Different Accounting Policies
Makers of financial statements i.e. Profit & Loss Account and Balance Sheet have to ascertain true and fair position of the company. For this purpose, profitability and true financial position of the company during the accounting period has to be correctly and accurately shown in the financial statements. Therefore, different policies have to be adopted for preparation of Profit & Loss Account and Balance Sheet and their presentation for the users' interest.
The following are different important policies, which are adopted by the company and also disclosed, in the financial statements :
- Inventory Valuation Policies.
- Cash Flow Statement Policies.
- Depreciation Policy.
- Policy regarding Construction Contracts.
- Revenue Recognition Policies.
- Fixed Assets Accounting Policies.
- Accounting for Investments Policies.
- Employees Benefits Policies.
- Segment Reporting Policies.
- Leases Accounting Policies.
- Earning Per Share Policy.
- Policy on Accounting for Taxes on Income.
- Interim Financial Reporting Policies.
- Accounting of Intangible Assets Policy.
- Policies on Provision, Contingent Liabilities and Contingent Assets.
In all there are 29 Accounting Standards, which are issued by ICAI, which indicate as to how policies should be adopted and followed. Most of these standards are mandatory and are applicable to most of the enterprises. However, every company management has to follow not only Accounting Standards but also adhere to several laws, rules and regulations made like Company Law, ICAI etc.
