ACCOUNTING STANDARD

• THE INSITUTE OF CHARTED ACCOUNTS OF INDIA

RECOGNIZING THE NEEDS RO HARMAONS THE
DIVERSE ACCOUNTING POLICIES AND
PRACTICIES (ACCOUNTING STANDARD BOARD)
ON 21 APRIL 1977
• AS-1 DISCLOSER OFACCOUNTING POLICIES –
ACCOUNTING POLICIES REFER TO SPECIFIC
ACCONTING PRINCIPLE AMD THE METHOD OF
APPLYING THOSE PRINCIPLE OF FINANCIAL
STATEMENT
 AS-2
• VALUATION OF INVENTROIES
AS-3 = CASH FLOW STATEMENT- CASH FLOW
STATEMENT IS ADDITIONAL INFORMATION TO
USER OF FINANCIAL MANAGEMENT
AS-4 = CONTINGENCIES AND EVENTS OCCURING
AFTER THE BALANCE SHEET DATE-= BASED ON
ACCURAL BASIS OF ACCOUNTING
AS-5 = NET PROFIT OR LOSS FOR THE PERIOD PRIOR
PERIOD ITEMS CHANGE IN ACCOUNTING
POLICIES
• AS-6 = DEPRECIATION ACCOUNTING – DEPRECIATION IS
A MEASURES OF WEARING OUT CONSUMPTION OR
OTHER LOSS OF VALUE OF A DEPRECIABLE ASSET
ARISING FROM THE PASSAGE OF THE TIME
• AS-7 = CONSTRUCTION CONTRACT
• AS-8= ACCOUNTING FOR RESEACH AND DEVELOPMENT
(MERGED NTO AS-26 ON INTANGIABLE ASSETS)
• AS-9 = REVENUE RECOGNITION - HOW TO REVENUE
RECOGNINIZE AND IN PROFIT AND LOSS ACCOUNT
AND ALSO STATES THE CRICUMTANCES (INFLOW OF
THE CASH)
• AS-10 ACCOUNTING FOR FIXED ASSETS
• AS=11 THE EFFECT CHANGER IN FOREIGN ECHANGE
RATE = EFFECT OF CHANGES IN FROREIGN ECHANGE
RATE SHALL BE APPLICABLE IN RESPECT OF
ACCOUNTING PERIOD ON OR AFTER 1 APRIL 2004
AND ITS MANDATORY IN NATURE
• .1. AMOUNT EXCHANGE DIFFERENCE INCLUDE IN NET
PROFIT OR NET LOSS
• 2 AMOUNT ACCUMULATED IN FROEIGN EXCHAHE
TRANSCIATION
• 3.RECONCILLIATION OPEANING AND CLOSING
BALANCE
• AS-12 = ACCOUNTING FOR GOVERNMENT GRANT
• AS-13 = ACCOUNTING FOR INVESTMENTS - A DEALS
WITH ACCOUNTING FOR INVESTMENT IN THE
FINANCIAL STATEMENT
• AS-14-ACCOUNTING FOR AMALGAMATION –IT DEALS
WITH ACCOUNTING TO BE MADE IN THE BOOKS OF
TRANSFREE COMAPANY CASE OF AMALAGAMATION ,
NOT ABLIACBLE IN CASE OF ACQUISITION OF SHARES
OF ANOTHER COMPANY ( AND THE ACQUIRES
COMAPANY IS NOT DISLOVE)
• 1 PURCHASE METHOD
• MERGER OF POOLING AND INTREST METHOD
• AS-15 EMPLOYEE BENEFITS - ONCE REVICED BY ICAI
• AS-16= THE OBEJACTIVE OF THE ACCOUNTING
STANDARD TO PRESCRIBE THE TREATMENT OF
BROWWING COST (INTREST + OTHER COST) IN
ACCOUNTING WHETHER THE INTREST AND OTHER
COST BORROWING COST RELATED TO A QUALIFYING
ASSETS MUST BE CAPITALISED INTO THECOST OF THAT
ASSETS RATHER THAN TRANSFERRING IT INTO THE
PROFIT AND LOSS ACCONTING
