AS 1 – DISCLOSURE OF ACCOUNTING POLICIES

PRESENTED BY :
ANNU MORE (23) BHARAT BHUSHAN RATHI(39) PRAVIN JADHAV (34)

UNDER THE GUIDANCE OF :

PROF. SONAL VED

AS WE MOVE FORWARD
• • • • • • • ACCONTING STANDARD ACCOUNTING PRINCIPLES AS 1:- INTRODUCTION NATURE OF ACCOUNTING POLICIES FUNDAMENTAL ACCOUNTING ASSUMPTIONS AREAS OF DIFFERING ACCOUNTING POLICIES SELECTION OF ACCOUNTING POLICIES

ACCOUNTING STANDARDS
• Accounting Standards are written documents, policy documents issued by expert accounting body or government or other regulatory body covering the aspects of recognition, measurement, treatment, presentation and disclosure of accounting transaction in the financial statement. • In India Accounting standards are issued by the institute of chartered accountant of India (ICAI)

• Objective of accounting standard is to standardize the diverse accounting policies and practices. •To formulate accounting standards, the institute of chartered accountants of India established on 22nd April,1977, an Accounting Standard Board (ASB). •These accounting standards are termed as ‘accounting principles’.

ACCOUNITNG PRINCIPLES
May be defined as those rules of action adopted by the accountants universally while recording accounting transaction. Can be classified into two categories : • Accounting concepts • Accounting conventions

ACCOUNTING CONCEPTS
The term ‘concepts’ includes those basic assumptions upon which the science of accounting is based. • Separate Entity Concept :- Amount invested by the proprietor into business is treated as a liability for the business. • Going Concern Concept :- it is assumed that the business will continue for a fairly long time to come.

• Money Measurement Concept : records only those transactions which can be expressed in terms of money. • Cost Concept : assets are ordinarily entered at the price paid to acquire it. • Dual Aspect Concept : e.g.- if A starts a business with Rs 10,000, it has two aspects. One-the business has an asset of Rs 10,000 and other the business has to pay to the proprietor a sum of Rs 10,000.

• Accounting Period Concept : the life of the business is divided into appropriate segments. • Periodic Matching Of Cost and Revenue Concept : the revenue earned for a specific period should be matched with the costs incurred for earning that revenue in the same period. • Realization Concept : revenue is recognised at a point when the property in goods passes to the buyer and he

ACCOUNTING CONVENTIONS
• Convention of conservatism : accountants follow the rule ‘anticipate no profit but provide for all possible losses’ while recording business transactions. • Convention of full disclosure : requires the accounting reports to be honestly prepared and sufficiently disclose information of material interest.

•Convention of materiality : requires the accountant to attach importance to material details and ignore insignificant details. •Convention of consistency : requires that the accounting practices adopted should remain unchanged from one period to another.

ACCOUNTING STANDARD 1
Disclosure of Accounting Policies

Introduction :
• Constituted in 1979 • Deals with the disclosure of significant accounting principles and methods of applying those principles adopted by enterprises in preparing and presenting financial statements.

NATURE OF ACCOUNTING POLICIES
• Accounting Policies refers to the specific accounting principles adopted in the preparation and presentation of financial statements. • No single list of accounting policies applicable to all circumstances. • Choice of the appropriate accounting principles in the specific circumstances calls for considerable judgement by the

• To ensure proper understanding of financial statements, all significant accounting policies adopted in the preparation should be disclosed. • Significant accounting policies should normally be disclosed at one place of the financial statements.

FUNDAMENTAL ACCOUNTING ASSUMPTIONS
The acceptance and use of these principles in the preparation and presentation of financial statements are assumed.

• Going concern • Consistency
In case any of the above assumptions is not followed, the fact should be disclosed in the financial statements.

• Accrual

AREAS OF DIFFERING ACCOUNTING POLICIES
• Methods of Depreciation (AS-6) • Straight line method • WDV Method • Valuation of inventories (AS-2) • FIFO • Weighted Average

• Conversion of foreign currency item (AS-11) • Valuation of Investment (AS-13) • Treatment of Retirement Benefits (AS-15) • Valuation of Fixed Assets (AS-10) • Treatment of Contingent Liabilities (AS-29)

SELECTION OF ACCOUNTING POLICIES

• Should exhibit the true and fair picture of stat of affairs of the enterprise.

Points to be considered

• Prudence : uncertainties attached to future events should be taken into consideration. • Substance over form : transactions and events should be governed by their substance and not merely by their legal form. • Materiality

CHANGES IN ACCOUNTING POLICIES
• If required by statute or for compliance with an Accounting Standard. • If change result in more appropriate presentation of financial statement.

CASE STUDY
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