PRESENTATIONON ACCOUNTING STANDARDS By:- AMEY JOSHI BUSHAN PATIL SONAL SAVE SMITA AVHAD KANCHAN THKUR GEETANJALI POL
Introduction Accountingis the art of recording transactions in the best manner possible, so as to enable the reader to arrive at judgments/come to conclusions, and in this regard it is utmost necessary that there are set guidelines. These guidelines are generally called accounting policies. Accounting Standards in India are issued By the Institute of Chartered Accountanst of India (ICAI) on 21stApril,1977 Initiated by Kumar Mangalam Birla, chairman committee of Corporate Governance for Financial Disclosures Also initiated by Chair person of NACAS (National Advisory Committee on Accounting)
Eradicate baffling variation in treatment of accounting aspects
Facilitate inter-firm and intra-firm comparison
Compliance with Accounting Standards issued by ICAI Sub Section(3A) to section 211 of Companies Act, 1956 requires that every Profit/Loss Account and Balance Sheet shall comply with the Accounting Standards. 'Accounting Standards' means the standard of accounting recomended by the ICAI and prescribed by the Central Government in consultation with the National Advisory Committee on Accounting Standards(NACAs) constituted under section 210(1) of companies Act, 1956.
AS 6 - Accounting for Depreciation Depreciation is distribution of total cost of asset over its useful life.
Arise due to consumption or other loss of value of a depreciable asset, passage of time.
AS 12-Accounting for Government Grants
GovernementGrants are assistance by the Govt.
Form of cash or kind to an enterprise in return for past or future compliance with certain conditions.
Government assistance, which cannot be valued reasonably, is excluded from Govt. Grants.
Transactions with Governement, which cannot be distinguished from the normal trading transactions of the enterprise, are not considered as Government grants.
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
AS 2 - Valuation of Inventories Used for computation of Cost of inventories and to show in BS till it is sold Consists of :- Raw Materials Work in progress Finished goods Spares, etc Measurements of Inventories Determination of Cost of Inventories Cost of purchase (Purchase price, duties & taxes, freight inwards) Cost of conversion. Determination of Net realisablevalue Comparison of cost and net realisable.
AS 13- Accounting for Investments Assets held for earning incomes like dividend, interest, rental for capital appreciation, etc It involves:- Classification of Investment Cost of Investment Valuation of Investment Reclassification of Investment Disposal of Investment Disclosure of Investment in FS
AS 11- Effect of change in FOREX Rates Classification for Accounting treatment:- Category I: Foreign currency transactions: a) buying and selling of goods or services b) lending and borrowing in foreign currency c) Acquisition and disposition of assets Category II: Foreign operations: a) Foreign branch b) Joint venture c) Foreign Subsidiary Category III: Foreign Exchange contracts: a) For managing Risk/hedging b) For trading and Speculation
AS 19- Accounting for Leases Agreement between Lessor And Lessee Two types of leases: Operating lease Finance lease Different from Sale Classification to be made at the inception
AS 3- Cash Flow Statements Incoming and outgoing of cash Act as barometer to judge surplus and deficit Explain Cash flow under 3 heads :- Cash flow from operating activities Cash flow from financing activities Cash flow from investing activities
AS 9 - Revenue Recognition Means gross inflow of cash and other consideration like arising out of :- Sale of goods Rendering services Use of enterprise resources by other yielding interest, dividend and royalities.