Amey Accounting Standard Ppt

8/8/2019 Amey Accounting Standard Ppt

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ACCOUNTING STANDARD

AMEY JOSHI

BUSHAN PATIL

SONAL SAVE

SMITA AVHAD

KANCHAN THKUR

GEETANJALI POL


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Introduction to Accounting

Standard

A common standard for accounting &

reporting . Accounting standard containprinciples governing accounting practices &determine appropriate treatment of

financial transactions.


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ObjectivesObjective of Accounting Standards is to

standarize the diverse accountingpolicies and practices with a view toeliminate to the extent possible thenon-comparability of financialstatements and the reliability to thefinancial statements.


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omp ance w t ccount ng

Standards issued by ICAI

Sub Section(3A) to section 211 of Companies Act,1956 requires that every Profit/Loss Account andBalance Sheet shall comply with the AccountingStandards. 'Accounting Standards' means thestandard of accounting recomended by the ICAIand prescribed by the Central Government in

consultation with the National AdvisoryCommittee on Accounting Standards(NACAs)constituted under section 210(1) of companies Act,1956.


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What is Revenue ?

Revenue is the gross inflow of economic benefits

during the period arising in the course of theordinary activities of an entity when those inflowsresult in increases in equity, other than increasesrelating to contributions from equity participants.

Revenue includes only the gross inf lows ofeconomic benefits received and receivable by theentity on its own account.


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What is Revenue Recognition

Standard?

The standard explains as to when the revenue should berecognized in profit and loss account and also states

the circumstances in which revenue recognition can bepostponed.


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Examples of Revenue Recognition

1. Sale of goods

2. Rendering services3. Use of enterprise resources by other yielding

interest, dividend and royalities.


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Disclosure of Accounting Policies

y Specific policies adapted to prepare FS

y Should be disclosed at one place

Purpose :-1. Better understanding of FS

2. Better comparison analysis

3. Mostly needed w.r.t Depreciation


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Accounting for Inventoriesy Used for computation of Cost of inventories and to

show in BS till it is sold

Consists of :-1. Raw Materials

2. Work in progress

3. Finished goods

4. Spares, etc


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Measurements of Inventoriesy Determination of Cost of Inventories

Cost of purchase (Purchase price, duties

& taxes, freight inwards)Cost of conversion

y Determination of Net realisable value

y Comparison of cost and net realisable


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AS 20- Earning per sharey Earning capacity of the firm

yAssessing market price for share

yAS gives computational methodology fordetermination and presentation ofEPS

y 2 types ofEPS

1. Basic EPS

2. Diluted EPS


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AS 13- Accounting for Investmentsy Assets held for earning incomes like dividend, interest,

rental for capital appreciation, etc

y It involves:-

1. Classification of Investment

2. Cost of Investment

3. Valuation of Investment

4. Reclassification of Investment

5. Disposal of Investment6. Disclosure of Investment in FS


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AS 11- Effect of change in FOREX Ratesy Classification for Accounting treatment:-1. Category I: Foreign currency transactions:

a) Buying and selling of goods or service: involved the importing high

take machinery which will utilize in terms of key projects which has aremarkable impact on economy of importing countryEx: meeg 21

b) Acquisition and disposition of assets2. Category II: Foreign operations:

a) Foreign branch

b) Joint venture : Birla company and sunlight company

3. Category III: Foreign Exchange contracts:

a) For trading and speculation


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AS 19- Accounting for Leasesy It means a lease agreement execute in import high technology

orientated industry.

y Two types of leases:

1. Operating lease:-the technology and expertise used in Johnson andJohnson's heath care company theyby the operational machinery onrent form Japan for the limited period of time

2. Foreign lease :- customer involved the money or invest the moneyin foreign market they wants the returns from the invested shares its

called the foreign lease.


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AS 3- Cash Flow Statementsy Incoming and outgoing of cash

y Tools for assessing the liquidity & solvencyof the enterprise.

y Explain Cash flow under 3 heads :-

1. Cash flowfrom operating activities: principal revenue producingactivities of the enterprise other than investing &financing activities.

e.g.: cash receipts from the sales of goods.

2. Cash flowfrom investment activities: acquisition & disposal oflong-term assets & other investments not included in cashequivalent.

e.g.: cash receipts from disposal of fixed assets.

3. Cash flowfrom financing activities: results in change in size &composition of owners capital & borrowing of the org.

e.g.: sale of shares, long-term loan.


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AS 10- Accounting for Fixed Assets

y Called as Cash generating Assets.

y Expected to used for more than a Accounting period like land,building, P/M, etc

y Shown at either Historical cost orRevalued price.y Historical cost: consist of purchase price, import duties & non-

refundable tax.

y Revalued price: means when the fixed assets are revalued.

There are two methods for showing the revalued amt:

a) re-stating the gross book value

b) re-stating the net book value


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AS 5- Net profit or loss for the period, prior

period items and change in Accounting policies

y Ascertain certain criteria for certain items

y Include income and expenditures of Financial year

y Consists of 2 component1. Profit and loss of ordinary activities

2. Profit and loss of extra ordinary activities


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AS 6- Accounting for Depreciationy A non-cash expenditure

y Distribution of total cost to its useful life

y Occurs due to obsolescencey Different methods of computation

1. Straight line method ( SLM )

2. Written-down value or diminishing value (WDV)


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AS 12- Accounting for Govt. Grants

y Assistance provided by Govt. in cash or in kind like

1. Grants of Assets like P/M, Land,etc

2. Grants related to depreciable FA3. Tax exemptions in notified area


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THANK YOU

Amey Accounting Standard Ppt

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