Fundamentals of Financial and Cost Accounting · Accounting Principles, Concepts and Conventions

Accounting Standards and Ind AS in India

Updated 10 October 2026

Accounting standards are written rules that tell businesses how to recognise, measure and disclose transactions, so financial statements are consistent and comparable. In India, ICAI frames them and the government notifies them. Ind AS are the IFRS-converged standards mandatory for specified larger companies; the older AS apply to others. Learn the difference, then match numbers to titles.

Understand Accounting Standards and Ind AS

Imagine ten companies each valuing stock in their own way. Their profits could not be compared, and owners or lenders could be misled. Accounting standards solve this. They are written policy documents that say how to recognise, measure, present and disclose items in financial statements.

The need for accounting standards is simple: they bring uniformity, reduce the room for manipulation, make statements of different firms comparable, and improve trust for investors, lenders and regulators. They also narrow the choice between alternative accounting treatments.

In India, the Accounting Standards Board of ICAI prepares the standards. Under the Companies Act 2013 (Section 133), the Central Government prescribes them for companies on the recommendation of ICAI, in consultation with and after examining the recommendations of the National Financial Reporting Authority (NFRA). The older set is called Accounting Standards (AS), notified under the Companies (Accounting Standards) Rules 2006, and numbered AS 1, AS 2 and so on. The ICMAI separately issues Cost Accounting Standards (CAS) through its Cost Accounting Standards Board. These deal with cost records and cost determination, not general financial reporting.

To bring Indian reporting in line with global practice, India moved to Indian Accounting Standards (Ind AS). These are converged with IFRS (International Financial Reporting Standards) issued by the IASB, with some changes for Indian conditions. They are notified by the Ministry of Corporate Affairs and apply in phases to companies that meet specified criteria, such as listing and net worth. Other companies continue with the AS.

The key difference in style: Ind AS lean more on fair value and substance over form, and are more detailed. Ind AS numbers also differ from AS numbers, for example Ind AS 2 (Inventories), Ind AS 16 (Property, Plant and Equipment), Ind AS 115 (Revenue from Contracts with Customers) and Ind AS 116 (Leases).

One status note: AS 6 (Depreciation Accounting) was withdrawn for companies by the 2016 amendments. For companies, depreciation is now dealt with through AS 10 and Schedule II of the Companies Act. AS 6 is still commonly taught and can be examined, so learn it with this status in mind.

Key formulas to remember

Purpose of standards: Standards = uniformity + comparability + reliable disclosure; Use this to answer any 'need for accounting standards' question.
Who frames and who notifies: ICAI (ASB) recommends → Central Government prescribes (Companies Act 2013, Section 133, in consultation with and after examining NFRA's recommendations); ICAI frames; the government gives legal force for companies, with NFRA playing a real role in the process.
Ind AS in one line: Ind AS = IFRS-converged standards notified by MCA; Applicable in phases to companies meeting prescribed criteria; others follow AS.
Key AS numbers: AS 1 Accounting Policies | AS 2 Valuation of Inventories | AS 3 Cash Flow | AS 6 Depreciation | AS 9 Revenue Recognition | AS 10 Property, Plant and Equipment | AS 16 Borrowing Costs | AS 20 EPS | AS 26 Intangibles | AS 28 Impairment | AS 29 Provisions and Contingencies; Most commonly asked. Learn number and title together. AS 6 was withdrawn for companies by the 2016 amendments (depreciation is now covered via AS 10 and Schedule II), but it is still commonly taught and may be examined.
Key Ind AS numbers: Ind AS 1 Presentation of Financial Statements | Ind AS 2 Inventories | Ind AS 7 Cash Flows | Ind AS 16 PPE | Ind AS 36 Impairment | Ind AS 37 Provisions | Ind AS 38 Intangibles | Ind AS 109 Financial Instruments | Ind AS 115 Revenue | Ind AS 116 Leases; Note that Ind AS numbers follow IFRS/IAS numbering.

How to solve Accounting Standards and Ind AS questions

Questions on this topic are mostly factual or matching type. Use this method to avoid guessing.

1Read the question and decide the type: need/purpose, who issues, AS vs Ind AS difference, or number-title matching.
2For purpose questions, think uniformity, comparability, reliability and reduced manipulation.
3For authority questions, recall: ICAI's ASB recommends the AS, the Central Government prescribes them in consultation with and after examining NFRA's recommendations; ICMAI frames Cost Accounting Standards.
4For AS vs Ind AS, ask: is it IFRS-converged? Is it notified by MCA for larger or specified companies? If yes, it points to Ind AS.
5For matching, recall the subject of the standard first (inventory, depreciation, revenue), then the number.
6Eliminate options that mix up a subject, such as a cost standard offered as a financial reporting standard.
7Pick the option that states a rule without words like 'always' or 'all companies' unless you are sure.

