Example of Notes to the Accounts and Significant Accounting Policies.

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NOTES ON ACCOUNTS : FOR REFERENCE UNDER

  1. Significant Accounting Policies

         (a)     Basis of Preparation

                  The financial statements are prepared in accordance with the Indian Generally Accepted Accounting Principles (GAAP), applicable Accounting Standards issued by The Institute of Chartered Accountants of India and under the historical cost convention, on accrual basis.

         (b)    Use of Estimates

                  The preparation of Financial statement of the company is on conformity with Indian Generally Accepted Accounting principles require management to make estimates that affect the reported amount of assets and liabilities at the date of the Financial Statement and the reported amounts revenue and expenses, during the reporting period, although these estimates are based on management’s best knowledge of current events and actions, actual results may ultimately differ from these estimates, which are recognized in the period in which the results are known/materialized.

         (c)     Fixed Assets

                  Fixed Assets are stated at cost. Cost includes taxes, duties, freight and other incidental expenses related to acquisition, improvements and installation of the assets.

         (d)    Deprecation

                  (i)   Deprecation is provided on “Written Down Value Method”, at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956 of India.

                  (ii)  Assets costing Rs. 5,000/- or less are depreciated in full in the year of purchase.

         (e)     Investments

                  Long terms investments are stated at cost. Diminution of permanent nature, if any, is provided for.

         (f)     Inventories

                  Inventories are valued at lower of cost or net realizable value. Cost is computed on the basis of cost of purchase inclusive of freight etc., “First-In-First – Out” basis.

         (g)    Intangible Assets

                  The intangible assets (Computer Software acquired for internal use) are capitalized in accordance with the relevant Accounting Standard. The cost of such assets is amortized on straight-line method over a period of five years, the estimated economic life of the asset. The carrying value of the capitalized software costs is received at each Balance sheet due.

         (h)    Revenue Recognition

                  (i)      Sales, net of taxes, are accounted for on dispatch of goods to customers.

                  (ii)     Commission is accounted for as and when the company’s right to receive the same is established.

                  (iii)    Income from investment is recognized, as and when received.

         (i)      Retirement Benefits

                  (i)      Provident Funds and Employees State Insurance Fund (Defined Contribution Schemes) are administered by Central Government of India and contribution to the said funds are charges to Profit and Loss Account or accrual basis.

                  (ii)     Leave encashment (Defined Benefit Scheme) is provided annually based on management estimates in accordance with the policies of the company.

                  (iii)    Year end accrued liabilities on account of Gratuity (Defined Benefit Scheme) is provided for the employees’, based on their last drawn salary, completed years of services, instead of ascertaining actuarial impact.

         (j)      Borrowing Cost

                  Borrowing costs that are allocated to the acquisition or construction of qualified assets are capitalized as part of cost of such assets. A qualifying asset in one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charges to revenue.

         (k)     Foreign Current Transactions

                  Transactions in foreign currencies are accounted for at equivalent rupee value incurred/earned in foreign currents. Assets/Liabilities at the year end are realigned at the applicable exchange rates or at forward contract rates, where applicable and variations are adjusted to the respective capital or revenue hands.

         (l)      Treatment of Prior Period and Extra Ordinary Items

                  (i)      Any material (other than those arising out of over/ under estimation in earlier years) arising as a result of error or omission in preparation of earlier years financial statements are separately disclosed.

                  (ii)     Any material gains/ losses which arise from the events or transaction which are distinct from ordinary activities of the company are separately disclosed.

         (m)   Taxation

                  Income tax expense will comprise of current tax and deferred charge or credit.

                  Current tax is determined as the amount of tax payable in respect of taxable income for the year.

                  Deferred Tax should be recognized to that extent only, subject to consideration of prudence in respect of deferred tax assets, or timing differences, being the differences between the taxable income and accounting income that originate in one year and are capable of reversal in one or more subsequent years, having tax consequences.

         (n)    Provisions, Contingent liabilities and Contingent Assets

                  A provision is made based on reliable estimate when it is probable that an outflow or resources embodying economic benefits will be required to settle an obligation. Contingent liabilities, if material, are disclosed by way of notes to accounts. Contingent assets are not recognized or disclosed in the financial statements.

