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Acconting standard 1 ppt Acconting standard 1 ppt Presentation Transcript

  • DISCLOSURE OFACCOUNTING POLICIES
  • ACCOUNTING POLICIESAccounting policies are those policies refer to specificaccounting principles and the method of applying those principles adopted by theenterprise in preparation andpresentation of the financial statements .
  • Methods of Depreciation Straight line method WDV methodConversation or translation of foreign currency itemConversation or translation of foreign currency itemAverage rateAverage rateTT buying rateTT buying rateValuation of inventoriesValuation of inventoriesFIFOFIFOWeighted averageWeighted averageStandard costStandard costRetail methodRetail method
  •  Valuation of Investment Current Investment Long term Investment Investment Properties Valuation of Fixed Assets Valuation of Fixed AssetsAssets acquired on hire purchase termsAssets acquired on hire purchase termsCost of jointly held assetsCost of jointly held assetsFixed assets acquired at consolidated priceFixed assets acquired at consolidated price Treatment of Retirement Benefits Treatment of Retirement Benefits Gratuity Gratuity Pension Pension
  • Treatment of Contingent Liabilities Treatment of Contingent Liabilities Start NO NOPresent obligation as Possible a result of an obligation? obligation event YES YES NO YES Probable outflow ? Remote NO YES NO (rare)Reliable estimate ? Disclose contingent liability Do nothing YES Provide
  • Fundamental Accounting AssumptionsA. Three fundamental accounting assumptions are followed inpreparation of financial statements:1. Going Concern : Financial statements prepared Enterprise had intention for continuing operation in future2. Consistency ::2. ConsistencyPractice of using same accounting policiesPractice of using same accounting policiesImproves Comparability of Financial StatementImproves Comparability of Financial StatementChange in Accounting PolicyChange in Accounting Policy
  • Fundamental Accounting Assumptions3. Accrual : Mercantile system only Ensures matching between revenue, cost and profit/loss Logical approachB. Assumption as regards fundamentalB. Assumption as regards fundamentalaccounting assumption ::accounting assumption
  • Considerations in the selection of Accounting PoliciesFinancial statements prepared and presented should Financial statements prepared and presented shouldrepresent a true and fair view.. represent a true and fair viewThe major considerations governing the selection andThe major considerations governing the selection andapplication of accounting policies are ::application of accounting policies arePRUDENCEPRUDENCESUBSTANCE OVER FORMSUBSTANCE OVER FORMMATERIALITYMATERIALITY
  •  PRUDENCE: Profits are recognized only when realized but provision is made for all known liabilities and losses SUBSTANCE OVER FORM: SUBSTANCE OVER FORM: Accounting transactions and events should be governed by Accounting transactions and events should be governed by their substance not merely by the legal form their substance not merely by the legal form MATERALITY: MATERALITY: Financial statements should disclose all “material” items, Financial statements should disclose all “material” items, which might influence the decisions of the users which might influence the decisions of the users
  • Change in Accounting Policies Change in Accounting Policies Adoption of different policies, required by statute. Adoption of different policies, required by statute.For compliance with accounting standardsFor compliance with accounting standardsIt is considered that change would result in more appropriateIt is considered that change would result in more appropriatepresentation of financial statementpresentation of financial statement
  • As per IAS – 1, the Financial As per IAS – 1, the FinancialStatements includes the followingStatements includes the following Components: Components:A statement of Financial position (Balance Sheet)A statement of Financial position (Balance Sheet)A statement of Comprehensive Income (Profit and LossA statement of Comprehensive Income (Profit and LossStatement)Statement)A statement of Cash FlowsA statement of Cash FlowsSignificant Accounting policies & other Explanatory notesSignificant Accounting policies & other Explanatory notes
  • As per US GAAP, the Financial Statements As per US GAAP, the Financial Statements includes the following Components: includes the following Components:Overall considerations included viz. Fair Presentation, Off Overall considerations included viz. Fair Presentation, Offsetting, Comparative Information setting, Comparative InformationAn Income statement of the year showing net income andAn Income statement of the year showing net income and comprehensive income comprehensive incomeA statement of Cash flow for the yearA statement of Cash flow for the yearA statement of changes in Stock holder’s EquityA statement of changes in Stock holder’s EquitySupplemental and Note DisclosureSupplemental and Note Disclosure
  • A statement of Financial Position of the last day of the yearA statement of Financial Position of the last day of the yearPrescribes minimum structure of Financial Statements andPrescribes minimum structure of Financial Statements andcontains guidance on related issues viz. Current Liabilitiescontains guidance on related issues viz. Current LiabilitiesStatements showing changes in EquityStatements showing changes in EquitySpecific disclosure for departures from IFRSSpecific disclosure for departures from IFRSDisclosure of critical judgements made by ManagementDisclosure of critical judgements made by Management
  • BIBLIOGRAPHY
  •  Karishma Dalvi Kunal Anardi Shital Thakur Manish Patil Aparna Manjrekar Gaurita Maldikar