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ACCOUNTING STANDARD - 5
Page 2


ACCOUNTING STANDARD - 5
OBJECTIVE
OBJECTIVE
?
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.
?
Increases the Comparability of the Financial 
statements.
?
Requires classification and disclosure of 
extraordinary and prior period items, and the 
disclosure of certain items within profit or loss 
from ordinary activities.
Page 3


ACCOUNTING STANDARD - 5
OBJECTIVE
OBJECTIVE
?
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.
?
Increases the Comparability of the Financial 
statements.
?
Requires classification and disclosure of 
extraordinary and prior period items, and the 
disclosure of certain items within profit or loss 
from ordinary activities.
?
 It also specifies the accounting treatment 
for changes in accounting estimates and the 
disclosures to be made in the FS regarding 
changes in accounting policies.
?
Does not deal with the Tax implications of 
extraordinary items, prior period items, 
changes in accounting estimates, and 
changes in accounting policies for which 
appropriate adjustments will have to be 
made depending on the circumstances.
Page 4


ACCOUNTING STANDARD - 5
OBJECTIVE
OBJECTIVE
?
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.
?
Increases the Comparability of the Financial 
statements.
?
Requires classification and disclosure of 
extraordinary and prior period items, and the 
disclosure of certain items within profit or loss 
from ordinary activities.
?
 It also specifies the accounting treatment 
for changes in accounting estimates and the 
disclosures to be made in the FS regarding 
changes in accounting policies.
?
Does not deal with the Tax implications of 
extraordinary items, prior period items, 
changes in accounting estimates, and 
changes in accounting policies for which 
appropriate adjustments will have to be 
made depending on the circumstances.
Disclosure under Following category
Financial Statements
Ordinary Items
Extra-Ordinary Items
Prior Period Items
Changes in Accounting 
estimates
Changes in Accounting 
Policies
Page 5


ACCOUNTING STANDARD - 5
OBJECTIVE
OBJECTIVE
?
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.
?
Increases the Comparability of the Financial 
statements.
?
Requires classification and disclosure of 
extraordinary and prior period items, and the 
disclosure of certain items within profit or loss 
from ordinary activities.
?
 It also specifies the accounting treatment 
for changes in accounting estimates and the 
disclosures to be made in the FS regarding 
changes in accounting policies.
?
Does not deal with the Tax implications of 
extraordinary items, prior period items, 
changes in accounting estimates, and 
changes in accounting policies for which 
appropriate adjustments will have to be 
made depending on the circumstances.
Disclosure under Following category
Financial Statements
Ordinary Items
Extra-Ordinary Items
Prior Period Items
Changes in Accounting 
estimates
Changes in Accounting 
Policies
 
 
RELEVANT DEFINITIONS
RELEVANT DEFINITIONS
Ordinary activities are any activities and other 
incidental activities which are undertaken by an 
enterprise as part of its business.
Extraordinary items are income or expenses that 
arise from non recurring events and transactions 
and are not expected to recur frequently or 
regularly.
Prior period items are income or expenses, which 
arise, in the current period as a result of errors or 
omissions in the preparation of the financial 
statements of one or more prior periods. It is 
generally infrequent in nature and can be 
distinguished from changes in accounting estimates.
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FAQs on PPT: Accounting Standards (5) - Advanced Accounting for CA Intermediate

1. What are the key differences between Indian Accounting Standards (Ind AS) and Accounting Standards (AS) in India?
Ans. Ind AS are converged with International Financial Reporting Standards (IFRS), whereas AS are based on the old Indian GAAP. Ind AS focus on principles-based accounting, while AS are more rule-based. Ind AS require more extensive disclosures compared to AS.
2. How do Accounting Standards impact financial reporting for companies in India?
Ans. Accounting Standards provide a framework for companies to prepare their financial statements in a consistent and transparent manner. They help users of financial statements make informed decisions by ensuring comparability and reliability of the information presented.
3. What is the process for the adoption of new Accounting Standards in India?
Ans. The Accounting Standards Board (ASB) of the Institute of Chartered Accountants of India (ICAI) is responsible for issuing new Accounting Standards in India. The ASB follows a due process that includes exposure drafts, public comments, and final issuance of the standard.
4. How often are Accounting Standards updated or revised in India?
Ans. Accounting Standards are periodically updated or revised in India to align with changes in the global accounting environment, including updates to IFRS. The ASB continuously monitors developments and issues updates as necessary.
5. What are the consequences of non-compliance with Accounting Standards in India?
Ans. Non-compliance with Accounting Standards in India can result in penalties, fines, or legal action. It can also lead to a loss of credibility for the company and its financial statements, affecting investor confidence and stakeholder trust.
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