Presented by

Name

AGENDA OF DISCUSSION
Introduction of Accounting Standards

AS 1 Disclosure of Accounting Policies

Concepts & Conventions
Annual Report with notes to Accounting
Tata Steel
Satyam Scam
Income tax act section 40A(3)
Q&A

Introduction
Written Documents issued by Ministry of
Corporate affairs.
In India, issued by ICAI on 21st April,1977
In process two accounting standards -1.
Under companies rule, 2006. and 2. converged
with IFRS.
Also initiated by Chair person of NACAS

Objectives
Standardize the diverse Accounting Policies
Add the reliability to the Financial
Statement
Ensures consistency and comparability of
the data published in the FS.
Facilitate inter-firm and intra-firm
comparison

AS 1-Disclosure of Accounting
Policies

Specific policies adapted to prepare FS

Should be disclosed at one place

Purpose : Better understanding of FS

Better comparison analysis
Mostly needed w.r.t Depreciation.Ex: Jet
Airways window dressing.

Prudence:
Profits are recognized only when realized but
provision is made for all known liabilities and losses.

Substance over form:

Accounting standards and events should be
governed by their substance and not merely by the
legal form.

Materiality:
Financial statements should disclose all
material items, which might influence the
decisions of the users.

Money measurement:
Only transactions of monetary nature are
recorded.

Going concern:
Business will continue to operate for an
indefinitely long period in the future.

The Entity concept:

Business is treated as separate & distinct
from its members.

The Cost Concept :

An asset is entered in the accounting records
at the amount paid to require it.
In case of nonmonetary asset this concept extends
to their accounting subsequent to acquisition.
Whereas, for monetary assets, subsequent to their
acquisition they are accounted at their fair value.

The Dual-Aspect Concept :

Accounting is a Double-entry system. What is
debited somewhere is credited somewhere else.

The Accounting Period Concept:

Accounting measures activities for a specific
interval of time called as the Accounting Period.
Generally the accounting period is one year. In India, the
accounting period is from 1st April to 31st March.

Consistency Concept:Use same method for an entity unless some

changes need to be made .

Realization Concept:Inflows of cash or claims to cash arising from the

sale of goods or services.

Matching Concept:Revenue of the particular period matched with

the cost of that period for determining the net profits of
that period.

Income-tax Act Section 40A(3)

Section 40A(3)(a) of the Income-tax Act, 1961 provides
that any expenditure incurred in respect of which payment
is made in a sum exceeding Rs.20,000/- otherwise than
by an account payee cheque drawn on a bank or by an
account payee bank draft, shall not be allowed as a
deduction.
Exception : However if payment is being made for plying,
hiring or leasing goods or carriages then Limit for this
section is Rs 35000/-,instead Of 20000/-.
It does not apply to loan transactions or to payments made
by commission agents for goods received by them for sale
on commission basis.
Contd..

Expenditures not covered under the provisions of

Section 40A(3):
Freight charges paid to railways.
Return of paid cheques by banks to its constituents.
Payments made during suspension of clearing
operations.
Section 40A(3)(b) also provides for deeming a
payment as profits and gains of business or profession
if the expenditure is incurred in a particular year but
the payment is made in any subsequent year in a sum
exceeding Rs. 20,000/- otherwise than by an account
payee cheque or by an account payee bank draft.

 Section 40A(3) is an anti tax-evasion measure.

A high value payment can be split into several cash
payments of less than Rs.20,000/- each.
To avoid splitting of payments an amendment was
made through Finance Act 2008 wherein if a payment
or aggregate of payments made to a person in a day
exceeds Rs.20,000/- will not be exempted.

Tata Steel Financial Statement

(with notes to accounting)
Balance Sheet
Cash Flow statement Profit and Loss
Account Notes-