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  • 2. 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)
  • 3. Objective of Accounting Standards :
    • Standardise the diverse Accounting Policies
    • 4. Add the reliability to the Financial Statement
    • 5. Eradicate baffling variation in treatment of accounting aspects
    • 6. 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.
  • 7. AS 6 - Accounting for Depreciation
    Depreciation is distribution of total cost of asset over its useful life.
    • A non-cash expenditure
    • 8. Measure of wearing out
    • 9. 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.
    • 10. Form of cash or kind to an enterprise in return for past or future compliance with certain conditions.
    • 11. Government assistance, which cannot be valued reasonably, is excluded from Govt. Grants.
    • 12. 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
  • 13. 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.
  • 14. AS 20 - Earning per share
    • Earning capacity of the firm
    • 15. Assessing market price for share
    • 16. AS gives computational methodology for determination and presentation of EPS
    • 17. 2 types of EPS
  • 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
  • 18. 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
  • 19. 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
  • 20. 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
  • 21. AS 10 - Accounting for Fixed Assets
    • Called as Cash generating Assets
    • 22. Expected to used for more than a Accounting period like land, building, P/M, etc
    • 23. Shown at either Historical or Revalued value
  • 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.
  • 24. THANK YOU