• (QUALIFYING ASSETS IS AN ASSET WHICH TAKE A
PERIOD OF 12 MONTHS OR MORE TO BE
CONSTRUCTED OR MANUFACTURED LONGER
• AS-17 = SEGMENT REPORTING
• AS-18 = RELATED PARTY DISCLOSURE SOMETIME
BUSINESS TRANSCATION BETWEEN RELATED
PARTIES LOSE THE FEATURE AND THE
CHARACTERSTICS OF ARMS LENGTH OF
TRANSCATION
• AS-19 ACCONTING FOR LEASES
• AS-20 = EARNING PER SHARE
• EPS = EARNING AVAILIABLE FOR EQUITY SHARE
HOLDER / WEIGHTED AVERAGE NUMBER OF
COST
• AS-21 = CONSOLIATED FINANCIAL STATEMENT –
THE OBJECTIVE OF AS-21 TO SHOW THE
SUBSIDIARY OR SINGLE ENITY FINANCIAL
STATEMENT AS PARENT , IN OTHER WORD THE
HOLDING COMAPANY AND OWN COMAPANY IS
CALCULATED AS A SINGLE ENITY
• AS-22 =ACOUNTING FOR TAXES AND INCOME
• AS- 23 = ACCONTING FOR INVESTMENTS
INASOCIATION INCONSOLIATED FINANCIAL
STATEMENT
• AS-24 = DISCONTINUING OPERATION –
• AS 25 = INTERIM FINANCIAL REPORTING (IFR)
INTEREIM FIANCIAL REPORTING
AS-26= INTANGIABLE ASSETS
AS 27 = FINANCIAL REPORTING OF INTREST IN JOINT
VENTURE = DEFINED AS A CONTRUCTUAL
ARRANGEMENT (JOINT CONTROL)
AS- 28 = IMPAIRMENT OF ASSETS = MEANS WEAKNESS
OF ASSETS WHEN THE VALUE OF AASSETS DECREASE
IT MAY BE CALLED IMPAIRMENT
• AS 29- PROVISIONS CONTIGENT LIABILTIES
AND CONTIGENGENT ASSETS =
• AS – 30 FINANCIAL INSTRUMENTS
RECOGNITION AND MESUREMENT ISSUED BY
COUNCIL OF THE INSTITUDE OF CHARTERED
ACCOUNTS OF INDIA COMES IN EFFECT OF
THE INSITUTE OF CHARTERED ACCOUNTABLES
• AS-31 FINANCIAL INSTRUMENT
 INFLATION IN ACCOUNTIG
WHEN THE PURCHASING POWER MONEY GOES DOWN
PRICE ARE CONSTINUSELY RISING IN THE COMMEDITIES
GOODS WHILE THE ACCOUNT ARE MAINTAIN IN
HISTROCIAL COST ONLY THUS IMPACT OF INFLATION IN
FINANCIAL CONDITION ALSO OF A BUSINESS
INCREASINGLY FELT IN VIEW OF THE FAST THEN THE
ACCOUNTS ARE PREPERARED ON THE BASIC OF
HISTROCIAL COST ONLY IN SUCH CIRUMTANCE ACCOUNTS
ARE REQUIRED TO MAINTENANCE ON PRESEND VAUE
BASED
INFLATION ACCOUNTING IS A SYSTEN OF ACCOUNTING
WHICH SHOW THE EFFECTS OF CHANGING COST AN D
PRICE NO AFFAIRS OF A BUSINESS DURING AN
ACCOUNTING PERIOD
• THE DIFFERENT WAYS THROGH WHICH
FIANCIAL ACCOUNTS CAN BE ADJUSTED FOR
CHANGING PRICE INFLATION
• INFLATION EFFECT IN FINANCIAL STATEMENT
IMPLIED ASSUMPTION = THE VALUE OF MONEY
WILL REMAIN CONSTENT BUT THE VALUE
OF MONEY HAS BEEN FLACUTING VIOLENTLY
MOST OF THE PART OF THE WORD
• REVENUE STATEMENT –SOME EXPENDITURE
ARE SHOWN AT CURRENT PRICE LEVEL EG.
