1. Chapter 5: Conceptual Framework for Accounting and Reporting, and Accounting Standards

2. Financial Accounting Standards Fifth Level Meaning of standards: The dictionary meaning is “ an acknowledged measure of comparison for qualitative or quantitative value ; criterion ;norm”. Ordinary, the word is used as a norm for comparing two or more items or things.

3. Financial Accounting Standards Fifth Level Meaning of Accounting Standards: - An accounting standard is not measure of comparison. -But refers to accounting guidelines to specific issued in financial accounting and reporting. -For example (Accounting Standard 2) that gives guidelines for valuation of inventory in a company and the manner in which it should be reported in annual financial statement.

4. Need for Accounting Standards An accounting standard develops guidelines or the ways of treatment of specific accounting issues. Adoption of uniform standards has become an imperative necessity. A comparison between financial statement of enterprises in different countries or within a country or an industry can better made.

5. Need for Accounting Standards If the accounting standards are uniformity applied in all the countries. Investor can make wise and rational decisions if the financial statement in all countries are prepared following the same accounting and reporting guidelines.

6. Accounting Standard in different countries Almost all developing countries now formulate accounting standard (AS). Accounting standards in USA, IASC ( International Accounting Standards Committee). – (IAS).

7. International Accounting Standards (IAS) IASC issued 41 standards: -IAS1: Presentation of Financial Statement. - IAS2: Inventories - IAS7: Cash Flow Statements - IAS8: Accounting Policies, Changes in Accounting Estimates and Errors - IAS10 : Events after the Reporting Period

8. International Accounting Standards (IAS) - IAS11:Construction Contracts - IAS16: Property, Plant and Equipment - IAS17 : Leases - IAS18 : Revenue. - IAS33 : Earnings per Share. - IAS34 : Interim Financial Reporting. -IAS38:Intangible Assets

9. IAS1 : Presentation of Financial Statement. Objective This Standard prescribes the basis for presentation of general purpose financial statements to ensure comparability both with the entity’s financial statements of previous periods and with the financial statements of other entities. - It sets out overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements for their content.

10. IAS1 : Presentation of Financial Statement. - A complete set of financial statements comprises: (a) a statement of financial position as at the end of the period; (b) a statement of comprehensive income for the period; (c) a statement of changes in equity for the period; (d) a statement of cash flows for the period; (e) notes, comprising a summary of significant accounting policies and other explanatory information

11. IAS1 : Presentation of Financial Statement. - Financial statements shall present fairly the financial position, financial performance and cash flows of an entity. Fair presentation requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the Framework. with additional disclosure when necessary.

12. International Accounting Standard 2 Inventories Objective 1- The objective of this Standard is to prescribe the accounting treatment for inventories. A primary issue in accounting for inventories is the amount of cost to be recognized as an asset and carried forward until the related revenues are recognized. - This Standard provides guidance on the determination of cost and its subsequent recognition as an expense, including any write-down to net realizable value. It also provides guidance on the cost formulas that are used to assign costs to inventories.

13. International Accounting Standard 2 Inventories Disclosure: The financial statements shall disclose: (a) the accounting policies adopted in measuring inventories, including the cost formula used; (d) the amount of inventories recognized as an expense during the period; (e) the amount of any write-down of inventories recognized as an expense in the period.

14. International Accounting Standard 10 Events after the Reporting Period Objective 1 The objective of this Standard is to prescribe: (a)when an entity should adjust its financial statements for events after the reporting period; (b) the disclosures that an entity should give about the date when the financial statements were authorized for issue and about events after the reporting period.

15. International Accounting Standard 10 Events after the Reporting Period Definitions - Events after the reporting period are those events, favorable and unfavorable, that occur between the end of the reporting period and the date when the financial statements are authorized for issue. Two types of events can be identified: (a) those that provide evidence of conditions that existed at the end of the reporting period (adjusting events after the reporting period); and (b) those that are indicative of conditions that arise after the reporting period (non-adjusting events after the reporting period).