Core concepts
- 01Objective: provide information about financial position, performance, cash flows.
- 02Qualitative characteristics: understandability, relevance, reliability, comparability.
- 03Elements: assets, liabilities, equity, income, expenses.
- 04Measurement bases: historical cost, current cost, realisable value, present value.
- 05ICAI has 32 Accounting Standards; Ind AS converges with IFRS for listed/large entities.
Flowchart summary
Financial Statements | Objective -> Useful info for decisions | Qualitative -- Relevance, Reliability, Comparability, Understandability | Elements -- Asset, Liab, Equity, Income, Expense | Measurement -- HC, CC, NRV, PV
Exam-critical pointers
- ⭐AS-1 (Disclosure) mandates disclosure of all significant accounting policies in one place.
- ⭐Substance over form: prefer economic reality over legal form.
- ⭐Materiality threshold typically 5% of relevant base.
- ⭐Carve-outs make Ind AS slightly different from IFRS (e.g., FCTR on translation).
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