Monday, November 9, 2009

AS-1 : DISCLOSURE OF ACCOUNTING POLICIES


AS-1 : DISCLOSURE OF ACCOUNTING POLICIES

                                                                                    
Meaning:
            Accounting Policies refer to
  • Specific Accounting Principal
  • And Method of Applying those Principal
  • In Preparation & presentation of Financial Statement.


Ø      REASON FOR SUCH POLICIES :
1)      Better comparison between different Financial Enterprises.
2)      Comparison over the years.
3)      Different accounting policies affects enterprises

VARIOUS ACCOUNTING POLICIES
1)      valuation of inventories
2)      valuation of Investment
3)      Treatment of goodwill
4)      Retirement Benefits
5)      Contingent liabilities

ABOVE LIST ARE EXHAUSTIVE



PRINCIPLES FOR SELECTING ACCOUNTING POLICIES

A)    Prudence: Provision for all kinds of loss to be made BUT NOT OF PROFIT.

B)     Materiality: Disclosing all materials items i.e. ITEMS THAT MIGHT INFLUENCE THE DECISION OF ANY ONE i.e.  Shareholers’, Creditors etc.

C)    Substance Over Form: The Accounting treatment & Presentation in financial statement of transaction & events should be governed by their substance & not BY LEGAL FORM
Eg: FINANCIAL LEASE

WHAT ARE ACCOUNTING POLICIES DISCLOSURES?

Ø      All Accounting policies adopted in PREPARATION & PRESENTATION of Financial statement should be disclosed.
Ø      All significant accounting policies should be DISCLOSED AT ONE PLACE
Ø      Accounting policies should be disclosed as first note to financial statement as THIS FORMS BASIS OF PREPARATION FOR SUCH STATEMENT.

CHANGE IN ACCOUNTING POLICIES
When to Adopt
  1. Required by Law or Statute
  2. Required by any AS
  3. Will give better preparation & presentation of accounting statement

REQUIREMENT WHEN ENETRPRISES CHANGES ITS POLICIES
Ø      Shall disclose all material facts/effects in current year &
Ø      If such change affects the future years then future effects too.

WHEN CHANGES NOT AMOUNTS TO CHANGE IN ACCOUNTING POLICIES
Ø      Adoption of accounting policies for events or transaction that differ in substance form previously occurring events or transaction.
Ø      Adoption of New accounting policy for events or transactions which doesn’t occur previously or that was not material.

Eg: Change in valuation of Inventory Method is not change in polices, if previously followed method, inventory was insignificant in overall context of enterprises


FUNDAMENTAL ACCOUNTING ASSUMPTION

Their acceptance is underlie thus no disclosure is required if followed but if not than DISCLOSURE IS NECESSARY

GOING CONCERN
CONSISTENCY
ACCURAL
Assumed that Business will Continue for FORSEEABLE FUTURE
Assumed that POLICES ARE SAME IN YEAR TO YEAR
Assumed that REVENUE & COST ARE accounted as when THEY ARE EARNED OR INCCURED not necessary in CASH.


OTHERS:

CAN DIFFERENT ACCOUNTING POLICES CAN BE APPLY FOR SIMILAR ITEMS ?

YES

After taking into Consideration type & nature of items



Shared BY PAPPU MISHRA 
CA FINAL STUDENT



Posted at www.taxmannindia.blogspot.com
Now www.taxmannindia.blogspot.com would be www.taxpertindia.blospot.com by 22nd Nov 2009.
Get Free Quality SMS updates from my blog on your MOBILE:http://labs.google.co.in/smschannels/subscribe/ca_taxmannindia
OR
Send a message JOIN ca_taxmannindia to 9870807070 thru ur mobile nd receive updates

No comments:

Related Posts Plugin for WordPress, Blogger...

whos.amung.us

  © Blogger template The Business Templates by Ourblogtemplates.com 2008

Back to TOP