An arcane accounting ruling from the little known, yet powerful. Financial Accounting Standards Board on how oil companies report billions of dollars in profits has touched off a classic Washington lobbying battle.

It pits the accounting industry's standards-setting authority against a group of independent oil companies. At stake is a proposed ruling from the privately run FASB to eliminate "full cost" accounting.

Some Carter administration officials say full cost accounting tends to inflate profits, making it easier for oil companies to borrow money.

For some compaines ending full cost accounting "will reduce their public earnings . . . it is a very inflammatory question with strong feelings on both sides," says Clarence Sampson, the Securities and Exchange Commission's acting chief accountant.

The controversy is rooted in a provision of the 1975 Energy Policy and Conversation act, advocated by liberal congressmen, calling on the SEC to set uniform accounting standards, they argued, would enable the government to obtain actual industry costs and profits it oil and natural gas development.

At the same time the accounting industry mounted a lobbying assault on House and Senate conferees to ensure that provision was written into the law allowing the SEC to rely on standards proposed by FASB. They succeeded.

Last July the FASB issued a proposed ruling in favor of the so-called "successful efforts" method used by the major opil companies, which treats exploration costs as drilling expenses in the years they occur. The full cost method, which is used generally by independent oil companies trying to enhance their borrowing power, treats exploration costs as asserts, essentially spreading out the losses from drilling over a period of years.

In the past the SEC has adopted FASB-proposed standards, and is expected to do so when the commission makes a ruling on accounting methods used for stockholder statments this December.

A loose coalition of "full costers" led by International Paper Co., which has extensive oil holdings, and Houston Oil and Minerals mounted a lobby against the FASB runling.

They went to Sen. Floyd Haskell (D-Colo.), who introduced an amendment - recently passed by the Senate - to allow companies to continue using full cost accounting for public reports.

They also enlisted the aid of Sen. William Proxmire (D-Wis.) and Rep. henry Reuss (D-Wis.), and other members of Congress to write a letter to the FASB, calling for an explanation of the board's decision. Proxmire and Reuss are chairmen of the congressional committees overseeing banking.

Sampson and other SEC officials are quick to point out that the companies are already using a successful-efforts method for tax purposes. A change in accounting practices would not make any difference in the companies' losses or gains, they say.

A recent study by Touche Ross, a nationally known accounting firm, of 36 companies using full cost accounting in stockholder statements concluded that a shift to successful-efforts would reduce reported earnings by 20 per cent, and shareholders' equity by 16 per cent.

SEC officials say they are aware of the possible impact an FASB ruling could have on some companies' stocks, Wall Street analysts says that Houston Oil and Minerals stock, which rose from 11's in 1976 to over 60 earlier this year, is one that may have already been affected by the FASB ruling.

One Houston Oil and Minerals executive charges "successful-efforts penalizes you for your failures," added that accounting switch in public statements would result in stockholder problems and greater difficulty in borrowing money for oil exploration.

James Kotting International Paper's comptroller, argues that a shift for his company would "leave a stigma" and reduce publicly reported earnings of IPC's General Crude Co. by $8 million.

Some companies fightign the FASb ruling privately charge that the privately funded board, based in Stanford Conn., is based in favor of the major oil companies. The seven-member board includes Robert E.Mays, Exxon's former comptroller, and former officials with two accounting firms that handle major oil company finiancial statements.

FASB staff member Norman Mattson denies the allegations,saying the board ruled against full cost because "it tends to obscure failure."

Department of Energy officials admit, as one said, "the FASB ruling is clearly what the majors prefer," but say there is little reason to intervene unless the few independents arguing against all companies using successful efforts can show that it wuld result in reduced oil exploration.

One Wall Street investment banker assessed the impact as neutral, claiming that investors are more concerned about additions to oil and gas reserves than earnings. However, "one thing is certain. It will take a lot of bloom out of the go go stocks," he said.