What are Accounting Standards? Video Lecture | SSC CGL Tier 2 - Study Material, Online Tests, Previous Year

Accounting Standards this is only an
overview accounting standards is not a
part of the CPT syllabus it would be
covered in detail and the highest levels
but you just understand what our
standards what are the accounting
sentence who issues them and why they
are issue a basic understanding and
introduction to accounting standards
there are several users to financial
statements already discussed accounting
standards behind you are compulsory for
the company form of business
organization since there are several
users of financial statements all these
users should be able should understand
the financial statements in the similar
manner so many companies issue financial
statements if there are so many users of
these different financial statements
accounting being the language of
business they should all be
understanding talking the same language
so Accounting Standards will ensure
transparency reliability adequacy
consistency and comparability accounting
standards are certain rules certain
accounting methods and they put their
subtle accounting policies and the
methods of application of these bursts
these are suggestive while these are
laid out by some regulatory authority in
each country each country may have their
own set of accounting standards today
with globalization with companies being
listed on different exchanges in the
world we we are trying to move towards
common Accounting Standards all over the
world these are called international
financial reporting standards
so while these have not been adopted in
all countries the processes on and
slowly it is hoped that most countries
all over the world will move to
international financial reporting
standards so that globally also
financial statements become comparable
they are of course mandatory for
companies and what our Accounting
Standards accounting standards are
written policy documents you should buy
any regulatory body or expert body in
India they are issued by the Institute
of Chartered Accountants of India they
provide certain standard accounting
policies certain standard valuation
methods they say how it certain items
have to be presented in the financial
statements and they lay down what are
the disclosure requirements in this
manner over the pds financial statements
are comparable also financial statements
of one company can be compared with the
other since they are all following
similar accounting standards accounting
standard deal with the recognition of
transactions and events when is income
to be recognized for example if a
contractor is building a bridge over a
period of five years so thus he
recognized income in the first year thus
he when the contract is signed does he
in curve recognize income in the fifth
year with India bridge is completed so
when does recognition of the transaction
occur how it is measured how it is to be
presented and what facts are to be
disclosed largely all accounting
standards
being with these four mattes accounting
standard to have to be followed by
companies an accounting standard cannot
override the law of the land accounting
standards cannot override the law of the
land for example though there are
accounting standards for let us say
insurance companies in India insurance
company
the final accounts of financial
statements of insurance companies are
drawn as per they insurance act as per
the format laid down by the Insurance
Act accounting standards are of in India
they are framed by what is called the
Accounting Standards Board which is
under the Institute of Chartered
Accountants of India the Institute of
Chartered Accountants of India they have
a committee a lot of discussion is done
an exposure draft on the accounting
standard is prepared and finally it is
formalized as of date there are 32
standards as8 was an accounting standard
on research and development
however when accounting standard 26 was
introduced being in being a standard on
intangible assets which included
research and development as 8 was
withdrawn so there are totally 32
standards without as8 some of the
important accounting standards are
disclosure of accounting policies is the
first one next is valuation of
inventories those of you're familiar in
inventory is
trees are valued at cost or net
realizable value whichever is low but
the valuation of cost also is it is of
different types it may be a FIFO method
it may be a weighted average cost method
so inventory valuation deals with some
issues like this similarly there is
depreciation accounting that is
accounting standard six so accounting
standard one disclosure of accounting
policies accounting standard - inventory
valuation and six is depreciation
accounting we this part of these two
would be covered in later chapters
the entire list of Accounting Standards
has not been listed here a few ones more
relevant ones and more commonly used
ones revenue recognition is is when to
recognize income accounting for fixed
assets is a stem accounting for
investments is yes 13 intangible assets
is es 26 as I said before this replaced
is 26 replaced es provisions contingent
liabilities and contingent assets is es
29 so one accounting disclosure of
accounting policies toque valuation of
inventories 6 depreciation accounting
then accounting for fixed assets 9 was
revenue recognition 13 accounting for
investments 26 is intangible assets
which actually replace accounting
standard a the accounting standard is no
longer present it has been cancelled
provisions contingent liabilities and
contingent assets is the S 29