Accounting Standards for non-corporate entities, such as Small and Medium-sized Enterprises (SMEs), are set by the Accounting Standards Board (ASB) of ICAI in India. These standards are based on Indian GAAP (Generally Accepted Accounting Practices) and are meant to make it easier for users to understand financial statements. But for corporate entities, the Accounting Standards that the MCA has announced apply.
The Accounting Standards put an end to the confusion by setting out a uniform set of best practises and investor-focused, uniform, and internationally known accounting policies that must be followed when financial statements are made and shown. Accounting standards have the same goals and basic ideas everywhere in the world.
These standards are mandatory on the dates specified either in the respective document or as notified by the ICAI/ MCA.
We might notice that the MCA gives companies the Accounting Standards based on what the ICAI says they should do. MCA notifies these Accounting Standards through the Companies (Accounting Standards) Rules and any changes to them. They apply to companies, including Small and Medium-sized Companies, for which Indian Accounting Standards (Ind AS) do not apply.
The ICAI Accounting Standards for non-corporate entities have been around for 20 years, and they are now being reviewed, changed, and improved to meet the financial reporting requirements of Ind AS as much as possible for SMEs.
Compendium of ICAI’s Accounting Standards (as on 01/07/2019)
ICAI has published a compendium of accounting standards as on 01/07/2019, which includes various relevant Announcements of ICAI on the subject.
ICAI’s Compendium of Accounting Standards dt. 01/07/2019
ICAI’s Quick Referencer on Accounting Standards (as on 01/04/2019)
The Accounting Standards Board of ICAI has put out a booklet called “Accounting Standards: Quick Referencer” so that everyone can quickly look up the most important parts of the Accounting Standards. This booklet has a summary of the Accounting Standards put out by the ICAI and the Companies (Accounting Standards) Rules, 2006, which were put out by the Ministry of Corporate Affairs, Government of India, to protect the interests of the people who make or audit financial statements as well as the interests of other stakeholders.
ICAI’s Quick Referencer on Accounting Standards (as on 01/04/2019)
List of Mandatory Accounting Standards of ICAI (AS-1 to AS-29): Updated as on 01/02/2022
The first question for students and learners is, “How many accounting standards are there?” For their information, the ICAI has put out a total of 32 Accounting Standards (AS-1 to AS-32), of which AS-1 to AS-29 are mandatory. AS-6, AS-8, AS-30, AS-31, and AS-32 have been taken away by the ICAI through different Announcements. So, as of February 1, 2022, there are really only 27 Accounting Standards of ICAI. All these accounting standards are mandatory in nature, as of 01/07/2017:
ICAI’s AS-1: Disclosure of Accounting Policies
AS-1 of ICAI deals with disclosing significant accounting policies applied in preparing and presenting financial statements in a supplementary statement/notes to permit meaningful comparison of financial statements of different enterprises/periods.
ICAI’s AS-2: Valuation of Inventories
AS-2 of ICAI deals with determining the value at which inventories are carried in financial statements, including cost and net realisable value.
ICAI’s AS-3: Cash Flow Statements
AS-3 of ICAI provides information on an enterprise’s historical changes in cash and cash equivalents through a Cash Flow Statement, which distinguishes cash flows from operating, investing, and financing activities.
ICAI’s AS-4: Contingencies and Events Occurring After Balance Sheet Date
AS-4 of ICAI covers post-balance-sheet events and contingencies.
ICAI’s AS-5: Net profit or Loss for the period, Prior Period Items and Changes in Accounting Policies
AS-5 of ICAI should be applied when presenting profit or loss from ordinary activities, extraordinary items, and prior period items in the Statement of Profit and Loss, accounting for changes in accounting estimates, and disclosing accounting policy changes.
ICAI’s AS-7: Construction Contracts
AS-7 of ICAI prescribes the accounting for construction contracts in the financial statements of contractors.
ICAI’s AS-9: Revenue Recognition
AS-9 of ICAI covers revenue recognition in an enterprise’s P&L. The Standard addresses the recognition of revenue from the sale of goods, the provision of services, and interest, royalties, and dividends.
ICAI’s AS-10: Property, Plant and Equipment
The objective of AS-10 of ICAI is to prescribe the accounting treatment for property, plant and equipment (PPE).
ICAI’s AS-11: The Effects of Changes in Foreign Exchange Rates
AS-11 of ICAI provides accounting standards for foreign currency transactions and foreign operations, such as which exchange rate to employ and how to recognise the financial effect of exchange rate changes.
