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CA Foundation · Accounting · Theoretical Framework

In India, Accounting Standards that companies must follow are notified under which of the following arrangements?

Accounting Standards are issued by ICAI and notified by the Central Government in consultation with the National Financial Reporting Authority, which gives them legal force for companies. They are not framed by the RBI or by individual boards, so the first option is correct.

  1. AThey are issued by ICAI and notified by the Central Government in consultation with the National Financial Reporting AuthorityCorrect
  2. BThey are framed by the Reserve Bank of India for all business enterprises
  3. CThey are issued by the Ministry of Finance without reference to ICAI
  4. DThey are framed by each company's board of directors for its own use

Explanation

Accounting Standards are formulated by ICAI and, for companies, are notified by the Central Government after consulting the NFRA. The RBI regulates banks and does not frame standards for all businesses. Company boards cannot set their own standards.

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