Introduction of Accounting Policy : www. icai.org

 Introduction of Accounting policy : Accounting policy is a method which is applied by the organisation in the preparation of financial statement.  Financial statement  includes the following items :
Balance sheet
Profit & loss Account
statement of Cash flow
Important Accounting policy & other notes
There are many areas where more than one accounting policy is used.Accounting policies are the part of financial statement. for better presentation of financial statement Accounting policy should be disclosed one place.It is useful for user of F/S .Financial statement is prepared on the basis of fundamental accounting assumption. There are three Fundamental Accounting Assumption which are as follows :
Going Concern : It means that an organisation the  will continue forever. It never dies in future.

.Consistency : -
 It means that an organisation will apply same accounting policy in one period to another period

Accrual : It means that an organisation will apply mercantile system  in presentation of financial statement.In mercantile system the effect of transaction recorded  when they occur. any expense due but not  paid it will be recorded when due. or any Income which is due but not received recorded when due. Under this system all transaction recorded whether due or received.

Condition for changes in Accounting Policy : In the following situation an organisation may change accounting policy.:
Implementation of different accounting policy is requires by statute.
For compliance of Accounting Standard.
For better presentation of financial statement.


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