In this article, we will explain about ICDS-I and its difference with respective Notified AS. To understand what is ICDS, read our previous article.
ICDS I deals with significant accounting policies. Accounting policies are the specific accounting principles and methods of applying those principles in preparation and presentation of financial statements. There are three fundamental accounting principles:
1. Going concern: Refers to the assumption of a continuous succession of an entity without the intention or necessity of its liquidation.
2. Consistency: Refers to the assumption that accounting policies will be followed consistently from one period to other.
3. Accrual: Refers to the assumption that recognition and recording of revenues will be done as soon as they are earned and recognition of cost will be done as soon as they are incurred.
Similarity: Both, ICDS I and AS 1, consider substance over form. The accounting treatment and presentation in financial statements of transactions and events should be governed by their substance and not merely by the legal form.
For further reading on these series, check out our next article on ICDS II.