WHAT ARE ACCOUNTING STANDARDS

• According to American association of accounting “Accounting standards

are made of conduct, imposed by customs, law or professional body for
the benefit of public accounts generally”.

• Accounting standards are the written statements consisting of rules and

guidelines, issued by the accounting institutions, for the preparation of
uniform and consistent financial statements and also for other disclosures
affecting the different users of accounting information.
ACCOUNTING STANDARD – 1 DISCLOSURE OF
ACCOUNTING POLICIES

• Issued on 1979.
• The Standard deals with the disclosure of significant accounting policies
followed in preparing and presenting financial statements.
• The accounting policies followed vary from enterprise to enterprise.
Disclosure of significant accounting policies followed is necessary if the
view presented is to be properly appreciated.
ACCOUNTING STANDARD – 2 VALUATION OF
INVENTORIES
• Issued on June 1981 and has become mandatory on or after 1st April 1999.
• The objective of this standard is to formulate the method of computation of cost of
inventories/stock, to determine the value of closing stock/ inventory at which, the inventory
is to be shown in balance sheet till its’ sale and recognition as revenue.
• 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.
Valuation of inventory:
• Inventories should be valued at the lower of cost and net realizable value.
ACCOUNTING STANDARD – 3 CHANGES IN FINANCIAL POSITION

• Issued on June, 1981.

• Revised in 1997 as Cash Flow Statement [CFS] and has become mandatory on or after
1st April 2002.
• Cash flow statement, as it's commonly referred to, is a financial statement that
summarizes the amount of cash and cash equivalents entering and leaving a company.
• The Statement deals with the provision of information about the historical changes in
cash and cash equivalents of an enterprise by means of a cash flow statement which
classifies cash flows during the period from operating, investing and financing
activities.
ACCOUNTING STANDARD – 4 CONTINGENCIES AND
EVENTS OCCURRING AFTER BALANCE SHEET DATE
• Issued on November 1982.
• Later it was revised and made mandatory for all enterprises in respect of accounting
periods commencing on or after April 1995.
• This Statement deals with the treatment in financial statements of
(a) contingencies , and
(b) events occurring after the balance sheet date.
• A contingency is a condition or situation, the ultimate outcome of which, gain or
loss, will be known or determined only on the occurrence, or non-occurrence, of
one or more uncertain future events.
ACCOUNTING STANDARD – 5 NET PROFIT OR LOSS FOR THE
PERIOD, PRIOR PERIOD ITEMS AND CHANGES IN ACCOUNTING
POLICIES

• Issued on November 1982.

• It has become mandatory on or after April 1st 1996.
• The objective of this Statement is to prescribe the classification and disclosure of
certain items in the statement of profit and loss so that all enterprises prepare and
present such a statement on a uniform basis.
ACCOUNTING STANDARD – 6 DEPRECIATION
ACCOUNTING
• Issued on November 1984.
• Revised later in the year 1994 and has become mandatory on or after 1 st April 1995.
• This Statement deals with depreciation accounting and applies to all depreciable assets.
• Depreciable assets are assets which
(i) are expected to be used during more than one accounting period; and
(ii) have a limited useful life; and
(iii) are held by an enterprise for use in the production or supply of goods and services,
for rental to others, or for administrative purposes and not for the purpose of sale in the
ordinary course of business.
THANK YOU
REFERENCE – Thakur Publications