The document discusses accounting standards in India. It provides definitions, objectives, benefits and limitations of accounting standards. It notes that accounting standards are issued by the Institute of Chartered Accountants of India and are mandatory for companies. It lists 31 accounting standards and provides brief descriptions of some key standards including AS-1 on disclosure of accounting policies, AS-2 on valuation of inventories, AS-3 on cash flow statements, and AS-9 on revenue recognition. It also discusses converged Indian accounting standards (Ind AS) applicable to certain companies.

1. Accounting Standards
The laws/framework behind
Financial Accounting
Mandatory for “Companies”
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2. Definition
Written policy documents- issued by
“ Institute of chartered Accountants of India”
Cover aspects of :
Treatment Presentation
Recognition Measurement Disclosure

3. Objectives (True & Fair View)
Uniformity
Comparability
Standardized set of accounting policies
More reliability

4. Benefits
Reduction in Confusion Easy comparison
Disclosure of all informations
( including not required by statute)

5. Limitations
Alternative solutions ( difficult choice between standards)
Trend towards rigidity
Accounting standards cannot override the statute

6. Overview
Accounting Standards
Issued by “ICAI” Issued standards-32
formulated by “ASB” set up on 21st
April,1977
In force standards-31
Notified Standards : 29 ( by MCA)

7. Overview
A draft is prepared of accounting standards after
comments from experts of various fields.
Advisory committee: “ NACAS”

8. List of Accounting Standards
AS-1 : Disclosure of Accounting Policies
AS-2 : Valuation of Inventories
AS-3 : Cash Flow Statements
AS-4 : Contingencies and Events Occurring after the Balance Sheet
AS-5 : Net Profit or Loss for the Period, Prior Period Items and Changes in
Accounting Policies
AS-6 : Depreciation Accounting
AS-7 : Accounting for Construction Contracts
AS-9 : Revenue Recognition
AS-10 : Accounting for Fixed Assets
AS-11 : The Effects of Changes in Foreign Exchange Rates
AS-12 : Accounting for Government Grants
AS-13 : Accounting for Investments
AS-14 : Accounting for Amalgamations
AS-15 : Employee Benefits
AS-16 : Borrowing Costs

9. List of Accounting Standards
AS-17 : Segment Reporting
AS-18 : Related Party Disclosures
AS-19: Leases
AS-20 : Earnings per Share
AS- 21: Consolidated Financial Statements
AS-22 : Accounting for Taxes on Income
AS-23 : Accounting for Investments in Associates in consolidated financial
statements
AS-24 : Discontinuing Operations
AS-25 : Interim Financial Reporting
AS-26 : Intangible Assets
AS-27 : Financial Reporting of Interests in Joint Ventures
AS-28 : Impairment of Assets
AS-29 : Provisions, Contingent Liabilities & Contingent Assets
AS-30 : Financial Instruments: Recognition & Measurement
AS-31 : Financial Instruments: Presentation
AS-32 : Financial Instruments: Disclosures

10. Notes
AS-8 “ Accounting for research & development” –
withdrawn & merged with
AS-26 “ Intangible assets”
AS-30,31 & 32 – Not notified by “Ministry of
corporate Affairs”

11. Notes
Applicability of Accounting Standards depends on Level of
Companies:
Note : Level 1 & 2 : Small & Medium Sized Companies
Level 1
Level 2
Level 3

12. Notes
 Level 1 :
a. Turnover(excl other income) of 50 Crores or above
b. Borrowings (incl deposits): 10 cr or more
c. Listed companies or are in process of listing.
 Level 2 :
a. Turnover(excl other income) of 40 lakhs-50Cr
b. Borrowings (incl deposits): 1Cr – 10 Cr.
 Level 3 :
Companies other than in Level 1 &2
Notes : All Accounting standards are compulsory for Level 1 Companies.
AS-3,17,18,24 (only for Level 1 cos.)

13. Accounting Standard-1
“Disclosure of Accounting Policies”
accounting policies to be fully disclosed in the
“notes to accounts”
Selection of policies through -
Prudence, Substance over Form & Materiality
No disclosure of Fundamental Accounting assumptions
(if followed)

14. Accounting Standard-2
“Valuation of Inventories”
Valuation – “Cost/NRV whichever is lower”
(based on Conservatism Concept)
WIP
FGs
Raw
Material

15. Accounting Standard-2
Valuation to be applied on item by item basis.
Cost of inventory:
a. Purchase cost
b. Cost of conversion
c. Cost of bringing the goods to the present
location of the factory
Net Realizable Value : Realizable Value – Selling
Expenses

16. Accounting Standard-3
“ Cash Flow Statements”
Statement showing movement of Cash in & out of the
business
through three activities:
Operating Activity Financing Activity
Investing Activity

17. Accounting Standard-9
“Revenue Recognition”- when work completed
Recognition of revenue arising in the course of
ordinary activities.
Sale (recognized as revenue)
Complete Sale Risks & Rewards transferred Consideration fixed
(Delivery done) to buyer (guarantee of receipt)

18. Amendments
To bring uniformity in Accounts round the world,
“ International Financial Reporting Standards”
are being applied worldwide.
India not applied IFRS till now, so have issued
Converged AS- IND AS
Applicable: from 1st April,2016
Listed Cos. and unlisted companies having
net worth in excess of Rupees 500 crore

19. MCQs
Q.1. AS-2 is on:
Disclosure of Accounting Policies
Valuation of Inventories
Revenue Recognition
Depreciation Accounting
B

20. MCQs
Q.2. Accounting Standards
Improve the reliability of financial statements
E Eliminate the non-comparability of financial statements
Harmonies accounting policies
All of the above
D

21. MCQs
Q.3. As per AS-3, which of the following, should be classified as
an investing activity?
Acquisition of Fixed Assets
Disposal of Fixed Assets
Interest Received
(a) to (c) of the above
D

22. MCQs
Q.4. Select the correct equation:
Owner Equity = Assets + Liability.
Owner Equity + Outside liability = Total assets.
Assets + Owners Equity = Outside Liability.
Outside Equity + Profit = Total assets
B

23. MCQs
Q.5. Revenue is generally considered as
realized. At the time of agreement to sell.
At the time of receipt of cash
At the time of sale.
At the time of production of goods
C

24. MCQs
Q.6. The accounting standards are mandatory for
:
Charitable organization
Government departments.
Companies.
Central Government.
C

25. MCQs
Q.7. Provision for bad debts is the application of
which of the following concept convention
Conservatism
Dual concept
Going concern
Materiality.
A

26. MCQs
Q.8. As per AS-1, the fact need not be disclosed
in the financial statements if the following
concept is followed.
Money Measurement Principle
Periodicity Principle
Consistency principle
Accounting Entity Principle
C

27. MCQs
Q.9. Economic life of an enterprise is split into
the periodic interval as per –
Periodicity
Matching
Going concern
Accrual
C

28. MCQs
Q.10. Selection of Accounting policies
appropriation is not based on :
Prudence
Amount Involved
Substance over Form
Materiality
B