Accounting Policies

DISCLOSURE OF ACCOUNTING POLICY

Accounting policies are the specific accounting principles and the methods of applying those
principles adopted by an enterprise in the preparation and presentation of financial statements.
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All significant accounting policies should be disclosed.

Such disclosure form part of financial statements.
All disclosures should be made at one place.
Specific disclosure for the adoption of fundamental accounting assumptions is not required.
Disclosure of accounting policies cannot remedy a wrong or inappropriate treatment of the item
in the accounts.
Any change in accounting policies which has a material effect in the current period or which is
reasonably expected to have material effect in later periods should be disclosed.
In the case of a change in accounting policies, which has a material effect in the current period,
the amount by which any item in the financial statements is affected by such change should also
be disclosed to the extent ascertainable. Where such amount is not ascertainable, the fact should
be indicated.
Fundamental Accounting Assumption: (GCA) :
1] Going Concern
2] Consistency
3] Accrual
Major considerations governing the selection of accounting policies:
1] Prudence
2] Substance over form (Logic over Law)
3] Materiality
The following are examples of the areas in which different accounting policies may be adopted
by different enterprises:

Methods of depreciation
Methods of translation of foreign currency
Valuation of inventories
Valuation of investments
Treatment of retirement benefits

Treatment of contingent liabilities etc.