Distinction Between Accounting Standards and Indian Accounting Standards

 

 

You’re sitting in class, and your teacher says:

“Follow Accounting Standards.”

Then in the next lecture, someone says:

“Companies now follow Ind AS.”

And you’re like…
“Sir, are these the same thing or different?”

This is exactly where most students get confused.

In my teaching experience, I’ve seen even good students mix up Accounting Standards (AS) and Indian Accounting Standards (Ind AS) — not because the topic is hard, but because nobody explains the real difference clearly.

Let’s fix that today, step by step — like we would in a real classroom.

 

Simple Understanding First (No Confusion Zone)

Let’s not jump into heavy definitions.

👉 Think like this:

• Accounting Standards (AS) = Older rules (Indian GAAP-based)
• Indian Accounting Standards (Ind AS) = Modern rules (based on global standards like IFRS)

That’s it. That’s your base.

Now let’s make it clearer.

 

What Are Accounting Standards (AS)?

Accounting Standards (AS) are rules that guide how businesses should prepare financial statements — like Profit & Loss Account, Balance Sheet, etc.

These were issued by the Institute of Chartered Accountants of India.

👉 They were designed mainly for Indian businesses, keeping Indian conditions in mind.

Simple Example

A shopkeeper in Bhopal sells goods worth ₹50,000 on credit.

Now question:
👉 When should he record this sale?

As per AS (especially AS 9 – Revenue Recognition):

• Record when ownership is transferred, not when cash is received.

So even if payment comes later, sale is recorded now.

✔️ Simple, practical, and focused on basic accounting.

 

What Are Indian Accounting Standards (Ind AS)?

Now comes the modern version.

Ind AS are accounting standards aligned with global standards (IFRS).

They are issued by the Ministry of Corporate Affairs, based on recommendations of ICAI.

👉 These are used by:

• Listed companies
• Large companies
• Companies with significant financial impact

Simple Example

Same situation:
A company sells goods worth ₹50,000 on credit.

But under Ind AS (Ind AS 115 – Revenue):

Now the company must check:

• Has control transferred?
• Are there performance obligations?
• Is revenue measurable reliably?

👉 More detailed, more judgment-based.

 

Why Two Different Standards Exist?

Good question. Ask yourself:

👉 Why not just keep one system?

Because:

1. Old System Was Simple but Limited

AS worked well for small and medium businesses.

But as companies grew, global investors needed:

• Transparency
• Comparability
• Uniformity across countries

2. Global Integration Became Important

Imagine an Indian company raising funds from the US.

If accounts are prepared using old AS:

• Foreign investors may not understand them easily

Ind AS solves this by aligning with global practices.

 

Visual Analogy (Easy to Remember)

Think like this:

• AS = Local Road Rules
• Ind AS = International Driving Rules

If you drive within your city → local rules are enough
If you travel globally → you need international standards

Same logic.

 

Real-Life Examples (Indian Context)

Example 1: Small Retail Business

A kirana store in Bhopal:

• Annual turnover: ₹20 lakh
• Uses simple accounting

👉 Follows AS

Because:

• No need for complex reporting
• No investors involved

 

Example 2: Growing Company

A manufacturing company:

• Turnover: ₹150 crore
• Taking loans from banks

👉 May shift to Ind AS

Because:

• Banks want transparency
• Financial statements must be more detailed

 

Example 3: Listed Company

A company listed on stock exchange:

👉 Must follow Ind AS

Why?

• Investors from different countries
• Need global-level reporting

 

Step-by-Step Difference (Clear Comparison Table)

Basis	Accounting Standards (AS)	Indian Accounting Standards (Ind AS)
Nature	Traditional	Modern & Global
Based On	Indian GAAP	IFRS (International)
Complexity	Simple	More complex
Flexibility	Less judgment	More judgment required
Users	Small & medium businesses	Large & listed companies
Focus	Legal form	Economic substance
Example	Record sale when ownership transfers	Check control + obligations
Issued By	ICAI	MCA (with ICAI support)

 

This Is Where Most Students Get Confused…

Confusion 1:

“Ind AS is just updated AS”

❌ Wrong thinking
✔️ Right thinking:

Ind AS is not just an update
It is a completely different approach

 

Confusion 2:

“Both give same results”

Not always.

Let’s see:

Example

A company gives a product with warranty.

