What is Accounting?
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 harmonized accounting principle, Standards needed to be set by recognized accounting bodies. This paved the way for Accounting Standards to come into existence.
Accounting Standards in India are issued By the Institute of Chartered Accountants of India (ICAI). At present, there are 30 Accounting Standards issued by ICAI.
Objective of Accounting Standards
The objective of Accounting Standards is to standardize 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 Chartered Accountants of India, recognizing the need to harmonize the diverse 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 recommended 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.
Indian Accounting Standards Issued by the Institute of Chartered Accountants of India are as below:
- Disclosure of accounting policies
- Valuation Of Inventories
- Cash Flow Statements
- Contingencies and Events Occurring after the Balance sheet Date
- Net Profit or loss For the period, Prior period items and Changes in Accounting Policies
- Depreciation accounting
- Construction Contracts
- Revenue Recognition
- Accounting For Fixed Assets.
- The Effect of Changes In Foreign Exchange Rates
- Accounting For Government Grants
- Accounting For Investments
- Accounting For Amalgamation
- Employee Benefits
- Borrowing Cost
- Segment Reporting
- Related Party Disclosures
- Accounting For Leases
- Earning Per Share
- Consolidated Financial Statement
- Accounting For Taxes on Income
- Accounting for Investment in Associates in Consolidated Financial Statement
- Discontinuing Operation
- Interim Financial Reporting
- Intangible assets
- Financial Reporting on Interest in Joint Ventures
- Impairment Of assets
- Provisions, Contingent, liabilities and Contingent assets
- Financial instrument
- Financial Instrument presentation
- Financial Instruments, Disclosures and Limited revision to accounting standards