Many Indian companies follow financial year, i.e. However, listed companies are required to provide additional quarterly financial information.
The usual periodicity of releasing financial statements is one year. Any financial information which is released very late would lose its relevance. The appropriate frequency of releasing financial statements has been developed taking into consideration cost of preparation and timeliness of the information.
But the stakeholders would require to know the financial performance, financial position and cash flow of the entity more frequently. Periodicity: Normally an entity has infinite or very long life. Three other important accounting concepts are periodicity, matching and realisation: What amount of purchases should the company record as expense during the year? At the beginning of the year balance of creditors Rs.20 million, payment made during the year is Rs.80 million and closing balance of creditors is Rs.15 million. is preparing income statement for the year 2008. What amount of sales should the company recognise as income of 2008? Out of sales of 2008, amount yet to be collected is Rs.90 million. The company Collected Rs.300 million during the year on account of sales of goods of which Rs.100 million for sales during 2007. Revenues and costs are accrued, that is, recognised as they are earned or incurred (and not as money is received or paid) and recorded in the financial statements of the periods to which they relate. In case the going concern concept is not satisfied, the company should value its assets and liabilities on liquidation basis Potential sources of replacement financing. There is a change in company’s performance level apart from market swings.Ī company considers a wide range of factors for reviewing its going concern status which may include:ģ. Should the going concern status of the company be reviewed? What general parameters are to be looked into? Its share price as on was Rs.400 and as on was Rs.600, whereas as on it was nosedived to Rs.170 because of general market downturn and poor performance of the company.
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