Lecture Insights on Advanced Accounting Standards

Apr 13, 2025

Advanced Accounting Lecture Notes

Introduction

  • Lecturer: CA Sankets
  • Topic: Advanced Accounting
  • Last Session Recap:
    • Need for accounting standards
    • Accounting standards in India vs globally
    • IFRS and convergence with Indian standards
  • Key Concepts:
    • Convergence vs Adoption

Daily Accounting Standards to Recall

  1. Disclosure of Accounting Policy
  2. Inventory Valuation
  3. Cash Flow Statement
  4. Contingencies and Events After Balance Sheet Date
  5. Net Profit or Loss for the Period
  6. Construction Contract
  7. Revenue Recognition
  8. Property, Plant, and Equipment
  9. Effects of Changes in Foreign Exchange Rates
  10. Accounting for Government Grants
  11. Accounting for Investments
  12. Amalgamation
  13. Employee Benefits
  14. Borrowing Cost
  15. Segment Reporting
  16. Related Party Disclosures
  17. Leases
  18. Earnings per Share

Study Strategy

  • Review 4-5 accounting standards daily
  • Maintain a 100-page book for theory
  • Consistency is key for exam success

Introduction to Accounting Standards

  • Generally Accepted Accounting Principles (GAAP):
    • International level (IFRS)
    • Indian level (Accounting Standards by ICI)
  • Benefits of Accounting Standards:
    • Standardization
    • Additional Disclosures
    • Comparability

Chapter 1: Introduction to Accounting Standards

  • Consistency in Study Materials:
    • Use a structured approach with a 100-page book for theory
    • Illustrations in a 400-page book
  • Important Points:
    • IFRS issued by IASB
    • Benefits of convergence include cross-border flow and global listing

Chapter 2: Framework for Financial Statements

  • Purpose of Frameworks:
    • Assist in preparation of financial statements
    • Aid accounting standard boards
    • Harmonization of regulations

Components of Financial Statements

  1. Balance Sheet:

    • Economic resources controlled by the enterprise
    • Liquidity and solvency indicators

  2. Profit and Loss Account:

    • Performance results for the accounting period

  3. Cash Flow Statement:

    • Cash receipts and payments
    • Divided into Operating, Investing, and Financing activities

  4. Notes to Accounts:

    • Detailed supplementary information
    • Important for disclosures like accounting policies

Objectives and Users of Accounting Standards

  • Objectives:
    • Provide information on financial position, performance, and cash flows
  • Users:
    • Investors, Employees, Lenders, Suppliers, Customers, Government

Fundamental Assumptions (GAS)

  1. Going Concern:

    • Business will continue in the foreseeable future

  2. Accrual Basis:

    • Record revenues and expenses when they are incurred

  3. Consistency:

    • Use the same accounting policies year after year

Qualitative Characteristics

  • To be discussed after break (ensure to revisit this section for details)

Practical Illustrations

Illustration 1: Going Concern vs Not Going Concern

  • Objective: Understand the impact of assuming/not assuming going concern on financial statements.

Example Calculations

  • Balance Sheet and P&L Adjustments for different scenarios
  • Impact of Transactions on financial statements (e.g., introducing capital, earning income)

Homework

  • Question on Page 2.35, Question 10
    • Same pattern as discussed in the class

Conclusion

  • Importance of structured study and practice using the institute's material
  • Emphasis on theoretical understanding for exam success
  • A reminder to maintain consistency and regular practice
  • Next Session: Continue with Chapter 2, focusing on qualitative characteristics and further illustrations
  • Reminder: Complete all pending notes and review session content thoroughly

Note: Always refer to your 100-page book for theory and 400-page book for illustrations as your primary study material.