ICAI’s AS-12: Government Grants
AS-12 of ICAI covers accounting for government grants (subsidies, monetary incentives, duty drawbacks, etc.).
ICAI’s AS-13: Accounting for Investments
AS-13 of ICAI deals with accounting for investments in the financial statements of enterprises and related disclosure requirements.
ICAI’s AS-14: Accounting for Amalgamations
AS-14 of ICAI deals with accounting for amalgamations and the treatment of any resultant goodwill or reserves.
ICAI’s AS-15: Employee Benefits
AS-15 of ICAI prescribes accounting treatment and disclosure for employee perks except employee share-based payments. It doesn’t cover employee benefit plan accounting and reporting.
ICAI’s AS-16: Borrowing Costs
AS-16 of ICAI applies to borrowing costs. This Standard doesn’t include the actual or imputed cost of owners’ equity, including preference share capital that’s not a liability.
ICAI’s AS-17: Segment Reporting
AS-17 of ICAI establishes rules for reporting financial information concerning a company’s segments/products/services and geographic locations.
ICAI’s AS-18: Related Party Disclosures
AS-18 of ICAI should be used to report related party transactions and relationships. This Standard applies to each reporting enterprise’s financial statements and a holding company’s consolidated financial statements.
ICAI’s AS-19: Leases
AS-19 of ICAI prescribes accounting standards and disclosures for financing and operating leases for lessees and lessors.
ICAI’s AS-20: Earnings Per Share
AS-20 of ICAI establishes criteria for determining and presenting earnings per share, which improves performance comparisons between enterprises and accounting periods.
ICAI’s AS-21: Consolidated Financial Statements
AS-21 establishes methods and principles for consolidated financial statements. These statements show the economic resources controlled by a parent and its subsidiary(ies) as a single economic entity, its liabilities, and the results it produces with its resources.
ICAI’s AS-22: Accounting for Taxes on Income
The purpose of AS-22 of the ICAI is to regulate the accounting treatment of taxes on income, as the taxable income may differ significantly from the accounting income for a variety of reasons, creating difficulties in matching taxes against revenue for a period.
ICAI’s AS-23: Accounting for Investments in Associates
AS-23 of the ICAI to be applied in the production and presentation of consolidated Financial Statements (CFS) by an investor when accounting for investments in associates.
ICAI’s AS-24: Discontinuing Operations
AS-24 of the ICAI establishes guidelines for reporting information on discontinuing operations, allowing readers of financial statements to predict an enterprise’s cash flows, earnings-generating potential, and financial position by distinguishing discontinuing and continuing operations information. AS 24 applies to all enterprises discontinuing operations.
ICAI’s AS-25: Interim Financial Reporting
AS-25 of the ICAI is applicable if a business is required or elects to issue an interim financial report. This standard’s aim is to regulate the minimum content of an interim financial report and the rules for recognition and measurement in complete or condensed financial statements for an interim period.
ICAI’s AS-26: Intangible Assets
ICAI AS-26 specifies the accounting treatment for intangible assets (i.e. identifiable non-monetary asset, without physical substance, held for use in the production or supply of goods or services, for rental to others, or for administrative purposes).
ICAI’s AS-27: Financial Reporting of Interests in Joint Ventures
AS-27 of the ICAI is intended to create accounting rules and reporting systems for joint venture interests, assets, liabilities, income, and expenses in venturers’ and investors’ financial statements.
ICAI’s AS-28: Impairment of Assets
AS-28 of the ICAI outlines the measures a business must take to ensure its assets are carried at their recoverable value. AS 28 mandates an entity to recognise an impairment loss if an asset’s carrying amount exceeds what may be recovered through use or sale. AS 28 addresses the impairment of all assets unless specifically excluded.
ICAI’s AS-29: Provisions, Contingent Liabilities and Contingent Assets
AS-29 of the ICAI ensures that proper recognition criteria and measurement bases are applied to provisions and contingent liabilities, and that sufficient information is published in the financial statements’ notes to help users understand their nature, timing, and amount. This Standard defines contingent asset accounting.
Note:
1. ICAI has withdrawn the AS 8 on Accounting for Research and Development.
2. ICAI Amends AS 2, AS 4, AS 10, AS 13, AS 14, AS 21, AS 29 and withdraws AS 6.
3. ICAI withdraws its Announcement on Treatment of exchange differences under AS 11
4. Companies (Accounting Standards) Amendment Rules, 2018 notified by MCA: AS 11 amended
ICAI has announced on 15/11/2016 that following Accounting Standards stands withdrawn:
iii) AS 32: Financial Instruments – Disclosures.
