1. DISCLOSURE OF
ACCOUNTING POLICIES

2. ACCOUNTING POLICIES
Accounting policies are those
policies refer to specific
accounting principles and the
method of applying those
principles adopted by the
enterprise in preparation and
presentation of the financial
statements .

3. Methods of Depreciation
 Straight line method
 WDV method
Conversation or translation of foreign currency item
Conversation or translation of foreign currency item
Average rate
Average rate
TT buying rate
TT buying rate
Valuation of inventories
Valuation of inventories
FIFO
FIFO
Weighted average
Weighted average
Standard cost
Standard cost
Retail method
Retail method

4.  Valuation of Investment
 Current Investment
 Long term Investment
 Investment Properties
 Valuation of Fixed Assets
 Valuation of Fixed Assets
Assets acquired on hire purchase terms
Assets acquired on hire purchase terms
Cost of jointly held assets
Cost of jointly held assets
Fixed assets acquired at consolidated price
Fixed assets acquired at consolidated price
 Treatment of Retirement Benefits
 Treatment of Retirement Benefits
 Gratuity
 Gratuity
 Pension
 Pension

5. Treatment of Contingent Liabilities
Treatment of Contingent Liabilities
Start
NO NO
Present obligation as Possible
a result of an obligation?
obligation event
YES
YES
NO YES
Probable outflow ? Remote
NO
YES
NO (rare)
Reliable estimate ? Disclose contingent
liability Do nothing
YES
Provide

6. Fundamental Accounting
Assumptions
A. Three fundamental accounting assumptions are followed in
preparation of financial statements:
1. Going Concern :
 Financial statements prepared
 Enterprise had intention for continuing operation in
future
2. Consistency ::
2. Consistency
Practice of using same accounting policies
Practice of using same accounting policies
Improves Comparability of Financial Statement
Improves Comparability of Financial Statement
Change in Accounting Policy
Change in Accounting Policy

7. Fundamental Accounting
Assumptions
3. Accrual :
 Mercantile system only
 Ensures matching between revenue, cost and profit/loss
 Logical approach
B. Assumption as regards fundamental
B. Assumption as regards fundamental
accounting assumption ::
accounting assumption

8. Considerations in the selection of
Accounting Policies
Financial statements prepared and presented should
Financial statements prepared and presented should
represent a true and fair view..
represent a true and fair view
The major considerations governing the selection and
The major considerations governing the selection and
application of accounting policies are ::
application of accounting policies are
PRUDENCE
PRUDENCE
SUBSTANCE OVER FORM
SUBSTANCE OVER FORM
MATERIALITY
MATERIALITY

9.  PRUDENCE:
 Profits are recognized only when realized but provision is
made for all known liabilities and losses
 SUBSTANCE OVER FORM:
 SUBSTANCE OVER FORM:
Accounting transactions and events should be governed by
Accounting transactions and events should be governed by
their substance not merely by the legal form
their substance not merely by the legal form
 MATERALITY:
 MATERALITY:
Financial statements should disclose all “material” items,
Financial statements should disclose all “material” items,
which might influence the decisions of the users
which might influence the decisions of the users

10. Change in Accounting Policies
Change in Accounting Policies
 Adoption of different policies, required by statute.
 Adoption of different policies, required by statute.
For compliance with accounting standards
For compliance with accounting standards
It is considered that change would result in more appropriate
It is considered that change would result in more appropriate
presentation of financial statement
presentation of financial statement

11. As per IAS – 1, the Financial
As per IAS – 1, the Financial
Statements includes the following
Statements includes the following
Components:
Components:
A statement of Financial position (Balance Sheet)
A statement of Financial position (Balance Sheet)
A statement of Comprehensive Income (Profit and Loss
A statement of Comprehensive Income (Profit and Loss
Statement)
Statement)
A statement of Cash Flows
A statement of Cash Flows
Significant Accounting policies & other Explanatory notes
Significant Accounting policies & other Explanatory notes

12. As per US GAAP, the Financial Statements
As per US GAAP, the Financial Statements
includes the following Components:
includes the following Components:
Overall considerations included viz. Fair Presentation, Off
Overall considerations included viz. Fair Presentation, Off
setting, Comparative Information
setting, Comparative Information
An Income statement of the year showing net income and
An Income statement of the year showing net income and
comprehensive income
comprehensive income
A statement of Cash flow for the year
A statement of Cash flow for the year
A statement of changes in Stock holder’s Equity
A statement of changes in Stock holder’s Equity
Supplemental and Note Disclosure
Supplemental and Note Disclosure

13. A statement of Financial Position of the last day of the year
A statement of Financial Position of the last day of the year
Prescribes minimum structure of Financial Statements and
Prescribes minimum structure of Financial Statements and
contains guidance on related issues viz. Current Liabilities
contains guidance on related issues viz. Current Liabilities
Statements showing changes in Equity
Statements showing changes in Equity
Specific disclosure for departures from IFRS
Specific disclosure for departures from IFRS
Disclosure of critical judgements made by Management
Disclosure of critical judgements made by Management

14. BIBLIOGRAPHY

15.  Karishma Dalvi
 Kunal Anardi
 Shital Thakur
 Manish Patil
 Aparna Manjrekar
 Gaurita Maldikar