Accounting Standards

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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.

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Session coverage
 During 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.

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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.

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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.

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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

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LIST OF ACCOUNTING STANDARDS ISSUED SO
FAR
 AS 1-Disclosure of Accounting Policies
 AS 2-Valuation of Inventories
 AS 3-Cash flow Statements
 AS 4-Contingencies and Events Occurring After
the Balance Sheet Date
 AS 5 -Net Profit or Loss for the Period, Prior Period
Items and Changes in Accounting Policies
 AS 6-Depreciation Accounting

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LIST OF ACCOUNTING STANDARDS ISSUED SO
FAR
 AS 7-Accounting for Construction Contracts
 AS 8-Accounting for Research and Development
 AS 9-Revenue Recognition
 AS 10-Accounting for Fixed Assets
 AS 11-Accounting for the Effects of Changes in
Foreign Exchange Rates
 AS 12-Accounting for Government Grants

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LIST OF ACCOUNTING STANDARDS ISSUED SO
FAR
 AS 13-Accounting for Investments
 AS 14-Accounting for Amalgamations
 AS 15-Accounting for Retirement Benefits in the
financial Statements of Employers
 AS 16-Borrowing Costs
 AS 17-Segment Reporting
 AS 18-Related Party Disclosures
 AS 19-Leases

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LIST OF ACCOUNTING STANDARDS ISSUED SO
FAR
 AS 20-Earnings Per Share
 AS 21-Consolidated Financial Statements
 AS 22-Accounting for Taxes on Income
 AS 23-Accounting for Investments in Associates in
Consolidated Financial Statements
 AS 24-Discontinuing Operations
 AS 25-Interim Financial Reporting

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LIST OF ACCOUNTING STANDARDS ISSUED SO
FAR
 AS 26-Intangible Assets
 AS 27-Financial Reporting of Interests in Joint
Ventures
 AS 28-Impairment of Assets
 AS 29-Provisions, contingent Liabilities and
Contingent Assets

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AS 1 – Disclosure of Accounting Policies

 Fundamental Accounting Assumptions

 Accounting Policies

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Fundamental Accounting
Assumptions
 Going concern
 Consistency
 Accrual

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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;

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Areas in which differing accounting
Policies are encountered
 Valuation of inventories;

 Treatment of goodwill;

 Valuation of investments;

 Treatment of retirement benefits;

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Areas in which differing accounting
Policies are encountered
 Recognition of profit on long-term contracts;

 Valuation of fixed assets;

 Treatment of contingent liabilities.

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Considerations in the selection of
Accounting Policies
 Prudence
 Substance over form
 Materiality

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Accounting Standard-1
 All 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.

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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.

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Accounting Standard-4
 This standard deals with treatment in financial
statements of:

 Contingencies; and

 Events occurring after the balance sheet date.

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Accounting Standard-4
 Does 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.


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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.
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 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
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