WAGES ,RENT LIGHTING ,CHARGE ETC
• BALANCE SHEET – ACQUISITION COST OF
VARIOUS ASSETS PURCHASED AT DIFFERENT
TIME INTERVAL ARE ADDED TOGETHER SOME
ASSETS ARE SHOWN AT CURRENT PRICE LEVEL
• EFFECTS OF PRICE LEVEL CHANGE ON
ACCOUNTS
• PROFIT AND LOSS ACCOUNT WILL SHOW
MORE PROFIT THAN ACTUAL AS
DEPRICATION IS UNADEQUATE AND
CLOSING STOCK IS VERY HIGH
• MORE AMOUNT OF INCOME TAX AND
DIVIDEND
• BVALANCE SHEET NOT DFESCRIBE TRURE
AND CLEAR POINT
 LIMITATION OF HISTORICAL
ACCOUTING
• HISTROCIAL ACCOUNTS DO NOT CONSIDER THE
UNRELIZED HOLDING GAINS ARISING FROM THE
RISE IN THE MENOTORY VALUE OF THE ASSETS
DUE TO INFLATION
• THERE IS NOT ANY PROVISION FOR
REPLACEMENT COST
• UNDER HISTROCIAL ACCOUNTING INVENTROIES
ACQUIRED AT OLD PRICE ARE MATCHED
AGAINST REVENUE MAYBE HOLDING GAINS
AND OPERATING GAINS ARE DIFFER
• TECHNIQUE OF INFLATION ACCOUNTING
• THERE ARE CURRENT PURCHASING POWER
(CPP) METHOD BASED ON CHANGE IN
GENRAL PROICE LEVEL CHANGE
• CURRENT COST ACCOUNTING MEHOD BASED
ON CHANGING IN PRICE SPECIFIED ASSETS
 CURRENT PURCHASING POWER
• INTHIS METHOD ALL TIMES IN FINANCIAL
STATEMENT ARE RESTARTED INTERMS OF A
CONSTENT UNIT OF MONEY. EXAMPLE IN TERM
GENRAL PURCHASING POWER IN OTHER TO
MEAN CHANGE IN THE PRICE LEVEL AND IN
CORPORATE CHANGE IN THE FANANCIAL
STATEMENT WE USED GENRAL PRICE INDEX THE
INDEX IS USED TO CONVERT THE VARIOUS
TERMS IN THE FIANANCIAL STATEMENT , CPP
METHOD INVOLVE THE REFURNSHING OF
HISTROCIAL FIGURE AT CURRENT PURCHASING
POWER
 CURRENT COST ACCOUNTING
THIS METHOD IS AN ALTERNATIVE TO THE CURRENT
PURCHASING POWER METHOD ,`
THE CURERENT COST ACCOUNTING METHOD MATCHES
CURRENT REVENUES WITH THE CURRENT COST OF
THE RESOURCE WHICH ARE CONSUMED IN
THEM,CHANGE IN GENERAL PRICE LEVEL ARE
MEASURED BY THE INDEX NUMBER SPECIFIED PRICE
CHANGE OCCUR , IF PRICE OF PARTICULAR ASSETS
CHANGE WITHOUT ANY GENRAL PRICE CHANGE ,
UNDER THIS METHOD ASSETS ARE VALUED AT
CURRENT COST, WHICH IS THE COST AT WHICH ASSETS
CAN BE REPLACED ON A DATA
 USE OF FIANCIAL ACCOUNTING
• FINANCIAL ACCOUNTING (FI) THE FUNCTION
ALLOWS THE RESSTATE THE G/L ACCOUNTTS
AND OPEN PAY ABLE ANDRECOVER FOR
INFLATION GENERAL AND SPECIFIED PRICE
LEVEL CHANGE
• ASSETS ACCOUNTING -- FI-A THIS COMPONENT
UNABLE TO REVALUE THE AESTS TO TAKE INTO
THE ACCOUNTS THE EFFECT OF INFLATION
• MATERIAL MANAGEMENT- IN THIS
COMPONENTS YOU CAN REVALUE RATE YOUR
MATERIAL ACCOUNTING TO VARIOUS PRINCIPLE
 DEFINATION OF REPONSIABLITY
ACCOUNTING
• ACCORDING TO CIMA LONDON THE RESONSIBLITY
ACCOUNTING IS SYSTEM OF MANAGEMENT
ACCOUNTING UNDER WHICH ACCOUNTABLITY IS
ESTABLISHED ACCORDING TO RESPONSIABLITY
DELAGETED TO VARIOUS LEVELS OF MANAGEMENT
AND MANAGEMENT INFORMATION AND REPORTING
SYSYTEM TO GIVE FEEDBACK IN OF THE DELEGATED
RESONSABILTY UNDER THE SYSTEM DEVIATION OF
UNIT AND ORGANIZATION UNDER AUTHORITY IN A
PERSON DEVELOP A RESPONSABILTY CENTRE AND
IN INDIVAUALLY FOR THERE PERFORMANCE
 OBJEACTIVE OF RESONSABLITY
ACCOUNTING
• THE OBJEACTIVE OF RA ARE US FELLOW
OVERALL ORGANIZATION GOALS ARE BROKEN DOWN