• Under AS → Expense recognized simply
• Under Ind AS → Provision calculated using probability & estimates

👉 Result:
Profit can be different under both systems.

 

In My Teaching Experience…

I once asked a student:

“Why do we need Ind AS?”

He said:
👉 “Because AS is outdated.”

Partly correct, but incomplete.

Real answer:
👉 “Because businesses have become global.”

This is where understanding matters more than memorization.

 

Why This Matters in Real Life

If you are:

• A commerce student → You’ll face this in exams
• An accountant → You’ll apply this in job
• A business owner → It affects compliance

Real Impact

Let’s say:

A company reports profit:

• Under AS → ₹10 lakh
• Under Ind AS → ₹8 lakh

👉 Investors may take different decisions based on this

So yes — it’s not just theory.

 

Common Mistakes Students Make

1. Thinking AS and Ind AS are same
2. Ignoring the “global” angle
3. Memorizing definitions without logic
4. Forgetting practical application
5. Not understanding why Ind AS is complex

 

Wrong vs Right Thinking

Wrong Thinking	Right Thinking
AS is old, Ind AS is new	Ind AS is global-focused
Both are same	Approach is different
Just memorize	Understand logic
Only for exams	Used in real companies

 

Practical Impact (Business + Exams)

In Exams:

• Questions may ask differences
• Case studies may involve revenue recognition

In Business:

• Affects profit calculation
• Impacts investor decisions
• Important for compliance

 

Where This Concept Is Used

You will see this topic in:

• Financial Reporting
• Corporate Accounting
• CA Foundation / Intermediate
• Company Accounts

 

Personal Story (Real Classroom Moment)

I remember once explaining this topic, and a student said:

“Sir, why make life complicated with Ind AS?”

I smiled and said:

👉 “Because business itself has become complicated.”

When companies operate globally, accounting must also evolve.

That day, the confusion disappeared — not because of definition, but because of logic.

 

Reflective Questions (Think for Yourself)

1. If India didn’t adopt Ind AS, how would foreign investors trust Indian companies?
2. Do you think small businesses should also follow Ind AS?

Think about it — this is how clarity builds.

 

Expert Insight Layer

If you want to truly master this topic:

👉 Don’t compare words
👉 Compare approach

• AS → Rule-based
• Ind AS → Principle-based

That’s the real difference.

 

Power Line

👉 Accounting Standards tell you WHAT to do, but Ind AS forces you to think WHY you are doing it.

 

Quick Recap (Revision Friendly)

• AS = Old, simple, Indian-focused
• Ind AS = Modern, complex, global-focused
• AS is used by small businesses
• Ind AS is used by large & listed companies
• Main difference = Approach + complexity

 

Internal Linking Opportunities (SEO Boost)

You can also explore:

• What is Accounting Standard?
• Difference Between GAAP and IFRS
• What is Financial Statement Analysis

 

FAQs (Student-Focused)

1. Are AS and Ind AS both used in India?

Yes. AS is used by smaller entities, while Ind AS is mandatory for certain companies.

 

2. Is Ind AS compulsory for all companies?

No. Only for specified companies like listed or large companies.

 

3. Which is more difficult – AS or Ind AS?

Ind AS is more complex because it requires judgment and deeper understanding.

 

4. Can results differ under AS and Ind AS?

Yes, profit and financial position can differ due to different treatment.

 

5. Why is Ind AS based on IFRS?

To make Indian companies globally comparable.

 

6. Should students focus more on Ind AS?

For higher studies and professional courses, yes — but basics of AS are equally important.

 

7. Is Ind AS used internationally?

Ind AS is India’s version of IFRS, so it is aligned but not exactly the same.

 

Author Bio

Hi, I’m Manoj Kumar.
I hold an MBA and have practical exposure to accounting, taxation, and business concepts. Along with this, I’ve spent time guiding and explaining these subjects to students in a way that actually makes sense to them.

In my experience, most students don’t find commerce difficult — they just don’t get the right explanation. That’s where I focus. I break down concepts into simple, logical steps so they are easier to understand and remember.

Through Learn with Manika, I aim to make commerce learning clear, practical, and useful — whether you’re preparing for exams or trying to understand how things work in real life.

When I explain a concept, I always focus on the logic behind it, because once that becomes clear, confidence automatically follows.

 

Disclaimer

This article is for educational purposes only and should not be considered professional advice.