ACCOUNTING

POLICIES
PRESENTED BY:
LAKSHITA,ISHA
PATEL,ISHIKA,NANDINI,NUPUR
WHAT IS MEANT BY ACCOUNTING
POLICIES ?
Policies refer to the written guidelines that a company
adopts to govern the financial reporting process. They set
out the specific rules and auditing standards for measuring
financial condition. The policies may be classified as
conservative or aggressive. This depends on how they
approach financial reporting. For example, a conservative
policy may require entities to adopt a more cautious
approach. This can be important when estimating future
income or assets.
There are also other factors to consider when classifying
accounting policies. For instance, some businesses may
follow International Financial Reporting Standards (IFRS).
Other companies may adhere to Generally Accepted
Accounting Principles (GAAP). There are other prominent
accounting policies which International businesses often
follow.
IFRS VS GAAP
There are two main types of accounting
policies.International Financial Reporting Standards (IFRS).
IFRS is the global standard for financial reporting.Generally
Accepted Accounting Principles (GAAP). GAAP is the
standard in the United States.While there are some
similarities between the two, there are also some key
differences. Here is a brief summary of each.
IFRS
IFRS is a set of global standards that businesses must
adhere to when preparing their financial statements. They
were developed by the International Accounting Standards
Board (IASB).Generally, IFRS are more principles-based
than GAAP. This means that there is more room for
interpretation when following these guidelines.IFRS allows
companies to use estimation techniques to calculate certain
figures.
GAAP
GAAP is the standard accounting framework in the United
States. It was created by the Financial Accounting
Standards Board (FASB).GAAP is more rules-based than
IFRS. This means that there is less room for interpretation
when following these guidelines.
GAAP prohibits companies from using estimation
techniques to calculate certain figures. This is allowed
under IFRS.
What Are Some Other Examples of Accounting
Policies?
There are a variety of different accounting policies that
businesses may adopt. The most common policies include:
1. Revenue Recognition Policy
2. Cost Principle
3. Matching Principle
4. Full Disclosure Principle
What Is the Difference Between Accounting
Policies and Principles?

While an accounting principle is the standardized rule set

forth by a governing body, an accounting policy is the
method or guideline used by management to adhere to the
rule and generate financial statements
What Factors Influence Which Accounting
Policies Are Chosen?
There are a few different factors that may influence which
accounting policies a business chooses to adopt:
1. The Business Industry
2. Location
3. Size of the Business
Conservative vs Aggressive Policies
Business may also choose to adopt conservative or
aggressive methods of accounting. A conservative policy
means that the company is more likely to adhere to the
accounting rules set out by GAAP or IFRS. An aggressive
policy means that the company is willing to break these
rules in order to improve its financial performance.
Each option has its pros and cons. A conservative policy
may make a company appear more reliable to outsiders. It
can also limit a company’s ability to grow and expand. An
aggressive policy, on the other hand, can lead to greater
profits but also comes with more risk.
Do Small Businesses Need Accounting Policies?
Small businesses do not necessarily need to adopt
aggressive accounting policies. However, it is still a good
idea for them to have some basic guidelines in place. This
will help ensure that financial information is consistently
reported. It also ensures that all transactions are accurately
recorded.One of the most important aspects of running a
small business is maintaining accurate financial records.
Having accounting policies in place will make this process
much easier.
SUMMARY
Your choice in accounting policies is important for
businesses of all sizes. They set out the rules by which a
company reports its financial information. Businesses do
not need complicated accounting practices to be effective.
Good accounting frameworks help to prepare accurate
financial statements. This makes it easier for investors to
compare and analyze a company’s financial performance.