Contingencies and Events occurring after the balance sheet date is accounting standards 4 i.e, AS 4.
This Standard deals with the treatment of financial statements of
- contingencies, and
- events occurring after the balance sheet date.
In preparing the financial statement of a particular enterprise, accounting is done by following accrual basis of accounting and prudent accounting policies to calculate the profit or loss for the year and to recognize assets and liabilities on the balance sheet. While following the prudent accounting policies, the provision is made for all known liabilities and losses even for those liabilities / events, which are probable. Professional judgment is required to classify the likelihood of the future events occurring and, therefore, the question of contingencies and their accounting arises.
The objective of this standard is to prescribe the accounting for contingencies and the events, which take place after the balance sheet date but before approval of balance sheet by Board of Directors. The Accounting Standard deals with Contingencies and Events occurring after the balance sheet date.