Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

Accounting statndard

PRAKASH BHATT (ASSISTANT MANAGER) (28 Points)

06 April 2012

I want to know about Accounting Standards. What it is & how it can be useful in business / service ??

Please help me by answering this. Plz........

Reply
Follow
Share

1 Replies

Giridhar S Karandikar (Team Lead) (7548 Points)
Replied 06 April 2012

Accounting standards are issued by the ICAI. there are various Accounting Standrds issued by the Institute till date on various purposes. These AS's lay down the procedure for accounting in the books of accoounts. What should be included in the costs & what should be included, similarly how revenue is to be recognised & when it should be recognised.

for instance AS-" Inventories says down that all the costs incurred on bringing the inventories to their present location & condition is required to be added to teh costs of teh inventories. in that again any taxes recoverable from the tax authorities, trade discounts should be excluded from the cost. Hence the organizaion while accounting for their inventories should account for by following the procedure explained above.

Similarly AS-9 relating to revenue recognition, says that revenue should be recognized when the property in the goods alongwith the risks & rewards is transferred from the seller to the buyer. also if there are un certainities in recognizing the revenue at the time of the sale then revenue recognition should be postponed & should be recognized in the period when it is actually received.

thus there are various AS's whihc explain the procedure for accounting. Given below are some of teh important AS''s that are requried to be adhered:

AS-1 Disclosure of Accounting Policies

AS-2 Accounting for Inventories

AS5-Net Profit or loss for the period/prior Period Items, Changes in accounting policies & extimates

AS4 Cotingencies & Events occuring after the Balance Sheet Date

AS-6 Depreciation Accounting

AS-9 Revenue Recognition

AS-10 Accounting for Fixed Assets

AS-12 Accounting for Government Grants

AS-16 Borrowing Costs

AS-22 Accounting for Taxes

The above AS's explain the procedures that are required to be followed stated in the AS's.