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Accounting Standards

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Accounting Standards are Rules and Regulation of Financial Accounting set by ICAI (Institute of Chartered Accountant of India) which Cover the Treatment, Recognition, Measurement, Disclosure etc. It include the Objective, Benefits and Limitation of AS (Accounting Standard) Total 32 Accounting Standards are issued by ICAI. – PowerPoint PPT presentation

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Title: Accounting Standards


1
Accounting Standards
  • The laws/framework behind
  • Financial Accounting
  • Mandatory for Companies
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2
Definition
  • Written policy documents- issued by
  • Institute of chartered Accountants of India
  • Cover aspects of
  • Treatment Presentation
  • Recognition Measurement Disclosure

3
Objectives (True Fair View)
4
Benefits
  • Reduction in Confusion Easy comparison
  • Disclosure of all informations
  • ( including not required by statute)

5
Limitations
  • Alternative solutions ( difficult choice between
    standards)
  • Trend towards rigidity
  • Accounting standards cannot
    override the statute

6
Overview
  • Accounting Standards
  • Issued by ICAI Issued standards-32
  • formulated by ASB set up on
    21st April,1977
  • In force standards-31
  • Notified Standards 29 ( by
    MCA)

7
Overview
  • A draft is prepared of accounting standards after
    comments from experts of various fields.
  • Advisory committee NACAS

8
List of Accounting Standards
  • AS-1 Disclosure of Accounting Policies
  • AS-2 Valuation of Inventories
  • AS-3 Cash Flow Statements
  • AS-4 Contingencies and Events Occurring after
    the Balance Sheet
  • AS-5 Net Profit or Loss for the Period, Prior
    Period Items and Changes in Accounting Policies
  • AS-6 Depreciation Accounting
  • AS-7 Accounting for Construction Contracts
  • AS-9 Revenue Recognition
  • AS-10 Accounting for Fixed Assets
  • AS-11 The Effects of Changes in Foreign
    Exchange Rates
  • AS-12 Accounting for Government Grants
  • AS-13 Accounting for Investments
  • AS-14 Accounting for Amalgamations
  • AS-15 Employee Benefits
  • AS-16 Borrowing Costs

9
List of Accounting Standards
  • AS-17 Segment Reporting
  • AS-18 Related Party Disclosures
  • AS-19 Leases
  • AS-20 Earnings per Share
  • AS- 21 Consolidated Financial Statements
  • AS-22 Accounting for Taxes on Income
  • AS-23 Accounting for Investments in Associates
    in consolidated financial statements
  • AS-24 Discontinuing Operations
  • AS-25 Interim Financial Reporting
  • AS-26 Intangible Assets
  • AS-27 Financial Reporting of Interests in Joint
    Ventures
  • AS-28 Impairment of Assets
  • AS-29 Provisions, Contingent Liabilities
    Contingent Assets
  • AS-30 Financial Instruments Recognition
    Measurement
  • AS-31 Financial Instruments Presentation
  • AS-32 Financial Instruments Disclosures

10
Notes
  • AS-8 Accounting for research development
    withdrawn merged with
  • AS-26 Intangible assets
  • AS-30,31 32 Not notified by Ministry of
    corporate Affairs

11
Notes
  • Applicability of Accounting Standards depends on
    Level of Companies
  • Note Level 1 2 Small Medium Sized
    Companies

12
Notes
  • Level 1
  • Turnover(excl other income) of 50 Crores or above
  • Borrowings (incl deposits) 10 cr or more
  • Listed companies or are in process of listing.
  • Level 2
  • Turnover(excl other income) of 40 lakhs-50Cr
  • Borrowings (incl deposits) 1Cr 10 Cr.
  • Level 3
  • Companies other than in Level 1 2
  • Notes All Accounting standards are compulsory
    for Level 1 Companies.
  • AS-3,17,18,24 (only for Level 1 cos.)

13
Accounting Standard-1
  • Disclosure of Accounting Policies
  • accounting policies to be fully disclosed in the
  • notes to accounts
  • Selection of policies through -
  • Prudence, Substance over Form Materiality
  • No disclosure of Fundamental Accounting
    assumptions
  • (if followed)

14
Accounting Standard-2
  • Valuation of Inventories
  • Valuation Cost/NRV whichever is lower
  • (based on Conservatism Concept)

15
Accounting Standard-2
  • Valuation to be applied on item by item basis.
  • Cost of inventory
  • Purchase cost
  • Cost of conversion
  • Cost of bringing the goods to the present
    location of the factory
  • Net Realizable Value Realizable Value Selling
    Expenses

16
Accounting Standard-3
  • Cash Flow Statements
  • Statement showing movement of Cash in out of
    the business
  • through three activities
  • Operating Activity Financing Activity
  • Investing Activity

17
Accounting Standard-9
  • Revenue Recognition- when work completed
  • Recognition of revenue arising in the course of
    ordinary activities.
  • Sale (recognized as revenue)
  • Complete Sale Risks Rewards transferred
    Consideration fixed
  • (Delivery done) to buyer
    (guarantee of receipt)

18
Amendments
  • To bring uniformity in Accounts round the world,
  • International Financial Reporting Standards
    are being applied worldwide.
  • India not applied IFRS till now, so have issued
  • Converged AS- IND AS
  • Applicable from 1st April,2016
  • Listed Cos. and unlisted companies having
  • net worth in excess of Rupees 500 crore

19
MCQs
  • Q.1. AS-2 is on

20
MCQs
  • Q.2. Accounting Standards

21
MCQs
  • Q.3. As per AS-3, which of the following, should
    be classified as an investing activity?

22
MCQs
  • Q.4. Select the correct equation

23
MCQs
  • Q.5. Revenue is generally considered as realized.

24
MCQs
  • Q.6. The accounting standards are mandatory for

25
MCQs
  • Q.7. Provision for bad debts is the application
    of which of the following concept convention

26
MCQs
  • Q.8. As per AS-1, the fact need not be disclosed
    in the financial statements if the following
    concept is followed.

27
MCQs
  • Q.9. Economic life of an enterprise is split into
    the periodic interval as per

28
MCQs
  • Q.10. Selection of Accounting policies
    appropriation is not based on
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