Give some Examples of Accounting Policies.

The following are some areas where different accounting treatments can be adopted :
  1. Method of Depreciation
    • Depreciation can be calculated either by Straight Line Method or Written Down Value Method.
  2. Treatment of Expenditure during Construction
    • It can be written off or capitalised or deferred.
  3. Conversion or Translation of Foreign Currency Items
    • Foreign currency items can be converted by adopting average rate method or TT buying rate method.
  4. Valuation of Inventories
    • Inventories may be valued by the different methods such as FIFO, Weighted Average, Standard Cost or Retail method.
  5. Valuation of Investment
    • Valuation of investment can be done depending on the classification of investment. Investment is classified as long-term investment and current investment. Cost of investment comprises purchase price & acquisition charges such as brokerage, fees and duties etc. For the purpose of Balance Sheet, carrying amount of investment can be valued in different manner depending on the type of investment.
      1. Current Investment: Carrying amount of each current investment is the lower of cost and realisable value.
      2. Long-term Investment: It is usually carried / valued at cost.
      3. Investment Properties: The cost of shares held in co-operative society is added to cost of investment properties if the shares in such societies are necessary to acquire the investment properties. An enterprise, which holds investment properties, should account for them as long-term investment.
    • Thus, investment can be given different accounting treatment in different cases.
  6. Treatment of Retirement Benefits
    • There are several accounting treatments to be given to the retirement benefits to the employees. It depends on the several labour laws and the retirement benefit plans adopted by the enterprise.
  7. Valuation of Fixed Assets
    • Fixed assets can be shown in financial statement either at historical cost or revalued price. Moreover, the type of fixed assets also matters in the valuation method. Examples of fixed assets are land, freehold building, leasehold building, plant & machinery, furniture & fittings etc. This account treatment in valuation of fixed asset is determined by laws, types of assets and the special cases etc.
  8. Treatment of Contingent Liability
    • Here also, an enterprise can follow different accounting treatments in recognition and disclosure of contingent liability.
Illustrations of Accounting Policies
  1. Depreciation
    • Depreciation on fixed assets is provided for on Straight Line Method at the rates prescribed under Schedule XIV to the Companies Act, 1956 as amended.
  2. Basis of Preparation of Financial Statements
    • The financial statements have been prepared under the historical cost convention in accordance with the Generally Accepted Accounting principles in India and the provisions of the Companies Act, 1956, except for certain fixed assets, which have been revalued.
  3. Inventories
    • Inventories are stated at lower of cost or net realisable value. In case of fuel, stores and spares 'cost' means weighted average cost. Unserviceable/damaged stores and spares are identified and written down based on technical evaluation.

No comments:

To Get Board Exam Important Follow us.

No. 1 Simple Hack, you can try out, in preparing for Board Exam

How to Study for CBSE Class 10 Board Exams Subject Wise Tips?

JEE Main 2020 Registration Process – Exam Pattern & Important Dates

NEET UG 2020 Registration Process Exam Pattern & Important Dates

How can One Prepare for two Competitive Exams at the same time?

8 Proven Tips to Handle Anxiety before Exams!


PDF FILE TO YOUR EMAIL IMMEDIATELY PURCHASE NOTES & PAPER SOLUTION. @ Rs. 50/- each

SSC MATHS I PAPER SOLUTION

SSC MATHS II PAPER SOLUTION

SSC SCIENCE I PAPER SOLUTION

SSC SCIENCE II PAPER SOLUTION

SSC ENGLISH PAPER SOLUTION

SSC & HSC ENGLISH WRITING SKILL

HSC ACCOUNTS NOTES

HSC OCM NOTES

HSC ECONOMICS NOTES

HSC SECRETARIAL PRACTICE NOTES

2019 Board Paper Solution

HSC ENGLISH SET A 2019 21st February, 2019

HSC ENGLISH SET B 2019 21st February, 2019

HSC ENGLISH SET C 2019 21st February, 2019

HSC ENGLISH SET D 2019 21st February, 2019

SECRETARIAL PRACTICE (S.P) 2019 25th February, 2019

HSC XII PHYSICS 2019 25th February, 2019

CHEMISTRY XII HSC SOLUTION 27th, February, 2019

OCM PAPER SOLUTION 2019 27th, February, 2019

HSC MATHS PAPER SOLUTION COMMERCE, 2nd March, 2019

HSC MATHS PAPER SOLUTION SCIENCE 2nd, March, 2019

SSC ENGLISH STD 10 5TH MARCH, 2019.

HSC XII ACCOUNTS 2019 6th March, 2019

HSC XII BIOLOGY 2019 6TH March, 2019

HSC XII ECONOMICS 9Th March 2019

SSC Maths I March 2019 Solution 10th Standard11th, March, 2019

SSC MATHS II MARCH 2019 SOLUTION 10TH STD.13th March, 2019

SSC SCIENCE I MARCH 2019 SOLUTION 10TH STD. 15th March, 2019.

SSC SCIENCE II MARCH 2019 SOLUTION 10TH STD. 18th March, 2019.

SSC SOCIAL SCIENCE I MARCH 2019 SOLUTION20th March, 2019

SSC SOCIAL SCIENCE II MARCH 2019 SOLUTION, 22nd March, 2019

XII CBSE - BOARD - MARCH - 2019 ENGLISH - QP + SOLUTIONS, 2nd March, 2019


BUY FROM PLAY STORE

DOWNLOAD OUR APP


HOW TO PURCHASE OUR NOTES?



S.P. Important Questions For Board Exam 2020


O.C.M. Important Questions for Board Exam. 2020


Economics Important Questions for Board Exam 2020


Chemistry Important Question Bank for board exam 2020


Physics – Section I- Important Question Bank for Maharashtra Board HSC Examination


Physics – Section II – Science- Important Question Bank for Maharashtra Board HSC 2020 Examination


MUST REMEMBER THINGS on the day of Exam


Are you prepared? for English Grammar in Board Exam.


Paper Presentation In Board Exam


How to Score Good Marks in SSC Board Exams


Tips To Score More Than 90% Marks In 12th Board Exam


How to write English exams?


How to prepare for board exam when less time is left


How to memorise what you learn for board exam