Accounting Policy : Specific accounting treatment and method of applying those principles in preparation and presentation in FS.
Areas where different a/c policies are adopted : Valuation of Inventory(AS-2), Depression(AS-6), Construction Exp (AS-7), Revenue Recognition(AS-9), Valuation of Fixed Assets(AS-10) etc......
Policy adopted should be
- Disclosed
- part of FS
- at one place
- Disclosed
- part of FS
- at one place
Changes in AP
- Required by AS
- Required by Law
- For better Prep and presentation of FS
- Required by AS
- Required by Law
- For better Prep and presentation of FS
Consideration in selection of AP
Primary Consideration : True & Fair view of FS
Secondary Consideration :
- Prudence
- Substance over Form
- Meteriality
- Prudence
- Substance over Form
- Meteriality
Fundamental Accounting Assumptions
- Going Concern : Neither intention nor necessity to liquidation or curtailing meterially the scale of operation
- Consistency : AP Should be consistent over the number of period
- Accrual : Recognise as they earned or incurred.
- Consistency : AP Should be consistent over the number of period
- Accrual : Recognise as they earned or incurred.
