GAAP

They are rule of action or conduct which are derived from past experience and practice. When they prove useful, becomes GAAP.

GAAP need to fulfill few criterion:

1.

2.
3.

Relevance Objectivity Feasibility

Basic Accounting Assumptions

1.

2.
3. 4.

Accounting Entity Assumption Monetary Unit Assumption Going Concern Assumption Accounting Period Assumption

Basic Accounting Principles

1.

2.
3. 4. 5. 6.

Duality Principle Full Disclosure Principle Historic Cost Principle Revenue Recognition Principle Matching Principle Objectivity Principle

Modifying Principles of Accounting

1.

2.
3. 4. 5. 6. 7.

Cost-Benefit Principle Materiality Principle Consistency Principle Conservatism Principle Timeliness Principle Substance over form Industry Practice

IFRS: The New Development

IFRS are formulated by the International Accounting Standards Board (IASB) which is an international standard-setting body. Implementation by 2011 Convergence or adoption Small or medium companies Amendments in the company act
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Major Differences between Indian Accounting Standards and IFRS

Depreciation Amalgamation Treatment of Preliminary exp, discount or commission on issue of discount/shares Reopening of financial statement

Challenges for Implementation

Need for a change in several laws and regulations governing financial accounting and reporting in India Lack of adequate professionals with practical IFRS conversion experience Certain Indian standards offer accounting policy choices which are not available under IFRS, for example, use of pooling of interests method in accounting for business combinations.