  1. Contingent Liabilities

As at 31

March, 20__

As At  31 March, 20__
(a) Claim not acknowledged as debts
i) Sales Tax under appeal
ii) Income Tax under appeal
(b) Bank Guarantees
(c) Capital commitments.
  1. The company has quoted equity investment amounting to Rs. _______ in the _______________________. The carrying value of investment as at 31 March, _____ has also substantially exceeded the net worth of the company. There has been a decline in the market value of the investment by Rs. ______ which in the opinion of the management, is of temporary nature consideration its market condition and the future prospects of the company. Accordingly, no provisions has been considered necessary at this stage.
  1. Sundry Debtors includes debts due by a director Rs. ______ for maximum amount outstanding at any time during the year Rs. _____.
  1. Advances recoverable in cash or in kind or to value to be received include Rs. _______ on account of _________________, a company incorporated with an object of setting up of a Family Entertainment Complex (FEC) at _____________ in pursuance of its decision to kame investment in the said company, which was approved by the share holders in its Annual General Meeting held at _____.
  1. Deferred Taxation

         The Major components of deferred taxation arising out of differences are –

Liabilities As at 31

March, 20__

As At  31 March, 20__
Total Liabilities (A)
Assets
Net Deferred Tax Liability [A-B]
  1. Sundry Creditors include Rs. ______ Company, which has been identified from the available information. There are no other amounts due to any other SSI undertakings.

         Such amounts remained outstanding for more than thirty days (but within normal credit period) and consequently provision for interest has not been considered necessary.

  1. As required under section 205C of the Companies Act, 1956 of India, the company has transferred Rs. _____ to the Investor Education and Protection Fund (IEPF) during the year. As of 31 March, ____, no amounts where due for transferred to the IEPF.
  1. Certain confirmation of balances from Sundry Debtors, Loans and Advances, Deposits and Sundry Creditors, including Advances received from Customers are awaited and the account reconciliation of some parties, where confirmations have been received, are in progress. Adjustment for differences, if any, arising out of such confirmation/ reconciliation would be made in accounts on receipt of final agreed balances/ reconciliation.
  1. Managing Director’s Remuneration
i)       Salary
ii)      Contribution of Provident Fund
iii)      Monetary value of perquisites
Total
  1. Miscellaneous Expenses include:
(a)     Amount paid/payable to auditors
         i)       Statutory Audit
         ii)      Tax Audit
         iii)      Reimbursement of Expenses
(b)     Directors Fees
  1. The company is predominantly engaged in trading of fruit products _________

         Accordingly revenues from the above products comprise the primary of segmental information in these financial statements.

         The company has no export sales and such there are no reportable geographical segments.

         Segmental Revenue, Segmental Results, Segmental Assets and Segmental Liabilities include the respective amounts identifiable to each of the segments to the extent possible, as also amounts allocated on a reasonable basis.

         The net expenses, which hare not directly attributable to the Business Segment, are shown as unallocated Corporate cost.

         It is not possible to allocate Assets and Liabilities of the Company between the Segments and therefore they are treated entirely as unallocated Corporate Assets and Corporate Liabilities respectively and consequently they are not disclosed separately here.

Particulars
Revenue
Operating Expenses
Operating Income
Un-allocable Expenses
Other Income.
Net Profit before tax
Income tax (including Deferred taxation)
Net Profit after tax
  1. Related Parties Disclosure
  1. a) Enterprises in which key management personnel have significant influence
  1. b) Key Management Personnel

         Details of transaction are as follows:

i) Sales related Parties
Enterprises in which key management personnel have significant influence
ii) Purchase from related Parties
Enterprises in which key Management Personnel have significant influence

iii) Commission received from related parties
Enterprises in which key management personnel have significant influence

iv) Outstanding Balance as _____
Due to the company
Payable by the company
  1. Earnings Per share (EPS)
Profit after tax attributable Equity shareholders (Numerator used for calculating basic EPS) et.

Weighted average number of equity share outstanding (Denominator used for calculating basic (EPC)
  1. Quantitative information pursuant to clause 3(ii)(b) of Part II and Schedule VI of the Companies Act, 1956.

(a)     Opening and closing stock trading goods

Particulars Unit
Opening Stock as at ___ Closing Stock  As at ____
Qty. Amount Qty. Amount.

(b)     Purchase and sales of trading goods

Particulars Unit
Opening Stock as at ___ Closing Stock  As at ____
Qty. Amount Qty. Amount.

(c)     The Central Government of India, vide its Order No. 46/197/2005-CL-III dated ______, has exempted the company to disclose certain quantitative information, as prescribed in paragraph 3(ii)(b) of the Part-II of Schedule VI to the Companies Act, 1956 of India for the financial year ended ____

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