AS 1: Disclosure of Accounting Policies
AS 1 requires an enterprise to disclose all significant accounting policies adopted in preparing financial statements at one place, so users can understand the basis on which the numbers were built.
- Standard
- AS 1
- Framework
- AS (India)
- Tested at
- Foundation+
- Question type
- Theory / MCQ
Applicability
Applies to all enterprises preparing financial statements under the Companies (Accounting Standards) Rules. It is the first standard tested at CA Foundation and reappears in Intermediate Advanced Accounting.
Key points to remember
- Fundamental accounting assumptions: going concern, consistency and accrual — disclosure is required only when they are NOT followed.
- Significant accounting policies must be disclosed at one place, normally as the first note to accounts.
- Any change in policy with a material effect must be disclosed along with the amount of impact.
- Selection of policies is guided by prudence, substance over form and materiality.
How the exam tests it
A favourite for short theory questions and MCQs at Foundation and Intermediate: expect questions on the three fundamental assumptions and on when disclosure of a change in policy is required.
Related standards
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Talk to usWhat are the three fundamental accounting assumptions under AS 1?
Going concern, consistency and accrual. If financial statements follow them, no separate disclosure is needed; if any assumption is not followed, that fact must be disclosed.
Where should accounting policies be disclosed?
All significant accounting policies should be disclosed at one place, normally as part of the first note to the financial statements, rather than scattered across schedules.
Is AS 1 asked in CA Foundation exams?
Yes. Principles from AS 1 appear in Paper 1 (Accounting) as short theory questions and MCQs, and the same concepts return in CA Intermediate Advanced Accounting.