Accounting

Standards
The laws/framework behind
Financial Accounting
Mandatory for Companies
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Definition
Written policy documents- issued by
Institute of chartered Accountants of India
Cover aspects of :

Treatment
Recognition

Presentation

Measurement

Disclosure

Objectives (True & Fair View)

Uniformity
Comparability
Standardized set of accounting policies

More reliability

Benefits

Reduction in Confusion

Easy comparison

Disclosure of all informations

( including not required by statute)

Limitations

Alternative solutions ( difficult choice between

standards)

Trend towards rigidity

statute

Accounting standards cannot override the

Overview
Accounting Standards

Issued by ICAI

Issued standards-32

formulated by ASB set up on 21st

April,1977
In force standards-31
Notified Standards : 29 ( by MCA)

Overview

A draft is prepared of accounting standards

after comments from experts of various
fields.

Advisory committee: NACAS

List of Accounting Standards

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
AS-5 : Net Profit or Loss for the Period, Prior Period Items and
Changes in Accounting Policies
AS-6 : Depreciation Accounting
AS-7 : Accounting for Construction Contracts
AS-9 : Revenue Recognition
AS-10 : Accounting for Fixed Assets
AS-11 : The Effects of Changes in Foreign Exchange Rates
AS-12 : Accounting for Government Grants
AS-13 : Accounting for Investments
AS-14 : Accounting for Amalgamations
AS-15 : Employee Benefits
AS-16 : Borrowing Costs

List of Accounting Standards

AS-17 : Segment Reporting
AS-18 : Related Party Disclosures
AS-19: Leases
AS-20 : Earnings per Share
AS- 21: Consolidated Financial Statements
AS-22 : Accounting for Taxes on Income
AS-23 : Accounting for Investments in Associates in
consolidated financial statements
AS-24 : Discontinuing Operations
AS-25 : Interim Financial Reporting
AS-26 : Intangible Assets
AS-27 : Financial Reporting of Interests in Joint Ventures
AS-28 : Impairment of Assets
AS-29 : Provisions, Contingent Liabilities & Contingent Assets
AS-30 : Financial Instruments: Recognition & Measurement
AS-31 : Financial Instruments: Presentation
AS-32 : Financial Instruments: Disclosures

Notes

AS-8 Accounting for research &

development withdrawn & merged with
AS-26 Intangible assets

AS-30,31 & 32 Not notified by Ministry of

corporate Affairs

Notes
Applicability of Accounting Standards depends on
Level of Companies:

Note : Level 1 & 2 : Small & Medium Sized Companies

Notes
Level 1 :
a. Turnover(excl other income) of 50 Crores or above
b. Borrowings (incl deposits): 10 cr or more
c. Listed companies or are in process of listing.
. Level 2 :
a. Turnover(excl other income) of 40 lakhs-50Cr
b. Borrowings (incl deposits): 1Cr 10 Cr.
. Level 3 :
Companies other than in Level 1 &2

Notes : All Accounting standards are compulsory for

Level 1 Companies.
AS-3,17,18,24 (only for Level 1 cos.)

Accounting Standard-1
Disclosure of Accounting Policies
accounting policies to be fully disclosed in the
notes to accounts
Selection of policies through Prudence, Substance over Form & Materiality
No disclosure of Fundamental Accounting assumptions
(if followed)

Accounting Standard-2
Valuation of Inventories

Valuation Cost/NRV whichever is lower

(based on Conservatism Concept)

Accounting Standard-2
Valuation to be applied on item by item basis.

a.
b.
c.

Cost of inventory:
Purchase cost
Cost of conversion
Cost of bringing the goods to the present
location of the factory

Net Realizable Value : Realizable Value

Selling Expenses

Accounting Standard-3
Cash Flow Statements
Statement showing movement of Cash in & out of the
business
through three activities:

Operating Activity

Financing Activity

Investing Activity

Accounting Standard-9
Revenue Recognition- when work
completed
Recognition of revenue arising in the course of ordinary
activities.
Sale (recognized as revenue)
Complete Sale Risks & Rewards transferred
to buyer
(Delivery done)

Consideration fixed
(guarantee of receipt)

Amendments
To bring uniformity in Accounts round the world,
International Financial Reporting Standards are being
applied worldwide.
India not applied IFRS till now, so have issued
Converged AS- IND AS
Applicable: from 1st April,2016
Listed Cos. and unlisted companies having
net worth in excess of Rupees 500 crore

MCQs
Q.1. AS-2 is on:

MCQs
Q.2. Accounting Standards

MCQs
Q.3. As per AS-3, which of the following, should be classified as
an investing activity?

MCQs
Q.4. Select the correct equation:

MCQs
Q.5. Revenue is generally considered as
realized.

MCQs
Q.6. The accounting standards are mandatory for
:

MCQs
Q.7. Provision for bad debts is the application of
which of the following concept convention

MCQs
Q.8. As per AS-1, the fact need not be disclosed
in the financial statements if the following
concept is followed.

MCQs
Q.9. Economic life of an enterprise is split into
the periodic interval as per

MCQs
Q.10. Selection of Accounting policies
appropriation is not based on :