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MB0041 01

MB0041 01

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Published by Uttam Singh

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Published by: Uttam Singh on Jun 30, 2011
Copyright:Attribution Non-commercial


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Assure you have just started a Mobile store. You sell mobilesets and currencies of Airtel, Vodaphone, Reliance and BSNL.Take five transactions and prepare a position statement after everytransaction. Did you firm earn profit or incurred loss at the end?Make a small comment on your financial position at the end.Answer: We shall consider five transactions and show how they areaccounted for in the booksof the business.1. Mr. Rajesh brings Rs.100000 cash as capital into his business.2. He purchases Mobile Set to his shop Rs.100003. He buys currencies for cash Rs.500004. He sells currencies worth Rs.30000 for Rs.40000 on credit to Arjun5. He pays wages to servants Rs.1000Transaction 1:The business receives capital in cash. Capital is a liability and cashisan asset to the business.
Liablity assestCapital 100000cash100000
Transaction 2:Mobile Set is purchased for cash. This transaction can be reflectedasunder Another way to look at the same equation is that assets equalsliabilities plus owner's equity. Looking at the equation in this wayshows how assets were financed: either by borrowing money(liability) or by using the owner's money (owner's equity). Balancesheets are usually presented with assets in one section andliabilities and net worth in the other section with the two sections"balancing."AIRTELVODAPHONE NET PROFIT10000100000SALES200000500000
List the accounting standards issued by ICAI.Ans -
The Institute of Chartered Accountants of India
) isa national professional accounting bodyof India. It was established on 1 July 1949 as a body corporateunder the CharteredAccountants Act, 1949 passed by theParliament of Indiatoregulate the profession of Chartered Accountancyin India. ICAI isthe second largest professional accounting body in the world interms of membership second only toAmerican Institute of Certified Public Accountants. ICAI is the only licensing cumregulating bodyof thefinancial auditandaccountancyprofession in India.
Accounting Standards
As of 2010, the Institute of Chartered Accountants of India hasissued 32 Accounting Standards. These are numbered AS-1 to AS-7 and AS-9 to AS-32 (AS-8 is no longer in force since it wasmerged with AS-26).Compliance with Accounting Standardsissued by ICAI has become a statutory requirement with thenotification of Companies (Accounting Standards) Rules, 2006 bythe Government of India.Before the the constitution of the National Advisory Committee on Accounting Standards( NACAS), the institute was the sole accounting standard setter in India. However  NACASis not an independent body. It can only consider 
Accounting Standards recommended by ICAI and advise theGovernment of India to notify them under the Companies Act,1956. Further the accounting standards so notified are applicableonly to companies registered under the companies act, 1956. For all other entities the accounting standards issued the ICAI continueto apply.
Technical standards
ICAI formulates and issues technical standards to be followed byChartered Accountants and others. Non-Compliance of thesestandards by the members will lead to disciplinary action againstthem. The technical standards issued by ICAI includes, AccountingStandards, Audit and Assurance Standards, Standards on InternalAudit, Corporate Affairs Standard, Accounting Standards for LocalBodies, etc..
Audit and Assurance Standards
As of 2010 ICAI has issued 43 Engagement and Quality ControlStandards (formerly known as Auditing and Assurance Standards)covering various topics relating toauditingand other engagements.All Chartered Accountants in India are required to adhere to allthese standards. If a Chartered Accountant is found not to followthe said standards he is deemed guilty of professional misconduct.These standards are fully compatible with theInternationalStandards on Auditing(ISA) issued by theIAASBof theIFAC  except for two standards SA 600 and SA 299, where corresponding provisions do not exist in ISA.
Write short notes of IFRS?Ans - International Financial Reporting Standards (IFRS) are principles-based Standards, Interpretations and the Framework (1989) adopted by theInternational Accounting Standards Board (IASB).

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