Accounting is the art of recording transactions in the best manner possible, so as to enable the reader to arrive at judgments/come to conclusions, and in this regard it is utmost necessary that there are set guidelines. These guidelines are generally called accounting policies. The intricacies of accounting policies permitted Companies to alter their accounting principles for their benefit. This made it impossible to make comparisons. In order to avoid the above and to have a harmonised accounting principle, Standards needed to be set by recognised accounting bodies. This paved the way for Accounting Standards to come into existence. Accounting Standards in India are issued By the Institute of Chartered Accountant of India (ICAI). At present there are 30 Accounting Standards issued by ICAI.
Objective of Accounting Standards
Objective of Accounting Standards is to standarize the diverse accounting policies and practices with a view to eliminate to the extent possible the non-comparability of financial statements and the reliability to the financial statements. The institute of Chatered Accountants of India, recognizing the need to harmonize the diversre accounting policies and practices, constituted at Accounting Standard Board (ASB) on 21st April, 1977.
Compliance with Accounting Standards issued by ICAI
Sub Section(3A) to section 211 of Companies Act, 1956 requires that every Profit/Loss Account and Balance Sheet shall comply with the Accounting Standards. 'Accounting Standards' means the standard of accounting recomended by the ICAI and prescribed by the Central Government in consultation with the National Advisory Committee on Accounting Standards(NACAs) constituted under section 210(1) of companies Act, 1956.
Accounting Standards Issued by the Institute of Chatered Accountants of India are as below: AS 1 - Disclosure of accounting policies:
AS 2 - Valuation Of Inventories:
AS 3 - Cash Flow Statements
AS 4 - Contingencies and events Occurring after the Balance sheet Date AS 5 - Net Profit or loss For the period, Prior period items and Changes in accounting Policies. AS 6 - Depreciation accounting.
AS 7 - Construction Contracts.
AS 8 – research and Development
AS 9 - Revenue Recognition.
AS 10 - Accounting For Fixed Assets.
AS 11 - The Effect of Changes In Foreign Exchange Rates.
AS 12 - Accounting For Government Grants.
AS 13 - Accounting For Investments.
AS 14 - Accounting For Amalgamation.
AS 15 - Employee Benefits.
AS 16 - Borrowing Cost.
AS 17 - Segment Reporting.
AS 18 - Related Party Disclosures.
AS 19 - Accounting For Leases.
AS 20 - Earning Per Share.
AS 21 - Consolidated Financial Statement.
AS 22 - Accounting For Taxes on Income.
AS 23 - Accounting for Investment in associates in Consolidated Financial Statement. AS 24 - Discontinuing Operation.
AS 25 - Interim Financial Reporting.
AS 26 - Intangible assets.
AS 27 - Financial Reporting on Interest in joint Ventures.
AS 28 - Impairment Of assets.
AS 29 - Provisions, Contingent, liabilities and Contingent assets. AS 30 - Financial instrument.
AS 31 - Financial Instrument: presentation.
AS 32 - Financial Instruments, Disclosures and Limited revision to accounting standards. Meanings:
Disclosure of Accounting Policies: Accounting Policies refer to specific accounting principles and the method of applying those principles adopted by the enterprises in preparation and presentation of the financial statements. Valuation of Inventories: The objective of this standard is to formulate the method of computation of cost of inventories / stock, determine the value of closing stock / inventory at which the inventory is to be shown in balance sheet till it is not sold and recognized as revenue. Cash Flow Statements: Cash flow statement is additional information to user of financial statement. This statement exhibits the flow of incoming and outgoing cash. This statement assesses the ability of the...