Page 54 - DMGT104_FINANCIAL_ACCOUNTING

Financial Accounting

Notes 25. The disclosure of the significant accounting policies as such should form part of the financial
statements and the significant accounting policies should normally be disclosed in one
place.
26. Any change in the accounting policies which has a material effect in the current period or
which is reasonably expected to have a material effect in later periods should be disclosed.
In the case of a change in accounting policies which has a material effect in the current
period, the amount by which any item in the financial statements is affected by such
change should also be disclosed to the extent ascertainable. Where such amount is not
ascertainable, wholly or in part, the fact should be indicated.

27. If the fundamental accounting assumptions, viz. Going Concern, Consistency and Accrual
are followed in financial statements, specific disclosure is not required. If a fundamental
accounting assumption is not followed, the fact should be disclosed.
Self Assessment

Fill in the blanks:
3. Statements of Accounting Standards (AS 1) Disclosure of Accounting Policies deals with
the disclosure of significant accounting policies followed in preparing and presenting
…………………….
4. …………………… is made for all known liabilities and losses even though the amount
cannot be determined with certainty and represents only a best estimate in the light of
available information.

3.3 Summary

 Accounting Standards is a set of certain generally accepted rules, principles, concepts and
conventions issued by the Institute of chartered Accountants of India in consultation with
other International Accounting bodies.
 The basic objective of Accounting Standards is to remove variations in the treatment of
several accounting aspects and to bring about standardization in presentation.

 The accounting policies refer to the specific accounting principles and the methods of
applying those principles adopted by the enterprise in the preparation and presentation
of financial statements.

3.4 Keywords

Accounting Policies: The accounting policies refer to the specific accounting principles and the
methods of applying those principles adopted by the enterprise in the preparation and
presentation of financial statements.
Accounting Standards: It is a set of certain generally accepted rules, principles, concepts and
conventions issued by the Institute of chartered Accountants of India in consultation with other
International Accounting bodies.
Going Concern: The enterprise is normally viewed as a going concern, that is, as continuing in
operation for the foreseeable future.
Materiality: Financial statements should disclose all “material” items, i.e. items the knowledge
of which might influence the decisions of the user of the financial statements.

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