This document discusses Accounting Standard 1 regarding the disclosure of accounting policies. It defines an accounting policy as the specific principles and methods used to prepare financial statements. Companies need flexibility to select policies that suit their individual circumstances. Accounting policies must adhere to fundamental assumptions like going concern, accrual, and consistency. When selecting policies, companies consider principles like true and fair view, materiality, substance over form, and prudence. The standard mandates disclosing all significant policies adopted as well as any changes made to existing policies.

1. Corporate
Knowledge
AS 1: Disclosure of Accounting
Policies

2. Contents
 Meaning of Accounting Policy
 Introduction- Why need this Standard
 Fundamental Accounting Assumptions and
Disclosure requirement relating to these
assumptions
 How to select Accounting policies i.e.
Considerations in selection of Accounting
Policies
 Disclosure Requirements

3. Accounting Policy
Accounting Policy refers to the specific accounting
principles and methods of applying those principle adopted
by the enterprise in the preparation and presentation of
Financial statements.
Specific Accounting Principle and Methods

4. Introduction- Need of AS-1
This AS do not deal with any
accounting treatment of any event
or transaction!
SO Why there is need of This AS

5. Introduction- Need of AS-1
 As we know, main objective of Accounting
standard is to standardise the diverse accounting
policies to make the FS comparable.
BUT
 AS can not and do not cover all possible areas of
accounting therefore there should be freedom for
entity to select suitable accounting policy for those
areas
 Since, because of diverse situation, it is not
possible to develop the single set of policies for all
the enterprise for all time, AS permit more than
one accounting policy.

10. Basic Accounting Assumption

11. Going Concern Concept
The enterprise is normally viewed as going concern,
i.e. as continuing business operation for the
foreseeable future. It is assumed that the enterprise
has neither the intention nor the necessity of
liquidation or curtailing, materially its scale of
operations.

12. Accrual Concept
Revenue and cost are recorded as they are
accrued, i.e. revenue items are recognised as they
are earned or incurred in the financial statement of
the period to which they relate even though payment
and receipt of actual cash has not been taken place

13. Consistency
It is assumed that accounting policies are
consistent from one period to another.
20152014 2016
C O N S I S T E N C Y
Straight
Line
Method
Straight
Line
Method
Straight
Line
Method

16. How to Select Accounting Policy
WDV
Method
Weighted
Average
Inventory
Valuation?
FIFO
Method
LIFO
Method
Original
Cost
Method
Simple
Average

17. How to Select Accounting Policy

18. How to Select Accounting Policy
True and Fair View
Materiality
Substance
over form
Prudence

19. Prudence

20. Substance Over Form

21. Materiality

22. Change in accounting policy
 One cannot change accounting policy
 But Change in accounting policy is allowed if
 When such change is allowed by statue
 If change in accounting policy present more
true picture of FS

23. Disclosure Requirement under AS -2
 All significant accounting policy adopted in
preparation and presentation of FS
 Disclosure should be as such as part of FS
 Disclosure should be at one place
 If any accounting policy is changed
 A note should be given by the company in its annual
accounts regarding the change
 Also the amount of difference is to be disclosed after
all changes have been incorporated in FS