Accounting Standards
RTI, Jaipur 1
Session overview Every profession develops a body of
knowledge consisting of principles, which are considered as standard to be attained. Accounting is no exception. In India, the Institute of Chartered Accountants of India has developed Accounting Standards; based on the ‘generally accepted accounting standards’ to be used in preparation of financial statements.
RTI, Jaipur 2
Session coverageDuring this session, we will learn: the importance of the accounting
standards in preparation of financial statements; and
application of AS 1 relating to ‘Disclosure of Accounting Policies’, and
application of AS 4 relating to ‘Events Occurring After the Balance Sheet Date’ for preparation of financial statements.
RTI, Jaipur 3
Learning Objective At the end of the session, the learner will be
able to state the importance of Accounting Standards in the preparation of financial statements and application of AS 1 relating to ‘Disclosure of Accounting Policies’ and AS 4 relating to ‘Events Occurring After the Balance Sheet Date’ in the preparation of Financial Statements.
RTI, Jaipur 4
Importance of Accounting Standards The users of the financial statements need an
assurance that the entities preparing their financial statements follow the accepted standards while presenting their financial information in the financial statements.
RTI, Jaipur 5
LIST OF ACCOUNTING STANDARDS ISSUED SO FAR Institute of Chartered Accountants of India
has so far issued 29 Accounting Standards on the advise of the accounting Standards Board
RTI, Jaipur 6
LIST OF ACCOUNTING STANDARDS ISSUED SO FAR AS 1-Disclosure of Accounting PoliciesAS 2-Valuation of InventoriesAS 3-Cash flow StatementsAS 4-Contingencies and Events Occurring
After the Balance Sheet DateAS 5 -Net Profit or Loss for the Period,
Prior Period Items and Changes in Accounting Policies
AS 6-Depreciation AccountingRTI, Jaipur 7
LIST OF ACCOUNTING STANDARDS ISSUED SO FAR AS 7-Accounting for Construction
ContractsAS 8-Accounting for Research and
DevelopmentAS 9-Revenue RecognitionAS 10-Accounting for Fixed AssetsAS 11-Accounting for the Effects of
Changes in Foreign Exchange RatesAS 12-Accounting for Government Grants
RTI, Jaipur 8
LIST OF ACCOUNTING STANDARDS ISSUED SO FAR AS 13-Accounting for InvestmentsAS 14-Accounting for AmalgamationsAS 15-Accounting for Retirement Benefits
in the financial Statements of EmployersAS 16-Borrowing CostsAS 17-Segment ReportingAS 18-Related Party DisclosuresAS 19-Leases
RTI, Jaipur 9
LIST OF ACCOUNTING STANDARDS ISSUED SO FAR AS 20-Earnings Per ShareAS 21-Consolidated Financial StatementsAS 22-Accounting for Taxes on IncomeAS 23-Accounting for Investments in
Associates in Consolidated Financial Statements
AS 24-Discontinuing OperationsAS 25-Interim Financial Reporting
RTI, Jaipur 10
LIST OF ACCOUNTING STANDARDS ISSUED SO FAR AS 26-Intangible AssetsAS 27-Financial Reporting of Interests in
Joint VenturesAS 28-Impairment of AssetsAS 29-Provisions, contingent Liabilities and
Contingent Assets
RTI, Jaipur 11
RTI, Jaipur 12
AS 1 – Disclosure of Accounting Policies
Fundamental Accounting Assumptions Accounting Policies
RTI, Jaipur 13
Fundamental Accounting Assumptions Going concern Consistency Accrual
RTI, Jaipur 14
Areas in which differing accounting Policies are encountered
Methods of depreciation, depletion and amortization;
Treatment of expenditure during construction;
Conversion or translation of foreign currency items;
RTI, Jaipur 15
Areas in which differing accounting Policies are encountered
Valuation of inventories;
Treatment of goodwill;
Valuation of investments;
Treatment of retirement benefits;
RTI, Jaipur 16
Areas in which differing accounting Policies are encountered
Recognition of profit on long-term contracts;
Valuation of fixed assets;
Treatment of contingent liabilities.
RTI, Jaipur 17
Considerations in the selection of Accounting Policies Prudence Substance over formMateriality
RTI, Jaipur 18
Accounting Standard-1All significant accounting policies
adopted in preparation and presentation of financial statements should be disclosed.
he disclosure of significant accounting
policies as such should form part of the financial statement and the significant accounting policies should normally be disclosed in one place.
RTI, Jaipur 19
Accounting Standard-1 If the fundamental accounting
assumptions, viz., going concern, consistency and accrual are followed in financial statements, specific disclosure is not required. If a fundamental accounting assumption is not followed, the fact should be disclosed.
RTI, Jaipur 20
RTI, Jaipur 21
Accounting Standard-4This standard deals with treatment in
financial statements of:
Contingencies; and
Events occurring after the balance sheet date.
RTI, Jaipur 22
Accounting Standard-4Does not apply to:(a) Liabilities of life assurance and
general insurance enterprises arising from policies issued;
(b) Obligations under retirement benefit plans; and
© Commitments arising from long-term lease contracts.
RTI, Jaipur 23
Definitions A contingency is a
condition or situation, the ultimate outcome of which, gain or loss, will be known or determined only on the occurrence or non-occurrence of one or more uncertain future events.
Events after the balance sheet date are those significant events, both favourable and unfavourable, that occur between the balance sheet date and the date on which the financial statements are approved by the Board of Directors
represent material changes and commitments affecting the financial position of the enterprise
RTI, Jaipur 24