Accounting Standard 1

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Accounting Standard 1

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Accounting Standard 1

  1. 1. ACCOUNTING STANDARD - 1 Disclosure Of Accounting Policies
  2. 2. What are Accounting Policies ? <ul><li>It refers to specific accounting principles and the method of applying those principles in preparation of financial statements. </li></ul><ul><li>Areas where more than one method of </li></ul><ul><li>accounting treatments :- </li></ul><ul><li>Method of depreciation : </li></ul><ul><li>Straight line method. </li></ul><ul><li>WDV method. </li></ul>
  3. 3. <ul><li>Treatment of expenditure during construction : </li></ul><ul><li>Written off . </li></ul><ul><li>Capitalization . </li></ul><ul><li>Conversion or translation of foreign currency item : </li></ul><ul><li>Average rate . </li></ul><ul><li>TT buying rate . </li></ul><ul><li>Valuation of inventories : </li></ul><ul><li>FIFO . </li></ul><ul><li>Weighted average. </li></ul><ul><li>Valuation of fixed assets : </li></ul>
  4. 4. Needs for disclosure of Accounting Policies. <ul><li>To ensure proper understanding of financial statements. </li></ul><ul><li>Comparing financial statements of different enterprises. </li></ul><ul><li>All significant accounting policies disclosed at one place would be helpful to the reader of financial statements. </li></ul>
  5. 5. Fundamental Accounting Assumptions <ul><li>Going concern : </li></ul><ul><li>Enterprise intention for continuing the operation in foreseeable future. </li></ul><ul><li>Consistency : </li></ul><ul><li>Same Accounting policies are followed by one period to another. </li></ul><ul><li>Accrual: </li></ul><ul><li>Revenues and costs should be recorded in financial statements on </li></ul><ul><li>accrued basis. </li></ul>
  6. 6. Selection of Accounting Policies. <ul><li>Exhibit true and fare view of state of affairs of balance sheet and profit and loss account. </li></ul><ul><li>Points considered for the purpose of selection </li></ul><ul><li>Of Accounting Policies. </li></ul><ul><li>Prudence : </li></ul><ul><li> It means making of estimates which is required under </li></ul><ul><li>the condition of uncertainties. </li></ul><ul><li>Substance over form : </li></ul><ul><li>The accounting treatment should be governed by their substance and not merely by legal form. </li></ul><ul><li>Materiality : </li></ul><ul><li>Financial statements should disclose all items which influence the decisions of user of financial statements. </li></ul>
  7. 7. Changes in Accounting Policies. <ul><li>Changes in Accounting Policies should be made in the </li></ul><ul><li>following conditions. </li></ul><ul><li>Adoption of different Accounting Policies is required by statue or for compliance with Accounting standard. </li></ul><ul><li>It is considered that change would result in more appropriate presentation of financial statements. </li></ul>
  8. 8. <ul><li>THANK YOU. </li></ul>

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