Amity School of Business 1 Amity School of Business BBA, III SEMESTER ACCOUNTING FUNDAMENTALS Ms.Soumya Pandey

Amity School of Business Accounting Standards Generally Accepted Accounting Principles (GAAP) are the concepts and conventions that have been developed and accepted to bring comparability and uniformity in the financial statements of various business entities. IASB came into existence in 1973 with ICAI & ICWA as its members to develop accounting standards. 2

Amity School of Business AS can be defined as written statements issued from time to time by institutions of accounting professionals, specifying uniform rules or practices for drawing the financial statements. As per Section 211 of companies Act, 1956, P&L a/c & balance sheet of the company should comply with the accounting standards. As on April 1, 2011, there are 32 accounting standards specified by ICAI 3

Amity School of Business Some of them are:- AS 1 Disclosure of Accounting Policies AS 2 Valuation of Inventories AS 3 Cash Flow Statements AS 6 Depreciation Accounting AS 9 Revenue Recognition AS 14 Accounting for Amalgamation AS 26 Intangible Assets AS 32 Financial Instruments : Disclosures 4

Amity School of Business IFRS International Financial Reporting Standards issued by IASB, are a replacement to GAAP. IFRS covers a wide range of International Accounting Standards (IAS). ICAI also decided complete harmonization between Indian accounting standards and IFRS, from April 1, 2011 It poses challenge to the government as higher profit due to change means higher tax liability for companies 5

Amity School of Business GOI opted for four stage implementation of IFRS In first stage, Companies that are part of NIFTY or SENSEX, have to move to IFRS In second stage, Insurance companies In third stage, companies with net worth of 500 crore and large NBFC In fourth stage, other companies 6