Accounting Standards
Accounting Standards, Advantages and Limitations
Objectives
After going through this lesson, you shall be able to understand the following concepts.
• Meaning of Accounting Standards
• Advantages and Limitations of Accounting Standards
• Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI)
Introduction
In our previous lesson, we discussed that various accounting principles, concepts and conventions are followed while preparing the financial statements. Adhering to such accounting methods and principles ensures transparency and consistency in the financial statements of different organisations. We all know that the basic aim of accounting is to summarise the financial position of a business and communicate the results thereof to the users of accounting information. Also, we know that the financial statements of different enterprises can be compared only if same methods and principles are consistently followed while preparing them. To ensure uniformity in the basic method adopted for the preparation of financial statements, various codes of practice have been laid by the regulatory accounting bodies. These are commonly referred to as ‘accounting standards’.
The meaning of accounting standards has been explained below.
Meaning of Accounting Standards
Let us understand the concept of accounting standards with the help of the following graphical presentation.
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Advantages and Disadvantages of Accounting Standards
The advantages and disadvantages of accounting standards are diagrammatically presented below.
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Accounting Standards Issued by the Institute of Chartered Accountants of India (ICAI)
The following are the mandatory Accounting Standards (AS) as on July 1, 2012 issued by the Institute of Chartered Accountants of India (ICAI).
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Issued/Revised year of Accounting Standard
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Number of the Accounting Standard
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Title of the Accounting Standard
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1979
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AS 1
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Disclosure of Accounting Policies
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1999 (Revised)
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AS 2
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Valuation of Inventories
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1997 (Revised)
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AS 3
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Cash Flow Statements
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1995 (Revised)
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AS 4
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Contingencies and Events Occurring after the Balance Sheet Date
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1997 (Revised)
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AS 5
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Net Profit or Loss for the period, Prior Period Items and Changes in Accounting Policies
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1994 (Revised)
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AS 6
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Depreciation Accounting
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2002 (Revised)
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AS 7
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Accounting for Construction Contracts
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AS 8
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Accounting for Research and Development
(withdrawn and merged under AS 26)
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