Accounting policies are the specific principles and procedures implemented by a enterprises management and are used to prepare financial statements of the organization. These include any methods, systems and procedures for presenting disclosures.
A. SINGNIFICANT ACCOUNTING POLICIES:
1. Basic Assumptions:
The Financial Statements are prepared on a going concern concept and as per the historical cost convention on accrual basis.
2. Revenue Recognition:
(a) Sale is recognized on dispatch of goods to customers
(b) Sale of service/commission is recognized as and when the right to receive arises
(c) Export sales are accounted on the basis of dates of bill of lading and export incentives are accounted for in the year of export.
(d) Insurance & other claim to the extent considered recoverable are accounted for in the year of claim.
(e) Interest is recognized on a time of proportion basis taking into account the amount outstanding and the rate applicable.
(f) Other items of Income including subsidies are accounted as and when the right to receive arises.
3. Fixed Assets And Depreciation:
Fixed assets are stated at cost less depreciation. Depreciation on Fixed Assets Is provided for on written down value method as per rates prescribed in the Income Tax Act.
Investments are stated at cost.
5. Intangible Assets:
There are no intangible assets.
6. Impairment of Assets:
There is a policy of assessing whether there has been any impairment of assets at the year end and necessary adjustment is made in the books of account for impairment of assets.
7. Provision and Contingencies:
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent assets are neither recognized nor disclosed in the Financial Statements.
Inventories are valued at Cost or market price whichever is lower and the cost is worked out on FIFO basis.
9. Borrowing cost:
Interest and other costs in connection with the borrowing of funds to the extent related/attributed to the acquisition of qualifying asset are capitalized up the date when such assets are ready for its intended use. Other borrowing costs are recognized as an expense in period for which they are incurred unless otherwise stated.
10. Taxes on Income:
Current Tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred Tax is recognized, subject to the consideration of prudence, on timing difference, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are not recognized on un-absorbed depreciation and carry forward of losses unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.
11. Other Accounting Standards:
The accounts are maintained in conformity with the applicable Accounting Standards.
12. Prior years(S) Transactions:
Charges or credits which arise in the current period as a result of error or omissions in the preparation of financial statement of one or more prior periods are treated as prior period items, whereas the same is treated as current year’s charges or credits if it is determined /decided/approved in the current year.
13. Gratuity and Bonus:
Gratuity and bonus is accounted for on payment basis.
14. Foreign Currency Transactions:
(i) Transactions in foreign currencies are recorded at the exchange rates prevailing at the time of the transaction.
(ii) Transactions in foreign currencies at the year end are restated at year end rates and difference is recognized as exchange difference and adjusted through Profit and Loss. In case of monetary items, which are covered by forward exchange contracts, the difference between the transaction rate and rate on the date of the contract is recognised as exchange difference and adjusted through Profit and Loss and the premium paid on forward contracts is recognised over the life of the contract.
(iii) Stock and other Non monetary foreign currency items are carried at cost on the date of transaction.
(iv) Exchange difference arising either on settlement or on translation of monetary items other than those mentioned above is adjusted in the Profit and Loss.
B. NOTES ON ACCOUNTS:
1. The Current Assets Loans & Advances have a value on realization in the ordinary course of business equal to the amount at which those are stated in the Balance Sheet.
2. Balances of some of the debtors, Creditors and unsecured loans are subject to confirmation, reconciliation and adjustments, if any.
3. Some expenses are not fully supported though circumstances evidencing the expenditure exist.