Quickest way: Anchor numbers and the IFRS test

When to use it: Use when the question asks for a standard's number or whether a statement relates to AS or Ind AS.

Memorise six anchors: AS 1 policies, AS 2 valuation of inventories, AS 6 depreciation (withdrawn for companies by the 2016 amendments, now covered via AS 10 and Schedule II, but still taught and may appear), AS 9 revenue recognition, AS 10 property, plant and equipment, AS 29 provisions.
If the option mentions IFRS convergence or fair value emphasis, lean to Ind AS.
If it mentions ICAI framing and government notification, it is the standard-setting framework.
Remove two clearly wrong options first, then choose between the remaining two.

Common mistakes in Accounting Standards and Ind AS

Saying ICMAI frames the Accounting Standards for companies.
Students see 'CMA' and assume ICMAI does everything in accounting.
Fix: ICAI's ASB frames AS and Ind AS recommendations. ICMAI frames Cost Accounting Standards.
Treating Ind AS as the same as IFRS.
Both are called international in casual talk.
Fix: Ind AS are IFRS-converged, not identical. They have some changes to suit Indian conditions.
Believing Ind AS applies to every company.
Students remember 'mandatory' but not the conditions.
Fix: Ind AS applies in phases to companies meeting specified criteria. Others follow AS.
Mixing up standard numbers, such as AS 2 and AS 6.
Learning numbers as a bare list without subjects.
Fix: Link each number to its subject with a short phrase, and revise the list often.
Thinking standards remove all judgement or choice.
Overreading 'uniformity'.
Fix: Standards narrow choices and improve comparability. Some estimates and policy choices remain.
Assuming Ind AS numbers equal AS numbers.
Both sets cover similar subjects, so students expect the same numbers.
Fix: Ind AS 16 and AS 10 both deal with property, plant and equipment, but the numbers differ. Learn the two lists separately.

Worked examples

Example 1

Which of the following is the main purpose of accounting standards? (a) To increase taxable profit (b) To bring uniformity and comparability in financial statements (c) To replace the need for auditors (d) To fix the selling price of goods

Show the solution

Recall that standards guide recognition, measurement and disclosure.
Their goal is consistent treatment, so statements of different firms can be compared.
Option (a) is wrong because standards do not aim to raise taxable profit.
Option (c) is wrong because audit is still needed to check compliance.
Option (d) is wrong because pricing is a business decision, not an accounting standard matter.

Answer: (b) To bring uniformity and comparability in financial statements

Example 2

Match the subject with the Accounting Standard: Valuation of inventories is dealt with by which standard? (a) AS 2 (b) AS 6 (c) AS 9 (d) AS 29

Show the solution

Identify the subject: inventories means stock of goods.
Recall the anchor list: AS 2 is Valuation of Inventories.
AS 6 deals with depreciation accounting.
AS 9 deals with revenue recognition.
AS 29 deals with provisions, contingent liabilities and contingent assets.

Answer: (a) AS 2

Exam tips

Learn the AS list as number plus subject. Matching questions are easy marks if you do this.
Remember the two bodies: ICAI for financial reporting standards, ICMAI for cost accounting standards.
For AS vs Ind AS, think 'IFRS-converged, notified by MCA, applies to specified companies in phases'.
Watch for absolute words like 'all' or 'only' in options. They are often wrong.
With no negative marking, always answer. Eliminate two options and choose between the rest.

Practice questions from Accounting Principles, Concepts and Conventions

Accounting Standards and Ind AS: frequently asked questions

What is Ind AS and how is it different from AS?

Ind AS are Indian Accounting Standards converged with IFRS and notified by the Ministry of Corporate Affairs. The older Accounting Standards (AS) are not IFRS-converged and are simpler. Ind AS apply to companies meeting specified criteria, while others follow AS.

Why do we need accounting standards?

They make financial statements consistent and comparable across businesses. They also reduce manipulation and give users such as investors and lenders reliable information. They narrow the alternative treatments a business can choose.

Who issues accounting standards in India?

ICAI's Accounting Standards Board prepares them. Under Section 133 of the Companies Act 2013, the Central Government prescribes them for companies on the recommendation of ICAI, in consultation with and after examining the recommendations of NFRA. ICMAI issues Cost Accounting Standards separately.

Do I need to memorise the whole list of Indian accounting standards?

You should know the commonly examined ones with their subjects, such as AS 1, 2, 6, 9, 10, 16, 20, 26, 28 and 29. Note that AS 6 was withdrawn for companies by the 2016 amendments, with depreciation now covered via AS 10 and Schedule II, but it is still commonly taught and may be examined. Matching a number to a subject is a typical MCQ. Learn the list in short phrases and revise it regularly.