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Sunday, September 14, 2014

9:06 PM

ACCOUNTING STANDARD 1
DISCLOSURE OF ACCOUNTING
POLICIES [PPT]
A PPT on Accounting Standard 1, Disclosure of Accounting Policies with summary READ MORE

A PPT on Accounting Standard 1, Disclosure of Accounting Policies with summary Below. You
candownload the PPT at the end of the article.

SUMMARY OF THE PPT

The Standard deals with disclosure of significant accounting policies followed in preparing financial
statements. As the financial statements are influenced by accounting policies and as the latter vary from
enterprise to enterprise, disclosure of such policies is necessary for proper appreciation of financial
statements. Such disclosure would also facilitate a more meaningful comparison between financial
statements of different enterprises.
ACCOUNTING POLICIES

Accounting policies are the specific accounting principles and the methods of applying those principles
adopted by an enterprise in the preparation and presentation of financial statements.
SIGNIFICANT ACCOUNTING POLICIES

Accounting Conventions followed


Valuation of Fixed Assets including revaluation
Policies relating to depreciation and Inventory
Valuation of Investments
Translation of foreign currency Items
Treatment of Government Grants
Costs incurred on research and Development How disposed of
Basis of Accounting Historical or Current Cost
Preliminary Expenses and Capital issue Expenses Treatment
Treatment of Lease rental paid and Lease rental Income
Treatment of Expenditure during Construction
Treatment of Contingent Liabilities
Treatment of Goodwill
Recognition of Profit on Long Term Contracts
The List is only Illustrative and Not Exhaustive.

FUNDAMENTAL ACCOUNTING ASSUMPTIONS

The Financial Statements are expected to be prepared by following the accounting principles of
Going Concern
Consistency
Accrual
So long as these assumptions are followed in preparation of financial statements, no disclosure of such
adherence is necessary. Any departure from any of these assumptions should however be disclosed.
SELECTION OF ACCOUNTING POLICIES

An Enterprise in the selection of accounting policies must be primarily guided with a view to present a
true and fair view of the profit and loss account for the period and a true and fair view of the balance
Unfiled Notes Page 1

true and fair view of the profit and loss account for the period and a true and fair view of the balance
sheet at the end of the year. For this purpose the major considerations governing the selection and
application of accounting policies are:
Prudence: Profits are not recognised on the basis of anticipation. They are recognized only when realised
in cash. However all losses are anticipated and provided for.
Substance over Form: Transactions and events are governed by the substance and not merely by the legal
form.
Materiality: Financial Statements should disclose all material items, i.e., knowledge of which might
influence the decision of the user of financial statements
CHANGES IN THE ACCOUNTING POLICIES

Any change in accounting policies which has a material effect in the current period or which is reasonably
expected to have material effect in later periods should be disclosed.
In the case of a change in accounting policies, which has a material effect in the current period, the
amount by which any item in the financial statements is affected by such change should also be disclosed
to the extent ascertainable. Where such amount is not ascertainable, the fact should be indicated.
DISCLOSURE OF ACCOUNTING POLICIES

All significant accounting policies should be disclosed.


Such disclosure form part of financial statements.
All disclosures should be made at one place.
Specific disclosure for the adoption of fundamental accounting assumptions is not required.
Disclosure of accounting policies cannot remedy a wrong or inappropriate treatment of the item in
the accounts.

Accounting
Standard 1
Disclosure of
DISCLOSURE OF DEVIATIONS FROM FUNDAMENTAL ACCOUNTING ASSUMPTIONS
If the fundamental accounting assumptions, viz. Going concern, Consistency and Accrual are followed inAccounting
financial statements, specific disclosure is not required. If a fundamental accounting assumption is not
Policies [PPT]
followed, the fact should be disclosed.
A PPT on Accounting Standard 1,
The principle of consistency refers to the practice of using same accounting policies for similar
transactions in all accounting periods. The deviation from the principle of consistency therefore means aDisclosure of Accounting Policies
with summary Read More
change in accounting policy.
Pasted from <http://cadiary.org/ppt-on-accounting-standard-1/>

A PPT on Accounting Standard 1,


Disclosure of Accounting Policies
with summary Below. You can
download the PPT at the end of
the article.

Summary of the PPT


The Standard deals with
disclosure of significant
accounting policies followed in
preparing financial statements.
As the financial statements are
influenced by accounting policies
and as the latter vary from
enterprise to enterprise,
disclosure of such policies is
necessary for proper appreciation
of financial statements. Such
disclosure would also facilitate a
more meaningful comparison
between financial statements of
different enterprises.

Accounting Policies
Accounting policies are the
specific accounting principles and
the methods of applying those
principles adopted by an
enterprise in the preparation and
presentation of financial
statements.

Significant
Accounting Policies
Accounting Conventions
followed
Valuation of Fixed Assets
including revaluation
Policies relating to
depreciation and Inventory
Valuation of Investments
Translation of foreign
currency Items
Treatment of Government
Grants

Unfiled Notes Page 2

Grants
Costs incurred on research
and Development How
disposed of
Basis of Accounting
Historical or Current Cost
Preliminary Expenses and
Capital issue Expenses
Treatment
Treatment of Lease rental
paid and Lease rental
Income
Treatment of Expenditure
during Construction
Treatment of Contingent
Liabilities
Treatment of Goodwill
Recognition of Profit on
Long Term Contracts
The List is only Illustrative and
Not Exhaustive.

Fundamental
Accounting
Assumptions
The Financial Statements are
expected to be prepared by
following the accounting
principles of
Going Concern
Consistency
Accrual
So long as these assumptions are
followed in preparation of
financial statements, no
disclosure of such adherence is
necessary. Any departure from
any of these assumptions should
however be disclosed.

Selection of
Accounting Policies
An Enterprise in the selection of
accounting policies must be
primarily guided with a view to
present a true and fair view of
the profit and loss account for the
period and a true and fair view of
the balance sheet at the end of
the year. For this purpose the
major considerations governing
the selection and application of
accounting policies are:
Prudence: Profits are not
recognised on the basis of
anticipation. They are recognized
only when realised in cash.
However all losses are anticipated
and provided for.
Substance over Form:
Transactions and events are
governed by the substance and
not merely by the legal form.
Materiality: Financial Statements
should disclose all material items,
i.e., knowledge of which might
influence the decision of the user
of financial statements

Changes in the
Accounting Policies
Any change in accounting policies
which has a material effect in the
current period or which is
reasonably expected to have
material effect in later periods

Unfiled Notes Page 3

material effect in later periods


should be disclosed.
In the case of a change in
accounting policies, which has a
material effect in the current
period, the amount by which any
item in the financial statements is
affected by such change should
also be disclosed to the extent
ascertainable. Where such
amount is not ascertainable, the
fact should be indicated.

Disclosure of
Accounting Policies
All significant accounting
policies should be
disclosed.
Such disclosure form part
of financial statements.
All disclosures should be
made at one place.
Specific disclosure for the
adoption of fundamental
accounting assumptions is
not required.
Disclosure of accounting
policies cannot remedy a
wrong or inappropriate
treatment of the item in
the accounts.

Disclosure of
deviations from
fundamental
accounting
assumptions
If the fundamental accounting
assumptions, viz. Going concern,
Consistency and Accrual are
followed in financial statements,
specific disclosure is not required.
If a fundamental accounting
assumption is not followed, the
fact should be disclosed.
The principle of consistency
refers to the practice of using
same accounting policies for
similar transactions in all
accounting periods. The deviation
from the principle of consistency
therefore means a change in
accounting policy.

Unfiled Notes Page 4