Accounting policies refer to the specific accounting principles and the methods of applying those
principles adopted by the enterprise in the preparation and presentation of financial statements.
There is no single list of accounting policies which are applicable to all circumstances. The different
circumstances in which enterprises operate in a situation of diverse and complex economic activity
make alternative accounting principles and methods of applying those principles acceptable. The choice
of the appropriate accounting principles and the methods of applying those principles in the specific
circumstances of each enterprise calls for considerable judgment by the management of the enterprise.
The various statements of the Institute of chartered accountants of India combined with the efforts of
government and other regulatory agencies and progressive managements have reduced in recent years
the number of acceptable alternative particularly in the case of a corporate enterprise. While continuing
efforts in this regard in future are likely to reduce the number still further, the availability of alternative
accounting principles and methods of applying those stances faced by the enterprises.
Nature of Accounting Policies
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