3. Disclosure of accounting principles Accounting Standard (AS) 1 issued by the Accounting Standards Board on ‘Disclosure of Accounting Policies’. The Standard deals with the disclosure of significant accounting policies followed in preparing and presenting financial statements.
4. Disclosure of accounting principles: Introduction… All significant accounting policies adopted in the preparation and presentation of financial statements should be disclosed in one place. There is no single list of accounting policies which are applicable to all circumstances. Is required by law in some cases. The nature and degree of disclosure vary between Corporate and Non-Corporate sectors. In some cases it forms part of accounts, while in others it is given as supplementary information. It also facilitates a more meaningful comparison between financial statements of different enterprises.
5. Fundamental accounting assumptions Following are the Fundamental Accounting Assumptions. If any assumptions is not followed in the financial statements, the fact should be disclosed. GOING CONCERN:The enterprise is normally viewed as a going concern, that is, as continuing in operation for the foreseeable future. CONSISTENCY: To achieve comparability of the financial statements of enterprise through time, the accounting policies are followed consistently from one period to another. If any changes are there they must disclose it. ACCRUAL: Revenues and costs are recorded in the financial statements of the periods to which they relate.
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7. AREAS IN WHICH DIFFERING ACCOUNTING POLICIES ARE ENCOUNTERED CONT… VALUATION of INVENTORIES Inventories are valued at lower of cost and net realisable value. The basis of determining cost is set out below: Stores and spares “Weighted Average Basis” Raw materials & components “Weighted Average Basis” Packing materials “Weighted Average Basis” Work-in-progress “Cost of Raw materials, conversion cost and appropriate share of production Overheads.
