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CA Final · Financial Reporting · Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors

Sundaram Textiles Ltd is preparing its financial statements under Ind AS. The finance head says an accounting policy is simply any amount in the financial statements that cannot be measured precisely. Which statement correctly describes accounting policies as defined in Ind AS 8?

Accounting policies are the specific principles, bases, conventions, rules and practices an entity applies in preparing and presenting its financial statements. Monetary amounts subject to measurement uncertainty are accounting estimates, a different concept, so the finance head's description is wrong.

  1. AMonetary amounts in financial statements that are subject to measurement uncertainty
  2. BThe specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statementsCorrect
  3. CStandards prescribed under Section 133 of the Companies Act, 2013
  4. DTerms used to describe information that could influence decisions of primary users

Explanation

Ind AS 8 defines accounting policies as the specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements. Option A describes accounting estimates, which is what the finance head confused with policies. Option C describes Ind AS themselves, and option D relates to materiality.

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