.mnj

1. INTRODUCTION TO
ACCOUNTING STANDARDS-1
Project by
Divit Dholabhai
Arya Kariya

2. INTRODUCTION AND MEANING OF ACCOUNTING
STANDARDS
The financial statements of enterprise are utilized by
different groups of users of financial statements some of
them are:
Shareholder, lenders, creditors, customers, employees
etc.
Accounting standards are authoritative standards for
financial reporting and are the primary source of
generally accepted accounting principles (GAAP).
Accounting standards specify how transactions and
other events are to be recognized, measured, presented
and disclosed in financial statements.
•

3. NATURE, NEED AND IMPORTANCE OF
ACCOUNTING STANDARDS
 Nature of accounting Standards (AS) are basic policy documents. Their main aim is to
ensure transparency, reliability, consistency, and comparability of the financial statements.
They do so by standardizing accounting policies and principles of a nation/economy.
The accounting standards help measure the performance of the management of an entity.
It can help measure the management's ability to increase profitability, maintain the solvency
of the firm, and other such important financial duties of the management. Management
also must wisely choose their accounting policies.

4. ACCOUNTING STANDARDS IN INDIA
On 21st April 1977 the institute of C.A. of India constituted Accounting Standard Board also
known as A.S.B with a view to harmonize accounting policies and practices used in India.
The main function is to formulate the standards after taking applicable laws into
consideration.

5. AS-1 DISCLOSURE OF
ACCOUNTING POLICIES

6. WHAT ARE ACCOUNTING POLICY?
It refers to specific accounting principles and the method of
applying those principles in preparation of financial
statements.

7. AREAS WHERE MORE THAN ONE METHOD
OFACCOUNTING TREATMENTS :-
• Method of depreciation :
• Straight line method.
• With straight line depreciation, an
asset’s cost is depreciated the same
amount for each accounting period.
• WDV method.
• WDV method equalizes the net total charges of using the
asset (amount of depreciation plus the repair charges)
every year.
• Valuation of inventories :
• • FIFO .
• First In, First Out (FIFO) is an
accounting method in which assets
purchased or acquired first are
disposed of first.
• • Weighted average.
• In calculating a weighted average, each number
in the data set is multiplied by a predetermined
weight before the final calculation is made.

8. 1.
AREAS WHERE MORE THAN ONE
METHOD OFACCOUNTING TREATMENTS
:-
• Treatment of
expenditure during
construction :
• Written off .
• Capitalization .
• Conversion or translation
of foreign currency item :
•• Average rate .
•• TT buying rate .