ICAI is revising all Accounting Standards for non-Ind AS entities. When implemented, 32 standards in various levels of revision/formulation will replace the existing standards. ICAI will maintain consistency/synchronization in the numbering of AS with numbering of Ind AS, i.e. existing Accounting Standards shall be amended and renumbered suitably.
FAQs
Which accounting standards are issued by ICAI? ›
AS-11 of ICAI provides accounting standards for foreign currency transactions and foreign operations, such as which exchange rate to employ and how to recognise the financial effect of exchange rate changes. AS-12 of ICAI covers accounting for government grants (subsidies, monetary incentives, duty drawbacks, etc.).
How many total accounting standards issued by ICAI? ›Answers. Accounting Standards. As of 2010, the Institute of Chartered Accountants of India has issued 32 Accounting Standards. These are numbered AS-1 to AS-7 and AS-9 to AS-32 (AS-8 is no longer in force since it was merged with AS-26).
How do you memorize accounting standards? ›Alphabet A = A for Accounting = AS 1 - Disclosure of Accounting Policies. Alphabet B = B for Ball ( Ball is an item) = AS 2- Valuation of Inventories. Alphabet C = C for Cash = AS 3 - Cash Flow Statement. Alphabet D = D for Danger = AS 4 Contingencies and Events occuring after the Balance Sheet Date.
What are the 12 accounting standards? ›Accounting Standard 12 deals with the accounting for government grants. Such grants are offered by the government, government agencies and similar bodies including local, national or international. These government grants are sometimes referred to as subsidies, cash incentives, duty drawbacks etc.
What is the role of ICAI in accounting standards? ›The Accounting Standards are issued under the authority of the Council of the ICAI. The ASB has also been entrusted with the responsibility of propagating the Accounting Standards and of persuading the concerned parties to adopt them in the preparation and presentation of financial statements.
What is accounting standard 10 of ICAI? ›The objective of this Standard is to prescribe the accounting treatment for property, plant and equipment so that users of the financial statements can discern information about investment made by an enterprise in its property, plant and equipment and the changes in such investment.
How many accounting standards are currently effective in India? ›Thus effectively, there are 27 Accounting Standards at present. The 'Accounting Standards' issued by the Accounting Standards Board establish standards which have to be complied by the business entities so that the financial statements are prepared in accordance with generally accepted accounting principles.
What are 5 accounting standards? ›Specific examples of accounting standards include revenue recognition, asset classification, allowable methods for depreciation, what is considered depreciable, lease classifications, and outstanding share measurement.
How many standards are issued by ICAI which are mandatory Mcq? ›Since then, it has issued 32 Accounting Standards so far, out of which 29 are notified by Central Government.
What is the most difficult accounting standard? ›IFRS 9 is probably the most complicated accounting standard ever issued, written to address the accounting weaknesses claimed to have contributed to the global financial crisis and intended to be fit for purpose for the most complex banking and financial services companies.
Is it hard to pass the accounting exam? ›
About half of the individuals who take the CPA Exam don't pass on their first attempt. According to the AICPA, the national average pass rate is 45-55%. Cumulative pass rates reported by the AICPA for the calendar year 2021 show that FAR had the lowest pass rate at 44.54% and BEC had the highest pass rate at 61.94%.
What is the quickest way to learn accounting? ›The most effective way to learn accounting, and retain what you've learned, is to "REVIEW AS YOU GO". If it's a bad idea to cram for a history exam the night before a test, it's a very bad idea to cram for an accounting test. Never postpone reviewing your accounting until examination time.
What are accounting standards answer? ›Accounting standards are authoritative standards for financial reporting and are the primary source of generally accepted accounting principles (GAAP). Accounting standards specify how transactions and other events are to be recognized, measured, presented and disclosed in financial statements.
How many standards are there in GAAP? ›What are the GAAP? The Generally Applied Accounting Principles are a set of 10 standards, meant to maintain a certain consistency across companies' financial statements.
What is accounting standards summary? ›Summary. An accounting standard is a policythat defines the treatment of an accounting transaction in financial statements. Accounting standards provide guidance for companies to prepare and report useful financial statements in an accurate fashion.
Which is the core function of ICAI? ›Functions of ICAI
Regulates the CA profession. Examination and education of CA course. Professional education of members. Conducting post-qualification courses.
The Committee on Terminology set up by the American Institute of Certified Public Accountants formulated the following definition of accounting in 1961: “Accounting is the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, ...
