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.ACCOUNTING STANDARD  Recording transaction  Setting a guidelines. It also has wider concept compare to Book Keeping  Global Uniformity  Easy to take decision.

INTRODUCTION OF AS-5 In India there is no specific accounting standard dealing with presentation of profit and loss account. Earlier in India every item of income and expenses except those that are directly taken into the balance sheet are routed through profit and loss account. . Generally all the items of income and expenses are included in determination of net profit or loss.


It has two types that are as follows  A) Extra-ordinary item  B) ordinary item .NET PROFIT AND LOSS  Normally all item of income and expenses which are recognized in a period of net profit and loss for the period.

EXTRA-ORDINARY ITEM  Nature of extra ordinary item  Rise of an extra ordinary item  Differences  Examples .

 Effective date and manner of discontinuance  To know the accounting policy used to measure gain or loss.Disclosure Of Extra Ordinary Item  Nature of the discontinued operation  Industry and geographical segments in which it is reported. .

ORDINARY ITEM  Performance of the enterprise for the period  Nature of item  To understand the financial position of an enterprises .

plant and equipment and their net value . poverty.Disclosure of ordinary item  The write-down of the inventories .  Organisation restructuring  Disposals of items of property and long term investment. .

The objective is to indicate the effect of such items on the current profit and loss they do not include recurring adjustments.PRIOR PERIOD The term prior period is being defined in this standard refers only to income or expenses which arise in the current period as a result of errors in the preparation of financial statement. . They are generally infrequent in nature.g. Arrears payable to workers as a result of revision of wages for the current period. .e.

PRIOR PERIOD ADJUSTMENTS  1) Change from FIFO to average method  2) Short supply of components  3) Change from direct costing to absorption costing method. .

 methods of correcting fundamental errors:i) bench mark treatment ii) allowed alternative .Fundamental Errors  Errors may be occurred as a result of mathematical mistakes in applying accounting policy frauds. Correction of errors is normally include in net profit or loss.

Changing in Accounting Policy  It has two application either:- i) Retrospectively application Ii) Prospective application Methods of changing accounting policy I) Adoption of an international accounting standard (IAS). Ii) Other changes a) Bench mark b) Allowed alternative .

Changing in accounting estimates  What does accounting estimates means? .

it may affect the current period and the coming future period also.EFFECTS OF ESTIMATION  A) The period of change:. .its affect the current period B) the period of the change and the future change:.


CONCLUSION  So here we conclude that ICAI has different practice of preparing from the others. ICAI has withdrawn the concept of extra_ ordinary item while US GAAP still requires separate disclosure of extraordinary item. . However Indian enterprise are required to make adequate disclosure so as to determine after taking into account all expense and income which directly relate to the entity .