Define Accounting Policies in brief. Name the major characteristics which should be considered for the purpose of selection and application of…

(a) 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. Policies are based on various accounting concepts, principles and conventions. The major characteristics that should be considered while selecting and applying accounting policies are (i) Prudence (ii) Substance over form and (iii) , Materiality, There is no single list of accounting policies, which are applicable to all enterprises in all circumstances. Enterprises operate in diverse and complex environmental situations and so they have to adopt various policies. A change in accounting policies should be made in the following conditions: (a) It is required by some statute or for compliance with an Accounting Standard (b) Change would result in more appropriate presentation of financial statement