FINANCIAL ACCOUNTING
CIA-1.1
BY ANUSHKA GUPTA 2223249
BBAH C
DABUR INDIA LIMITED
Dabur India Ltd (Dabur) a subsidiary of Burman Family Holdings,
develops, markets and sells ayurvedic and natural healthcare products.
It has operational presence in India, the Middle East, Africa, South Asia,
the US and Europe. Dabur is headquartered in Ghaziabad, Uttar
Pradesh, India.
1. ITEM IDENTIFIED: TRADE RECEIVABLES
STATEMENT IN WHICH IT IS IDENTIFIED: BALANCE SHEET (CURRENT
ASSETS)
RELATED CONCEPT: REALISATION COCEPT
REASON:
`Realisation concept requires that in order to record revenues and
incomes, the goods or services should actually be delivered first and
the income should be legitimately realized. Trade receivables falls
under this concept for the same reason as stated in the sentences
above which means that for the amount received as trade receivables
to be noted down in the books of accounts, the delivery of goods
should be received and confirmed by the receiver.
2. ITEM IDENTIFIED: DEPRICIATION
STATEMENT IN WHICH IT IS IDENTIFIED: INCOME STATEMENT
(EXPENSES)
RELATED CONCEPT: CONVENTION OF CONSISTENCY
REASON:
Convention of consistency requires that a company’s financial
statement follow the same accounting principles, practices, methods
and procedure from one accounting period to the next. As for
depreciation, it can be calculated using several methods namely
straight-line method, declining balance method and so on. But once a
particular method of calculation has been adopted the same method
should be followed unless a change is really necessary in which case
the change should be clearly specified. Hence why depreciation falls
under this convention.
3. ITEM IDENTIFIED: CAPITAL WORK-IN PRGRESS
STATEMENT IN WHICH IT IS IDENTIFIED: BALANCE SHEET (NONCURRENT ASSEST)
RELATED CONCEPT: GOING CONCERN COCEPT
REASON:
Going concern concept states that a business firm will continue to
exist and carryon its operations as a compony for an indefinite period
of time and will not be dissolved in the near future. Capital work-in
progress refers to the costs incurred on a fixed asset that is still under
construction at the balance sheet date which means that the since it is
still under construction it will be completed in the near future which is
possible since the company will not be dissolved in that near future.
This is why it falls under the going concern concept.
4. ITEM IDENTIFIED: PURCHASE OF STOCK-IN-TRADE.
STATEMENT IN WHICH IT IS IDENTIFIED: INCOME STATEMENT
(EXPENSES)
RELATED CONCEPT: COST CONCEPT
REASON:
Cost concept implies that all assets are recorded in the books of
accounts at the price at which they have been acquired and since all
purchases must be recorded in the books of accounts, this item falls
under the cost concept.
5. ITEM IDENTIFIED: EQUITY SHARE CAPITAL
STATEMENT IN WHICH IT IS IDENTIFIED: BALANCE SHEET (EQUITY)
RELATED CONCEPT: SEPARATE ENTITY CONCEPT
REASON:
The business entity concept states that, for accounting purposes, the
business enterprise and its owners and two separate, independent
identities, which makes the business transactions and personal
transactions of the owner separate. Equity share capital is the capital
raised by the owners for the company but since it is raised personally
by the owner(s), it is considered as a personal expense that benefits
the company. Thus, equity share capital falls under business entity
concept.
6. ITEM IDENTIFIED: DEFERRED TAX LIABILITIES
STATEMENT IN WHICH IT IS IDENTIFIED: BALANCE SHEET (NONCURRENT LIABILITIES)
RELATED CONCEPT: GOING CONCERN CONCEPT
REASON:
Going concern concept states that a business firm will continue to
exist and carryon its operations as a compony for an indefinite period
of time and will not be dissolved in the near future. Deferred tax
liability is the tax that is assessed or is due to be paid in the current
period but has not been paid yet, which means that it will be paid in
the near future. Since according to the going concern concept, the
company will not be dissolved in the near future, it makes it possible
for the deferred tax liabilities to be paid hence why it falls under this
concept.
7. ITEM IDENTIFIED: PROVISIONS
STATEMENT IN WHICH IT IS IDENTIFIED: BALANCE SHEET (CURRENT
LIABILITIES)
RELATED CONCEPT: CONVENTION OF CONSERVATISM
REASON:
Convention of conservatism is the concept of recognizing expenses
and liabilities as soon as possible when there is uncertainty about
future outcome of the company. Provisions are the funds kept aside
by companies in order to cover anticipated losses in the future.
Hence, since provisions will be used to cover up the liabilities caused
due to uncertainties in the future it relates to convention of
conservatism.
8. ITEM IDENTIFIED: PROPERTY PLANT AND EQUIPMENT
STAMENT IN WHICH IT IS IDENTIFIED: BALANCE SHEET (NONCURRENT ASSETS)
RELATED CONCEPT: COST CONCEPT
REASON:
Cost concept implies that all assets are recorded in the books of
accounts at the price at which they have been acquired and since
property, plant and equipment include machinery, furniture etc. that
fall under assets it relates to the cost concept.
9. ITEM IDENTIFIED: CURRENT TAX
STATEMENT IN WHICH IT IS IDENTIFIED: INCOME STATEMENT
RELATED CONCEPT: ACCOUNTING PERIOD CONCEPT
REASON:
Accounting period concept implied that all accounting transactions of
a company are divided into equal time periods, called accounting
periods, usually being a year. Current tax is the amount of income tax
either payable or receivable in respect of the current profit or loss for
an accounting period. Since current tax is looked at in reference to a
particular accounting period, it comes under the accounting period
concept.
10.
OTHER EXPENSES: INCOME STATEMENT (DEBIT SIDE)
STATEMENT IN WHICH IT IS IDENTIFIED: INCOME STATEMENT (DEBIT
SIDE)
RELATED CENCEPT: MATERIALITY COCEPT
REASON:
Materiality states that immaterial amounts may be aggregated with
the amounts of similar nature or function and need not be presented
separately. Small payments such as stationery, postage etc. should be
grouped together as sundry or other expenses.