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Accounting Policies Guide

This document discusses accounting standard 1 regarding the disclosure of accounting policies. It states that accounting policies refer to the specific principles and methods used to prepare financial statements. There are multiple acceptable methods for areas like depreciation, foreign currency translation, and inventory valuation. Disclosing accounting policies is important to ensure understanding of financial statements and allow comparison between companies. Fundamental assumptions include going concern, consistency, and accrual basis. Selection of policies should exhibit a true and fair view, and consider prudence, substance over form, and materiality. Changes can be made if required by law or standards, or to provide a more appropriate presentation.

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Ashish Tayal
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138 views8 pages

Accounting Policies Guide

This document discusses accounting standard 1 regarding the disclosure of accounting policies. It states that accounting policies refer to the specific principles and methods used to prepare financial statements. There are multiple acceptable methods for areas like depreciation, foreign currency translation, and inventory valuation. Disclosing accounting policies is important to ensure understanding of financial statements and allow comparison between companies. Fundamental assumptions include going concern, consistency, and accrual basis. Selection of policies should exhibit a true and fair view, and consider prudence, substance over form, and materiality. Changes can be made if required by law or standards, or to provide a more appropriate presentation.

Uploaded by

Ashish Tayal
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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ACCOUNTING STANDARD - 1

Disclosure Of Accounting Policies


What are Accounting Policies ?

 It refers to specific accounting principles and the method


of applying those principles in preparation of financial
statements.

Areas where more than one method of


accounting treatments :-

 Method of depreciation :
• Straight line method.
• WDV method.
 Treatment of expenditure during construction :
• Written off .
• Capitalization .

 Conversion or translation of foreign currency item :


• Average rate .
• TT buying rate .

 Valuation of inventories :
• FIFO .
• Weighted average.

 Valuation of fixed assets :


Needs for disclosure of Accounting Policies.

 To ensure proper understanding of financial statements.

 Comparing financial statements of different enterprises.

 All significant accounting policies disclosed at one place


would be helpful to the reader of financial statements.
Fundamental Accounting Assumptions

 Going concern:
Enterprise intention for continuing the operation in foreseeable
future.

 Consistency:
Same Accounting policies are followed by one period to another.

 Accrual:
Revenues and costs should be recorded in financial statements on
accrued basis.
Selection of Accounting Policies.
 Exhibit true and fare view of state of affairs of balance
sheet and profit and loss account.
Points considered for the purpose of selection
Of Accounting Policies.

 Prudence :
It means making of estimates which is required under
the condition of uncertainties.
 Substance over form :
The accounting treatment should be governed by their
substance and not merely by legal form.
 Materiality :
Financial statements should disclose all items which
influence the decisions of user of financial statements.
Changes in Accounting Policies.

Changes in Accounting Policies should be made in the


following conditions.

 Adoption of different Accounting Policies is required by


statue or for compliance with Accounting standard.

 It is considered that change would result in more


appropriate presentation of financial statements.
THANK YOU.

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