This resulted in less acceptability of accounting figures by the end-users.CONSERVATISM • In the initial stages of accounting certain anticipated profits which were recorded did not materialize. • In other words the accountant follows the policy of “Playing Safe”. It means Income statement shows a lower net income. 1/7 . the Balance Sheet understates assets and overstates liabilities.

They should be honestly prepared to disclose information which is of material interest to proprietors.FULL DISCLOSURE • According to this convention accounting reports should disclose fully and fairly the information they purport to represent. It is also required under the companies Act for full disclosure. 2/7 . present and potential creditors. and investors.

For example if stock is valued at “Cost or Market price whichever is less”. it should be done year after year. However consistency does not mean inflexibility. This is necessary for the purpose of comparison. Similarly if depreciation is charged on fixed assets according to diminishing balance method. . this principle should be followed year after year.CONSISTENCY • According to this convention accounting practices should remain unchanged from one period to another. It does not forbid introduction of improved accounting techniques.

MATERIALITY • According to this convention the accountant should attach importance to material details and ignore insignificant details. 4/7 .

The committee has its head quarters at London.members) signed the agreement and constitution for its formation.ACCOUNTING STANDARDS • International Accounting Standards Committee (IASC) came into existence on 29th June 1973 when 16 accounting bodies from nine nations (Called as founder. 5/7 .

” The formulation of such standards will bring uniformity in technology. This will not only help in a correct understanding and exchange of economic and financial information but also in facilitating a smooth flow of international investment 6/7 . approach and presentation of results.I A S C OBJECTIVES • The objective of the committee is “to formulate and publish in the public interest their world-wide acceptance and observance.

approach and presentation of accounting results. the ASB will give due consideration to the International Accounting Standards and try to integrate them to the extent possible.ACCOUNTING PRINCIPLES IN INDIA • In order to bring uniformity in terminology. customs. 7/7 . • The main function of the ASB is to formulate accounting standards so that such standards will be established by the council of the Institute of Chartered Accounts. usages and the business environments prevailing in India. While formulating the accounting standards. • It will also take into consideration the applicable laws. the Institute of Chartered Accountants of India created Accounting Standards Boards (ASB).