Financial statement and acoounting standard

Financial statement and acoounting standard

• 1.
  FINANCIAL REPORTING
• 2.
  Module 1 • Financialstatements – Objectives – Uses of financial statement • Accounting standards – Concept and Nature – Objectives • List of Accounting Standards
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  FINANCIAL STATEMENTS • Financialstatements are the statements showing the financial position and results of business operation at the end of the accounting period. • Traditional statements are balance sheet and profit and loss account.
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  Financial Statements A financialstatement (or financial report) is a formal record of the financial activities and position of a business, person, or other entity. Relevant financial information is presented in a structured manner and in a form easy to understand. • Balance sheet • Income statement • Statement of changes in equity, also known as equity statement or statement of retained earnings • Cash flow statement
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  Objectives of preparingfinancial statements 1. To show the position of asset or liabilities 2. To provide various information to various stakeholders 3. To present true and fair view of the business 4. To forecast earning capacity of the business 5. To assess credit worthiness of the business 6. To decide about future of the business
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  Uses of financialstatement • To owners of an entity • To management • To suppliers and creditors • To customers • To financial institutions • To employees and trade unions • To Government and other agencies • To public
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  Accounting Standards • Accountingstandards are the written statements consisting of rules and guidelines, issued by the accounting institutions, for the preparation of uniform and consistent financial statements and also for other disclosures affecting the different users of accounting information. • Accounting standards lay down the terms and conditions of accounting policies and practices by way of codes, guidelines and adjustments for making the interpretation of the items appearing in the financial statements easy and even their treatment in the books of account.
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  Nature of AccountingStandards 1. Serve as a guide to the accountants 2. Act as a dictator 3. Serve as a service provider 4. Act as a harmonizer
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  Objectives of AccountingStandards 1. For bringing uniformity in accounting methods 2. For improving the reliability of the financial statements 3. Simplify the accounting information 4. Prevents frauds and manipulations 5. Helps auditors
• 10.
  • Set ofaccounting standards notified by the Ministry of Corporate Affairs which are converged with International Financial Reporting Standards (IFRS). • These accounting standards are formulated by Accounting Standards Board of Institute of Chartered Accountants of India. • Now India will have two sets of accounting standards viz. existing accounting standards under Companies (Accounting Standard) Rules, 2006 and IFRS converged Indian Accounting Standards (Ind AS). • The Ind AS are named and numbered in the same way as the corresponding IFRS. • Basically, the Accounting standards of the ICAI are to ensure that accounts are prepared uniformly and in line with the Indian GAAPs for better understanding of the users.
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  Mandatory Accounting Standards(AS) of the ICAI, w.e.f. 1st Sep. 2014 onwards: • AS 1 Disclosure of Accounting Policies • AS 2 Valuation of Inventories • AS 3 Cash Flow Statements • AS 4 Contingencies and Events Occurring after the Balance Sheet Date • AS 5 Net Profit or Loss for the period,Prior Period Items and Changes in Accounting Policies • AS 6 Depreciation Accounting • AS 7 Construction Contracts (revised 2002) • AS 9 Revenue Recognition • AS 10 Accounting for Fixed Assets • AS 11 The Effects of Changes in Foreign Exchange Rates (revised 2003) • AS 12 Accounting for Government Grants • AS 13 Accounting for Investments • AS 14 Accounting for Amalgamations • AS 15 Employee Benefits (revised 2005) • AS 16 Borrowing Costs • AS 17 Segment Reporting • AS 18 Related Party Disclosures • AS 19 Leases • AS 20 Earnings Per Share • AS 21 Consolidated Financial Statements • AS 22 Accounting for Taxes on Income • AS 23 Accounting for Investments in Associates in Consolidated Financial Statements • AS 24 Discontinuing Operations • AS 25 Interim Financial Reporting • AS 26 Intangible Assets • AS 27 Financial Reporting of Interests in Joint Ventures • AS 28 Impairment of Assets