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Accounting policies refer to specific accounting principles and methods of applying these principles adopted by the enterprise in the preparation and presentation of financial statements.

There cannot be a single list of accounting policies which are applicable to all the enterprises in all circumstances. The management of each enterprise has to select appropriate policy depending on the nature and circumstances of a business.


The areas in which different accounting policies are frequently encountered are:

  •  Methods of depreciation, depletion, amortisation
  • Valuation of inventories
  • Treatment of goodwill
  • Valuation of investments
  • Valuation of fixed assets, etc.

Note: The above mentioned list is just illustrative and not exhaustive. The method which is actually followed in preparation of financial statement is disclosed as accounting policies. They are to be treated as separate from each other.

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