Accounting Standarts - Class Note

classmate As Accounting Standards Accounting Standard- Disclosure of Accounting policis Disclosure Objedne 2 Scope Meaning of Disclosure Seequirement Sele ne por of Alcot change of fundamental policis Inpolices Assumption 1. Objective & Scope of AS-1- (i) As-1 applicable on all entities. (TD) objecttue of As-s is to depict policis followed (goudara to its shareholder This increcye trust on Financial statement of lentity. 2. Meaning of Accounting policies :- Accounting policies are specific accounting... principes. and methods in appling such principles in preparing 2 A precacuting Financial statement Eg. Areas of Alk polides :. • Cas Depriciation policy. (le charge dep Yes or No). (b) Depriciation method (SLM WDV etc) () Stock valuation (d) Stock valuation methed (FIFO, weight Any eric) (e) Accounting Treatment of goodwill. (f) Atcounting treatment of sectirement benefits (y) valuation of investiments. 3. Disclosure of Accounting policies Au significant Aic policles fortlowed by entities in preparation of financial statement should be disclosed at ONE place. It means all policies will be presented as part of financial Statement after [BIS, PEL, 8 Cash Flow) 4- Change in Accounting policy :- Athenever any accounting policy. disclosure is required for Changed their (9) Old policy (ii) New policy (iii) Reasons of changing policy (iv) Effect of change in policy (Fact about change. Should be disclosed if effect can not be calculates Note: following can be the reasons for Change in policy. a. Compliance with law b. Compliance with Accounting standard C. Better presentation. Dote Page 3250 (FIFO, SLM) Alc treatment Methods of Alc treatment Aic policy AIC policy Methods of calcul Provision Chang in Estimat AS-5 # Secondary Consideration: Aperet forem above conticleration Considered following points should also be (1) Prudence (समसवारी) - It means being emon tue It means recording of income, when they are contam but expenses on estimated basis even if Uncertain (PT) Substance over form (तहयो) (संध्यover lagal form) - It means importance should be ghen facts Instead of Legal position Oil) Materiality- It maens policies should be dragsted for material them. Item which are hot material should be ignomed 7. Not mentioned in AS-L Whenever any mathod of calculating any provum. is changed, It is NOT change in accounting Policy. It is called change in Accounting estimate. AS-5 Fundamental Accounting assumption:- These asumpten are followed by all entities Unless otherwise mentioned Hence these ace be disclosed, if frillowed- NOT ta (2) Jong comcerm It means we alexays astrime that entity will continue foror for conable future and there is no need to Liquidate it's operation (b) Constyn Consistency - It means all policies of Entity will be consistently. followed and there is no need for any change (c) Acqual- It means recording of Income and of payment expenses as period basis, Prrespective IF entity is not following going consistent in its policies off concern or not not following. accrual assumption then Disclosure is required 6. How to select Accounting policies? (a) Consideration : Statements should be Policies which sreflect torme 2 falr view of financial. followed.