What are the objectives of ICAI? ›To provide high quality theoretical education to students of Chartered Accountancy Course by making available regular updation of educational publications like Study Material, Case Studies, Case Scenarios, MCQs, Revision Test Papers, Mock Test Papers, etc.
What are 7 accounting standards? ›Accounting Standard 7 (AS 7) relates with accounting of construction contracts. The very purpose of this accounting standard is to specify the accounting treatment of revenue and costs associated with construction contracts.
What does accounting standard 15 stand for? ›Accounting Standard 15 Employee Benefits deals with all the forms of employee benefits, all forms of consideration given by an enterprise in exchange for service rendered by employees but exclude inventory compensation.
What is the accounting standard 21? ›
AS 21 Consolidated Financial Statements should be applied in preparing and presenting consolidated financial statements for a group of enterprises under the sole control of a parent enterprise.
What is the most important accounting standard? ›Two popular accounting standards are used by a majority of countries globally. They are: GAAP or Generally Accepted Accounting Procedures. IFRS or the International Financial Reporting Standards.
What is the difference between Indian accounting standards and GAAP? ›Main GAAP differences
The Indian GAAP reflects international GAAP in the key accounting principles such as: prudence, going concern, consistency, accruals, substance over form and materiality. While currently the most significant accounting differences are absence of consolidation and deferred tax accounting.
In the U.S., Generally Accepted Accounting Practices (GAAP) are the standard. Elsewhere, the International Financial Reporting Standards (IFRS) are preferred. Different types of organizations will require different treatments and strategies from accountants. Accounting standards help outline expectations.
What are the two main accounting standards? ›The two main sets of accounting standards followed by businesses are GAAP and IFRS. GAAP, also referred to as US GAAP, is an acronym for Generally Accepted Accounting Principles. This set of guidelines is set by the Financial Accounting Standards Board (FASB) and adhered to by most US companies.
What are the 3 accounting standards? ›| Accounting Standard | Level I | Level III |
|---|---|---|
| AS 1 Disclosure of Accounting Principles | Yes | Yes |
| AS 2 Valuation of Inventories | Yes | Yes |
| AS 3 Cash Flow Statements | Yes | No |
| AS 4 Contingencies and Events Occurring After the Balance Sheet Date | Yes | Yes |
The three components of accounting systems are identification, measurement and communication. The three basic elements of all accounting systems support a standardized framework for recording and conveying information.
Is ICAI material enough? ›While ICAI material, previous years' papers, and RTP are good enough, most students benefit from specialized CA inter coaching classes, especially the mock tests.
Are all accounting standards are mandatory? ›It is mandatory for companies to follow accounting standards as it ensures uniformity in the accounting process and also makes statements comparable with other organisations.
Is ICAI study material sufficient? ›Question: Is ICAI study material for CA Final 2023 enough to prepare for the May exams? Answer: The study material has been updated by ICAI and is enough to qualify the exams.
Which CPA module is the hardest? ›
...
Though the CPA Competency map for Tax is lengthy, and any of the testable materials can come up, these are the key topics to focus on:
- Pros/cons of incorporating.
- Salary vs. ...
- Filing and payment deadlines.
- Take notes on the chapter before you go into class.
- Don't be afraid to ask questions. ...
- Take time to review notes after class.
- Revisit anything you are still having trouble with by rereading sections in your textbook or going over notes from the day's lesson.
FreshBooks is one of the easiest accounting software to use. The software is designed for small business owners who don't have an accounting background. You can create and send invoices, track expenses, manage projects and clients and view reports.
What is the failure rate for CPA? ›The Uniform CPA Examination pass rate percentages are released by the American Institute of Certified Public Accountants (AICPA) and historically average around 45%-55%, varying by quarter and section.
Which part of the CPA Exam is the hardest to pass? ›Among the four sections, FAR has a reputation for being the hardest. It typically has the lowest pass rate. BEC is often thought to be the easiest. It has the highest pass rate.
What exam is harder than CPA? ›Keep in mind, the Bar exam has much more difficult requirements to even sit for the exam—you need to go to law school, which is quite a commitment, both financially and in terms of time. While the CPA requires accounting experience and coursework, there's a lower bar for entry for this test.
How many hours a day should I study accounting? ›Recommended study time per testlet/CPA section is 15 to 20 hours per week, studying as consistently as possible. Plan to take a day off from your CPA study so you don't burn yourself out.
What are golden rules of accounting? ›Take a look at the three main rules of accounting: Debit the receiver and credit the giver. Debit what comes in and credit what goes out. Debit expenses and losses, credit income and gains.
How long should I study for accounting? ›In general, it takes four years of study to earn a degree in accounting.
