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CA Intermediate · Advanced Accounting · AS 1 Disclosure of Accounting Policies

Rohan Engineering Ltd. reports in its notes: (i) a list of significant accounting policies kept together in one place; (ii) a policy for revenue recognition; and (iii) a note that the policy on inventory valuation is unchanged. Under AS 1, which statement about disclosure of accounting policies is correct?

AS 1 requires that all significant accounting policies adopted in preparing financial statements be disclosed, forming part of the financial statements and normally shown together in one place. Disclosure is not limited to changed policies, nor to the Directors' Report.

  1. ASignificant accounting policies should be disclosed in one place as part of the financial statementsCorrect
  2. BAccounting policies may be omitted if the notes disclose figures
  3. CPolicies need be disclosed only when they are changed
  4. DPolicies are disclosed only in the Directors' Report

Explanation

AS 1 requires disclosure of all significant accounting policies adopted in preparing and presenting the financial statements, and this disclosure should form part of the financial statements, normally in one place. Other options contradict this.

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