A standard is an agreed
upon criteria of what is
proper practice in a given
situation.
Accounting standards are rules and
guidelines set up by governing bodies
An accounting standard is a common set
of principles, standards and procedures
that define the basis of financial
accounting policies and practices.
Accounting standards improve the
transparency of financial reporting in all
countries
It means a generally accepted model of
accounting principles. Accounting Standards are
written documents containing the “Generally
Accepted Accounting Principal” (GAAP). These
standards are issued in India by the Institute of
Chartered Accountant of India (ICAI).
An accounting standard is a common set of
principles, standards and procedures that define
the basis of financial accounting policies and
practice
Accounting standards have incredible
importance for both internal and
external stakeholders. They basically are
a report card for the company. So it is
important that they are regulated and do
not report misleading information.
Attains Uniformity in Accounting
Improves Reliability of Financial
Statements
Prevents Frauds and Accounting
Manipulations
Assists Auditors
Comparability
Determining Managerial Accountability
Reform in Accounting Theory and
Practice.
AS 1 Disclosure of Accounting Policies AS 17 Segment Reporting
AS 2 Valuation of Inventories AS 18 Related Party Disclosures
AS 3 Cash Flow Statements AS 19 Leases
Contingencies and Events Occurring After
AS 4 the Balance Sheet Date AS 20 Earnings Per Share
Net Profit or Loss for the Period, Prior
Period Items and Changes in Accounting
AS 5 Policies AS 21 Consolidated Financial Statements
AS 22 Accounting for Taxes on Income
Accounting for Investments in Associates in
AS 7 Construction Contracts AS 23 Consolidated Financial Statements
AS 8 Accounting for Research and Development AS 24 Discontinuing Operations
AS 9 Revenue. Recognition AS 25 Interim Financial Reporting
AS 10 Property plant and equipment AS 26 Intangible Assets
The Effects of Changes in Foreign Exchange
AS 11 Rates AS 27 Financial Reporting of Interests in Joint Ventures
AS 12 Accounting for Government Grants AS 28 Impairment of Assets
Provisions, Contingent Liabilities and Contingent
AS 13 Accounting for Investments AS 29 Assets
Financial Instruments: Recognition and
Disclosure of
accounting policies.
It states that an enterprise needs to disclose
significant accounting policies followed by it to
prepare and present its financial statement.
This is because a business entity’s state of affairs
gets significantly impacted by the accounting
policies used in preparing its financial statements.
Every enterprise follows accounting policies
appropriate to its own business as well as industry.
Thus, an enterprise mandatorily needs to disclose its
significant accounting policies in order to present a
true and fair view of its state of affairs.
Institute of Chartered Accountants of India
(ICAI)) has been issuing notifications over a
period of time recommending disclosure of
certain accounting policies.
Thus, an enterprise following such accounting
policies while preparing its financial statements
needs to disclose these policies necessarily.
Valuation of Inventories
The following terms are used in this
Standard Inventories : are assets
(a) held for sale in the ordinary course of
business
(b) in the process of production for such
sale
(c) in the form of materials or supplies to
be consumed in the production process
or in the rendering of services.
The cost of inventories should
comprise all costs of purchase, costs
of conversion and other costs
incurred in bringing the inventories
to their present location and
condition.
It is the estimated selling
price in the ordinary course
of business less the
estimated costs necessary to
make the sale.
Inventories should be valued
at the lower of cost, and net
realisable value.
This Standard should be applied in accounting for all
inventories except the following :
(a) work in progress in the construction business,
including directly related service contracts
(b) work in progress of service business (consulting,
banking etc)
(c) shares, debentures and other financial instruments
held as stock in trade
(d) Inventories like livestock, agricultural and forest
products, mineral oils etc These inventories are valued
at net realizable value
Revenue recognition is a generally accepted
accounting principle that identifies the specific
conditions in which revenue is recognized and
determines how to account for it. Typically,
revenue is recognized when a critical event has
occurred, and the amount is easily measurable
to the company.
Revenue accounting is fairly straight forward when a
product is sold, and the revenue is recognized when
the customer pays for the product. However,
accounting for revenue can get complicated when a
company takes a long time to produce a product. As
a result, there are several situations in which there
can be exceptions to the revenue recognition
principle so revenue recognition is a generally
accepted accounting principle (GAAP) that stipulates
how and when revenue is to be recognized.
The revenue recognition principle using accrual
accounting requires that revenues are recognized
when realized and earned–not when cash is received.