What is accounting standards PDF? ›Accounting Standards are policy documents in writing issued by the concerned authorities like. Accounting Standards Committee, government or other regulatory bodies, covering the aspects of. recognition, measurement, treatment, presentation and disclosure of accounting transactions in the. financial statements.
How many types of accounting standards are there? ›
The Indian Accounting Standards has a total of 32 standards, out of which the most common ones have been listed below: AS-1: Disclosure of Accounting Policies. AS-2: Valuation of Inventories. AS-3: Cash Flow Statements.
What is the difference between accounting standards and GAAP? ›...
Difference between GAAP and IFRS.
| IFRS | GAAP |
|---|---|
| Globally adopted in around 144 countries | Only adopted in the US |
| Based on | |
| Principles | Rules |
| Inventory Methods allowed | |
Accounting Standard 14 – Accounting for Amalgamation deals with accounting treatment for amalgamations and any resultant goodwill or reserves. This standard is applicable only when any company is liquidated after amalgamation, that is if no company is liquidated, this standard will not be applicable.
What are the 4 financial statements required by GAAP? ›The four main financial statements include: balance sheets, income statements, cash flow statements and statements of shareholders' equity. These four financial statements are considered common accounting principles as outlined by GAAP.
What are the benefits of accounting standards? ›The accounting standards help to measure the performance of the management of an entity. This measurement can help the management's ability to increase the profitability, maintain the solvency of the corporate firm. Also, help with other such important financial duties of the management.
Which Accounting Standards are issued by? ›The Indian Accounting Standards (Ind AS), as notified under section 133 of the Companies Act 2013, have been formulated keeping the Indian economic & legal environment in view and with a view to converge with IFRS Standards, as issued by and copyright of which is held by the IFRS Foundation.
On what accounting standard 6 has been issued by ICAI? ›As per Accounting Standard 6 issued by ICAI on depreciation, under which circumstances the method of depreciation may be changed? (i) When the adoption of new method is required by the statute. (ii) When it is required for compliance with an accounting standard.
What are 5 Accounting Standards? ›Specific examples of accounting standards include revenue recognition, asset classification, allowable methods for depreciation, what is considered depreciable, lease classifications, and outstanding share measurement.
What does Accounting Standard 7 issued by ICAI deals with? ›AS 7 Construction Contract describes and lays out the accounting treatment in respect of the revenue and costs in relation to a construction contract. AS 7 Construction Contract is to be used in for the accounting of construction contracts in the financial statements of the contractors.
Which accounting standard is used in USA? ›The Accounting Standards Codification (ASC) is developed and maintained by the FASB. The ASC is the only source of authoritative GAAP in the US (other than SEC issued rules and regulations that only apply to SEC registrants).
Which GAAP is used in India? ›
Indian GAAP primarily comprises 18 accounting standards (AS) issued by the Institute of Chartered Accountants of India (ICAI). To aid interpretation, the ICAI has also issued guidance notes and 'expert opinions' on specific queries raised by companies and accountants.
Is accounting standard 6 removed? ›Accounting Standard (AS) 6, Depreciation Accounting, stands withdrawn from the date AS 10, Property, Plant and Equipment, becomes applicable.
What is Indian Accounting Standard 7? ›7 Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. For an investment to qualify as a cash equivalent it must be readily convertible to a known amount of cash and be subject to an insignificant risk of changes in value.
What is the accounting standard 13? ›AS 13 Accounting for Investments is widely used and deals with accounting for investments in financial statements prepared by a Company and prescribes various disclosure requirements.
What are accounting standards Short answer? ›Accounting standards are authoritative standards for financial reporting and are the primary source of generally accepted accounting principles (GAAP). Accounting standards specify how transactions and other events are to be recognized, measured, presented and disclosed in financial statements.
What is ICAI accounting standard 22? ›Accounting Standard 22 has been prescribed by ICAI to be applied in accounting for taxes on income. This AS is applied to match the differences between accounting income and taxable income. 1. Accounting income is the net profit before tax for a period, as reported in the profit and loss statement.
What is accounting standard 14 of ICAI? ›14. The consideration for the amalgamation may consist of securities, cash or other assets. In determining the value of the consideration, an assessment is made of the fair value of its elements. A variety of techniques is applied in arriving at fair value.
What is accounting standard 15 of ICAI? ›As per Accounting Standard 15, an employee is defined as a person rendering service to an enterprise on a full-time, part time, permanent, casual or temporary basis. For the purpose of AS 15, employees include whole time directors and other management personnel.