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

Tara Retail Ltd. discloses its significant accounting policies as a note forming part of its financial statements. Which of the following statements about the disclosure of accounting policies under AS 1 is correct?

AS 1 requires disclosure of all significant accounting policies as part of the financial statements, normally in one place. Placing them only in the directors' report is not acceptable, and disclosure is not limited to changed policies or to the Statement of Profit and Loss items.

  1. ADisclosure of significant accounting policies should form part of the financial statements and should normally be shown in one placeCorrect
  2. BPolicies may be disclosed in the directors' report instead of the financial statements
  3. COnly policies that changed during the year need to be disclosed
  4. DDisclosure is required only for policies relating to the Statement of Profit and Loss

Explanation

AS 1 requires that all significant accounting policies adopted in the preparation and presentation of financial statements be disclosed, forming part of the financial statements and normally in one place. Disclosure in the directors' report is not a substitute. Option C is wrong because unchanged policies are also disclosed.

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