INTO SMALL GOAL EACH OF THE SMALL GOAL IS
MAINATAIN FOR BETTER ACHEIVMENT OF
RESPONSABLITY CENTRE WITH THE ATTACHED
RESPNSABILTY EACH RESPONSIBILITY CENTRE IS TIED
UP THERE IS AUTHORITIES SO THAT RESPONSIBILTY
CAN BE DISCHARGE
AT THE END OF PERIOD EVALUATION IS DONE OF THE
PERFORMANCE OF EACH RESPONSIABILTY CENTRE
AND COMPARISM OF THE PERFORMANCE IS DONE
WITH THE PRE DETERMINE TRAGET
 THE CENTRE OF RESPONSABILTY
ACCOUNTING
• REVENUE CENTRE
• COST CENTRE
• INVESTMENT CENTRE
• PROFIT CENTRE
REVENUE CENTRE BASICALLY MARKETING SALES UNITS THAT DO NOT
HAVE ANY AUTHORITY TO FIX THE SELLING PRICE OF THE
PRODUCT
ARE NOT CHANGE THE COST
SUITIABLITY = WHEN A WORKING HORIZONTAL INVOLVE SETTING
UP MULTIPLE SALES
COST CENTRE = THEY ARE ALSO KNOW AS EXPENSED CENTRE
SUTIBILTY= WHEN THE WORKING OF THE UNIT INVOLVES
PRODUCTION OF ASINGLE PRODUCT
• WHEN THE OUTPUT CANNOT BE MEASURED IN
ABSOLUTE FINANCIAL STATUS
• INVESTMENT CENTRE= IT A RESONSIABLE
CENTRE IN WHICH THE MANAGE IS HELD
RESPONSABILTY NOT ONLY FOR REVENUE &
EXPENSES BUT FOR THE INVESTMENT MADE IN
ASSETS THE INCOME ON THE RELATED
INVESTMENT BOTH TAKEN DECISION FOR THE
REVENUE AND COST
• MEASURE – RETURN ON INVESTMENT
• FULL AUTONOMY OF MANAGERS
 PROFIT CENTRE
• APROFIT CENTRE IS SUBUNIT OF AN
ORGANIZED TO WHICH BOTH REVENUE AND
COST CAAN BE ASSIGNED SO THAT THE
PROFITABILTY NEASURED WHWN A
RESOPNSABILITY CENTRE OF FINANCIAL
PERFORMANACE IS MEASURED IN
ABOULUTE TERM
HUMAN RESOURCE ACCOUNTING
• WHY NOT COMPANY SHOW HRA BECAUSE ITS
FAVORABLE
• DEFINATION OF HUMAN RESOURCE
MANAGEMENT - AMERICAN ACCOUNTING
ASSOCIATION - HRA DEFINE AS
IDENTIFICATION OF MEASURING THE DATA
AND COMMUNICATING THESE DATA BY
INTRESTING PARTIES
 MODELS
• 1) COST OF HRA (HISTROCIAL COST METHOD)
ACCORDING TO THIS FIRST AUMULATED ALL THE
EXPENTS AND MENTION ON BALANCE OF SHEET AND
WRITE OF AS A DEPREICATION TIME SAME AS
EXAMPLE – RECURITMENT COST - 10000 per pr
TRAINING COST - 15000
LIFE (USEFUL ) - 20 YRS
NUMBER OF EMPLOYEE– 100
TOTAL HISTROCIAL COST -25000 X 100 = 2500000
2500000 / 20 YRS = 350000 PER YEAR
 REPLACEMENT COST APPROACH
• 1 INDIVIDUAL REPLACEMENT
• 2 POSTIONAL REPLACEMENT

3 OPPORTUNITY COST APPROACH

EMPLOYEE

20000 30000 10000

 4. DISCOUNTED VALUE
APPROACH(LIEU AND SHWARTS )
• THIS APPROACH IS BASED ON RETURN OF
THE INVESTMENT
FUTHURE VALUE TO CURRENT VALUE
Example – according to this approach a
EMPLOYEE hire as a Asst professor so the
college will consider always as same post
and calculate the value
 5. STOCHASTIC SERVICE REWARD
APROACH
• YERS ASST PROF
1 TO 5 50000 / 60000
6 TO 15 ASSOCIATE – 70,000 / 90000
16 TO 30 PROFESSOR 120000 / 150000
(6) GROUP APROACH (JACUE 4 LAU MODEL)
COST APPROACH =SKILLED 100 WORKERS
RECURITMENT COST 200000 PER worker
TRANING COST - 180000 PER WORKER
• UNSKILLED 200 WORKERS
• RC – 10000
• TC- 20000
• USEFULL SKILLED 20 YRS AND 30 YRS
• SOLUTION
SKILLED = 38000 X 100 = 3800000
UNSKILLED = 30000 X 100 = 3000000
AMOTIZATION OF HISTROCIAL COST
SKILLED 3800000 / 20 YRS
UNSKILLED = 3000000