PRESENTATION

ON
ACCOUNTING
STANDARDS.

BY:
UTSAV, SIDDHARTH, APRAJITA,
RAHUL & SAKSHI
 CONTENTS
• What are Accounting Standards ?
• Objective of Accounting Standards ?
• Meaning of Accounting Standard 1 ?
• Objective of Accounting Standard 1 ?
• Fundamental Accounting Assumptions ?
• Considerations while selecting Acc.
Policies ?
• Example of a Company Following AS 1 ?
• International Accounting Standards ?
• Meaning of IAS-1 ?
ACCOUNTING STANDARDS

• These are written policy documents

issued by expert accounting body or
by government or other regulatory
body covering the aspects of
recognition, treatment,
measurement, presentation and
disclosure of accounting transactions
and events in the financial
statements.
OBJECTIVE OF ACCOUNTING
STANDARDS
• The whole idea of accounting
standards is centered around
harmonization of accounting
policies and practice followed by
different business entities so that the
diverse accounting practices adopted
for various aspects of accounting can
be standardized.
ACCOUNTING STANDARD
(AS) – 1
Issued in 1979
By accounting standards board, the
Institute of Chartered Accountants of

DISCLOSURE OF
ACCOUNTING
POLICIES
 STATUS & APPLICABILITY

• AS-1 is mandatory w.e.f. 01.04.1991

for Companies registered under the
Companies Act, 1956 and with effect
from 01.04.1993 for Partnerships,
Sole proprietorships, Hindu
undivided families, Trusts and
Societies.
DISCLOSURE OF ACCOUNTING
POLICIES

• This is the first accounting

standard, that deals with the
disclosure of significant
Accounting Policies followed in
preparing and presenting
Financial Statements.
ACCOUNTING POLICIES:-

These are specific accounting principles and

methods of applying these principles
adopted by the enterprise in the preparation
and presentation of financial statements.

FINANCIAL STATEMENTS :-

The financial statements are basic mean

through which the management of an firm
makes public communication with the
financial information along with selected
Quantitative Details.
 OBJECTIVE
• The objective of AS-1 is to lay down
the basic principles for the
disclosure of major accounting
policies being followed in preparing
the financial statements.
These accounting policies affect the
state of affair and profit or loss
position of the enterprise as shown
in the financial statements.
 FUNDAMENTAL
ACCOUNTING
ASSUMPTIONS
There are certain
assumptions which affect
the preparation and
presentation of financial
• Going Concern :
The enterprise is normally
viewed as a going concern and
continuing in operation, for
the foreseeable future. It is
assumed that the enterprise has
neither the intention nor the
necessity of closing the
operations.
• Consistency:

It is assumed that accounting

policies are consistent from one
period to another.
• Accrual:

Revenues & costs are accrued

& recognized as they are
accrued or incurred and
recorded in the financial
statements of the periods to
which they relate.
 Examples of Accounting
Policies
• Method of Depreciation:
1. Straight line method.
2. Written down value method.

• Valuation of investments and fixed

costs:
1. Cost
2. Market Value
3. Replacement Value.
 Contd….
• Treatment of contingent liabilities.
• Treatment of Goodwill.
• Recognition on profit on long term
contracts.
• Treatment of expenditure incurred
during construction.
• Conversion of foreign currencies.
• Valuation of Inventories , etc.
CONSIDERATIONS
FOR
SELECTING AN
ACCOUNTING
POLICY.
• Prudence- provision is made for all
expected liabilities & losses but
profits are recognized only when
realized.

• Materiality- all material , substantial

and important items should be
disclosed in the financial statements.
 DISCLOSURE
• To ensure proper understanding of
financial statements, it is necessary
that all accounting policies adopted
in the preparation and presentation
of financial statements should be
disclosed and at one place.
• Any change to the accounting
policies which has a material effect
in current period or later periods
should also be disclosed.
 Contd….

• If the fundamental accounting

assumptions, i.e. Going Concern,
Consistency & Accrual are followed in
financial statements, specific
disclosure is not required.
However, if a fundamental
accounting assumption is not
followed, the fact should be
 EXAMPLE :

GLAXO
SMITHKLINE
PHARMACEUTIC
ALS
 Statement of Accounting
Policies :-
• The financial statements are
prepared under the historical cost
convention & comply with the
Accounting Standards.

• Fixed assets are stated at cost of

acquisition, including any
attributable cost for bringing the
asset to the working condition less
 Contd….
• Interest on borrowings attributable to
new projects is capitalized and
included in cost of fixed assets.

• Long term investments are stated at

cost except where there is a
diminution in value other than
temporary, in which case, the
carrying value is reduced to
recognize the decline.
 International Accounting
Standards
• The objective of this Standard is to
prescribe the basis for presentation
of general purpose financial
statements, to ensure comparability
both with the entity’s financial
statements of previous periods and
with the financial statements of other
entities. To achieve this objective,
this Standard sets out overall
requirements for the presentation of
financial statements, guidelines for
 A complete set of financial statements
comprises:
(a) a balance sheet;
(b) an income statement;
(c) a statement of changes in equity
showing either:
• (i) all changes in equity, or
• (ii) changes in equity other than those
arising from transactions with equity
holders acting in their capacity as
equity holders;
(d) a cash flow statement; and
(e) notes, comprising a summary of
significant accounting policies and other
 Comparison
AS-1 IAS-1
• No format is • Is basically a
prescribed for any presentation
of the financial standard and gives
statement. the format of
balance sheet and
• Going concern, income statement.
accrual and • No fundamentals
consistency are assumptions have
basic accounting been provided and
policies and should it talks about the
be followed fair presentation.
 Contd..
AS-1 IAS-1
• There is no • The current
offsetting principle assents and
in AS-1 current liabilities
are clearly defined
and criteria for
offsetting items of
financial statement
against each other
are specified
 A N K
T H
Y O U