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Accounting Standards and Their Importance

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Accounting Standards and Their Importance

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  • Feb. 26, 2007
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Accounting Standards and Their Importance

AS-1: DISCLOSURE OF ACCOUNTING POLICIES
The following is the text of the Accounting Standard (AS) 1 issued by the Accounting Standards Board, the Institute of Chartered Accountants of India on 'Disclosure of Accounting Policies'. The Standard deals with the disclosure of significant accounting policies followed in preparing and presenting financial statements. AS-2: VALUATION OF INVENTORIES

A primary issue in accounting for inventories is the determination of the value at which inventories are carried in the financial statements until the related revenues are recognized. This Statement deals with the determination of such value, including the ascertainment of cost of inventories and any write-down thereof to net realizable value. AS-3: CASH FLOW STATEMENTS

Information about the cash flows of an enterprise is useful in providing users of financial statements with a basis to assess the ability of the enterprise to generate cash and cash equivalents and the needs of the enterprise to utilize those cash flows. The economic decisions that are taken by users require an evaluation of the ability of an enterprise to generate cash and cash equivalents and the timing and certainty of their generation. AS-4: CONTINGENCIES AND EVENTS OCCURING AFTER BALANCE SHEET DATE The following is the text of the revised Accounting Standard (AS) 4, 'Contingencies and Events Occurring after the Balance Sheet Date', issued by the Council of the Institute of Chartered Accountants of India. This Statement deals with the treatment in financial statements of contingencies, and events occurring after the balance sheet date. AS-5: NET PROFIT OR LOSS FOR THE PERIOD,PRIOR PERIOD AND CHANGES IN ACCOUNTING ESTIMATES The following is the text of the revised Accounting Standard (AS) 5, 'Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies', issued by the Council of the Institute of Chartered Accountants of India....