Accounting Standards and Their Importance
AS-1: DISCLOSURE OF ACCOUNTING POLICIES
The following is the text of the Accounting Standard (AS) 1 issued by the Accounting
Standards Board, the Institute of Chartered Accountants of India on Disclosure of
Accounting Policies. The Standard deals with the disclosure of significant accounting
policies followed in preparing and presenting financial statements.
AS-2: VALUATION OF INVENTORIES
A primary issue in accounting for inventories is the determination of the value at which
inventories are carried in the financial statements until the related revenues are recognized.
This Statement deals with the determination of such value, including the ascertainment of
cost of inventories and any write-down thereof to net realizable value.
AS-3: CASH FLOW STATEMENTS
Information about the cash flows of an enterprise is useful in providing users of financial
statements with a basis to assess the ability of the enterprise to generate cash and cash
equivalents and the needs of the enterprise to utilize those cash flows. The economic
decisions that are taken by users require an evaluation of the ability of an enterprise to
generate cash and cash equivalents and the timing and certainty of their generation.
AS-4: CONTINGENCIES AND EVENTS OCCURING AFTER BALANCE SHEET
DATE
The following is the text of the revised Accounting Standard (AS) 4, Contingencies and
Events Occurring after the Balance Sheet Date, issued by the Council of the Institute of
Chartered Accountants of India. This Statement deals with the treatment in financial
statements of contingencies, and events occurring after the balance sheet date.
AS-5: NET PROFIT OR LOSS FOR THE PERIOD,PRIOR PERIOD AND CHANGES IN
ACCOUNTING ESTIMATES
The following is the text of the revised Accounting Standard (AS) 5, Net Profit or Loss for
the Period, Prior Period Items and Changes in Accounting Policies, issued by the Council
of the Institute of Chartered Accountants of India. The objective of this Statement is to
prescribe the classification and disclosure of certain items in the statement of profit and
loss so that all enterprises prepare and present such a statement on a uniform basis.
AS-6: DEPRICIATION ACCOUNTING
The following is the text of the revised Accounting Standard (AS) 6, Depreciation
Accounting, issued by the Council of the Institute of Chartered Accountants of India. This
Statement deals with depreciation accounting and applies to all depreciable assets.
Different accounting policies for depreciation are adopted by different enterprises.
Disclosure of accounting policies for depreciation followed by an enterprise is necessary to
appreciate the view presented in the financial statements of the enterprise.
AS-7: ACCOUNTING FOR CONSTRUCTION CONTRACTS
