Accounting Standard 1
description
Transcript of Accounting Standard 1
![Page 1: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/1.jpg)
BY: UTSAV, SIDDHARTH, APRAJITA,
RAHUL & SAKSHI
PRESENTATION ON
ACCOUNTING STANDARDS.
![Page 2: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/2.jpg)
CONTENTS
• What are Accounting Standards ?• Objective of Accounting Standards ?• Meaning of Accounting Standard 1 ?• Objective of Accounting Standard 1 ?• Fundamental Accounting Assumptions ?• Considerations while selecting Acc. Policies ?• Example of a Company Following AS 1 ?• International Accounting Standards ?• Meaning of IAS-1 ?• Differences Between AS-1 & IAS-1 ?
![Page 3: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/3.jpg)
ACCOUNTING STANDARDS
• These are written policy documents issued by expert accounting body or by government or other regulatory body covering the aspects of recognition, treatment, measurement, presentation and disclosure of accounting transactions and events in the financial statements.
![Page 4: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/4.jpg)
OBJECTIVE OF ACCOUNTING STANDARDS
• The whole idea of accounting standards is centered around harmonization of accounting policies and practice followed by different business entities so that the diverse accounting practices adopted for various aspects of accounting can be standardized.
![Page 5: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/5.jpg)
ACCOUNTING STANDARD (AS) – 1 Issued in 1979
By accounting standards board, the Institute of Chartered Accountants of India.
DISCLOSURE OF ACCOUNTING POLICIES
![Page 6: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/6.jpg)
STATUS & APPLICABILITY
• AS-1 is mandatory w.e.f. 01.04.1991 for Companies registered under the Companies Act, 1956 and with effect from 01.04.1993 for Partnerships, Sole proprietorships, Hindu undivided families, Trusts and Societies.
![Page 7: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/7.jpg)
DISCLOSURE OF ACCOUNTING POLICIES
• This is the first accounting standard, that deals with the disclosure of significant Accounting Policies followed in preparing and presenting Financial Statements.
![Page 8: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/8.jpg)
ACCOUNTING POLICIES:-
These are specific accounting principles and methods of applying these principles adopted by the enterprise in the preparation and presentation of financial statements.
FINANCIAL STATEMENTS :-
The financial statements are basic mean through which the management of an firm makes public communication with the financial information along with selected Quantitative Details.
![Page 9: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/9.jpg)
OBJECTIVE
• The objective of AS-1 is to lay down the basic principles for the disclosure of major accounting policies being followed in preparing the financial statements.
These accounting policies affect the state of affair and profit or loss position of the enterprise as shown in the financial statements.
![Page 10: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/10.jpg)
FUNDAMENTAL ACCOUNTING ASSUMPTIONS
There are certain assumptions which affect the preparation and
presentation of financial statements.
![Page 11: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/11.jpg)
• Going Concern : The enterprise is normally viewed as a
going concern and continuing in operation, for the foreseeable future. It is assumed that the enterprise has neither the intention nor the necessity of closing the operations.
![Page 12: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/12.jpg)
• Consistency: It is assumed that accounting policies are
consistent from one period to another.
![Page 13: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/13.jpg)
• Accrual:
Revenues & costs are accrued & recognized as they are accrued or incurred and recorded in the financial statements of the periods to which they relate.
![Page 14: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/14.jpg)
Examples of Accounting Policies
• Method of Depreciation: 1. Straight line method. 2. Written down value method.
• Valuation of investments and fixed costs: 1. Cost 2. Market Value 3. Replacement Value.
![Page 15: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/15.jpg)
Contd….
• Treatment of contingent liabilities.• Treatment of Goodwill.• Recognition on profit on long term contracts.• Treatment of expenditure incurred during
construction.• Conversion of foreign currencies.• Valuation of Inventories , etc.
![Page 16: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/16.jpg)
CONSIDERATIONS FORSELECTING AN
ACCOUNTING POLICY.
![Page 17: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/17.jpg)
• Prudence- provision is made for all expected liabilities & losses but profits are recognized only when realized.
• Materiality- all material , substantial and important items should be disclosed in the financial statements.
![Page 18: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/18.jpg)
DISCLOSURE
• To ensure proper understanding of financial statements, it is necessary that all accounting policies adopted in the preparation and presentation of financial statements should be disclosed and at one place.
• Any change to the accounting policies which has a material effect in current period or later periods should also be disclosed.
![Page 19: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/19.jpg)
Contd….
• If the fundamental accounting assumptions, i.e. Going Concern, Consistency & Accrual are followed in financial statements, specific disclosure is not required.
However, if a fundamental accounting assumption is not followed, the fact should be
disclosed.
![Page 20: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/20.jpg)
EXAMPLE :
GLAXO SMITHKLINEPHARMACEUTICALS
LTD. (2007)
![Page 21: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/21.jpg)
Statement of Accounting Policies :-
• The financial statements are prepared under the historical cost convention & comply with the Accounting Standards.
• Fixed assets are stated at cost of acquisition, including any attributable cost for bringing the asset to the working condition less accumulated depreciation.
![Page 22: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/22.jpg)
Contd….
• Interest on borrowings attributable to new projects is capitalized and included in cost of fixed assets.
• Long term investments are stated at cost except where there is a diminution in value other than temporary, in which case, the carrying value is reduced to recognize the decline.
![Page 23: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/23.jpg)
International Accounting Standards
• The objective of this Standard is to prescribe the basis for presentation of general purpose financial statements, to ensure comparability both with the entity’s financial statements of previous periods and with the financial statements of other entities. To achieve this objective, this Standard sets out overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements for their content.
![Page 24: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/24.jpg)
A complete set of financial statements comprises: (a) a balance sheet; (b) an income statement; (c) a statement of changes in equity showing
either: • (i) all changes in equity, or • (ii) changes in equity other than those arising from
transactions with equity holders acting in their capacity as equity holders;
(d) a cash flow statement; and (e) notes, comprising a summary of significant
accounting policies and other explanatory notes.
![Page 25: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/25.jpg)
Comparison
AS-1• No format is prescribed
for any of the financial statement.
• Going concern, accrual and consistency are basic accounting policies and should be followed
IAS-1• Is basically a
presentation standard and gives the format of balance sheet and income statement.
• No fundamentals assumptions have been provided and it talks about the fair presentation.
![Page 26: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/26.jpg)
Contd..
AS-1• There is no offsetting
principle in AS-1
IAS-1• The current assents and
current liabilities are clearly defined and criteria for offsetting items of financial statement against each other are specified
![Page 27: Accounting Standard 1](https://reader036.fdocuments.us/reader036/viewer/2022081413/5465459bb4af9f46068b46b7/html5/thumbnails/27.jpg)
THANK
YOU