i) ACCOUNTING CONCEPT:
a. These accounts are prepared on the historical cost convention and
on the accounting principle of a going concern.
b. Accounting policies not specifically referred to otherwise be
consistent and in consonance with generally accepted accounting
ii) RECOGNITION OF INCOME AND EXPENDITURE
Company accounts Incomes and Expenses on accrual basis in accordance
with the generally accepted accounting principles except dividend which
are accounted on cash basis.
iii) USE OF ESTIMATES
The presentation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and reported amount
of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which the results are known/ materialized.
iv) FIXED ASSETS & DEPRECIATION
The Gross Block of Fixed Assets is shown at historical cost, which
includes taxes and other identifiable direct Expenses, less impairment
loss. The cost of fixed assets includes the cost of acquisition
including freight, taxes, duties and other identifiable direct
expenses, except otherwise specifically excluded and expressed by way
of note, attributable to acquisition of assets up to the date the asset
put to use less the accumulated depreciation on it.
Depreciation is provided on Written Down Value Method at the rates and
in the manner specified in Schedule XIV of the Companies Act, 1956. The
depreciation on addition / disposal is provided pro- rate basis.
v) SALES / TURNOVER
Sales are recognized, net of returns, on dispatch of goods to customers
the satisfaction of the customer and are reflected in the accounts at
Investments are carried at cost. They are long-term investment.
The fall in value being temporary in nature, no provision is made for
diminution in value.
Inventories are valued on FIFO basis at lower of cost or market price
except cotton waste and scrap material, which are shown at Net
vii) TREATMENT OF RETIREMENT BENEFITS
1. Short Term Employee Benefits: The undiscounted amount of short term
employee benefits expected to be paid in exchange for the service
rendered by employee is recognized during the period when the employee
render the service.
2. Post Employee Benefits: Contribution to defined contribution scheme
such as provident fund etc. is charged to P&L Account as incurred.
Tax liabilities of the company are estimated considering the provision
of the I.T. Act, 1961. The deferred tax Liability for timing difference
between the book and tax profit for the year is accounted using the
rates and Tax Laws that have been enacted or substantially enacted at
the balance sheet date. Deferred Tax assets arising from the timing
difference are recognized to the extent that there is reasonable
certainty that sufficient future taxable income will be available.
x) CONTINGENT LIABILITIES
Contingent liabilities are not provided for (unless otherwise stated)
and are disclosed by way of notes on account, if any.