DEFINATION
ACC Limited is India’s foremost manufacturer of cement and ready mix concrete with a
countrywide network of factories and marketing offices. Established in 1936, ACC has
been a pioneer and trend-setter in cement and concrete technology. ACC’s brand name is
synonymous with cement and enjoys a high level of equity in the Indian market. It is
among first companies in India to include commitment to environment protection as a
corporate objective. ACC's operations are spread throughout the country with 14 modern
cement factories, more than 30 Ready mix concrete plants, 20 sales offices, and several
zonal offices.
ACC's research and development facility has a unique track record of innovative
research, product development and specialized consultancy services. ACC has won
several prizes and accolades for environment friendly measures taken at its plants and
mines. The company has also been felicitated for its acts of good corporate citizenship
The company's various businesses are supported by a powerful, in-house research and
technology backup facility-the only one of its kind in the Indian cement industry. This
ensures not just consistency in product quality but also continuous improvements in
products, processes, and application areas.
ACC has rich experience in mining, being the largest user of limestone, and it is also one
of the principal users of coal. As the largest cement producer in India, it is one of the
biggest customers of the Indian Railways, and the foremost user of the road transport
network services for inward and outward movement of materials and products.
ACC has also extended its services overseas to the Middle East, Africa, and South
America, where it has provided technical and managerial consultancy to a variety of
consumers, and also helps in the operation and maintenance of cement plants abroad.
STAFFING PATTERN
ACC has a large workforce of about 10,032 people, comprising experts in various
disciplines assisted by a dedicated workforce of skilled persons and also a countrywide
distribution network of over 9,000 dealers. ACC employees, referred to as the ACC
Parivar, come from all parts of the country and belonging to a variety of ethnic, cultural
and religious backgrounds. ACC employees display a strong sense of loyalty to the
Company and their special stellar qualities as ‘value-adding’ human capital are well
known in the industry.
The dictionary meaning of the term principle is a fundamental truth implying uniformity
of an acceptance everywhere. However, when applied to accounting, it gives different
meanings in different contexts.
Accounting principles is a guiding influence or an accepted rule of action or conduct. In
other words accounting principles are those rules of action or conduct which are adopted
by the accountants universally in recording accounting transactions. It has been
developed over the years from experience, reason, usage and necessities. Hence they
accepted accounting principles.
ACCOUNTING
PRINCIPLES
ACCOUNTING ACCOUNTING
CONCEPTS CONVENTIONS
• Entity concept
• Dual aspect concept
• Going concern concept
• Money measurement
Concept
• Cost concept
• Accounting period
Concept
• Accrual concept
• Realization concept
• Periodic matching
Of cost and revenue
Concept
ENTITY CONCEPT:
For accounting purpose the business is stated as a separate entity from the proprietors. It
may be sound to absurd that one can sell goods to himself, but all transactions are
recorded in the books of business as per this point of view. This concept helps in keeping
private affairs of the proprietor away from the business affair.
Accounting entity concept enables to record transactions between business and the
proprietor. It ensures that accounting records reflect only the activities of business. It
separates business transactions from personal transactions of the proprietor.
This concept is applicable to all forms of business organizations. Although in the eyes of
law a sole trader and his business over the partners and their business are one and the
same, for accounting purposes they are regarded as separate entities. It is the business
with which we are concerned.
COST CONCEPT:
This concept does not recognize the realisable value, the replacement value or the real
worth of an asset. Thus, as per cost concept.
a) An asset is ordinarily recorded at the price paid to acquire it i.e. at its cost, and
b) This cost is the basis for all subsequent accounting for the asset.
The cost concept does not mean that the asset will always be shown at the cost. It only
means that cost becomes the basis for all subsequent accounting for the asset. Thus the
assets recorded at cost at the time of purchase may systematically be reduced by the
process of depreciation. These assets ultimately disappear from the Balance Sheet when
they have been fully depreciated [and sold as scrap]. The cost concept also implies that
if nothing has been paid to acquire an asset, it cannot be shown as an asset in the books
of accounts.
Cost concept brings objectivity in the preparation and presentation of financial
statements. It implies that the figures shown in the accounting records should be based
on objective evidence and not on subjective views of a person.
ACCRUAL CONCEPT:
The accrual system is a method whereby revenue and expense are identified with
specific periods of time like a month, half a year or a year. It implies recording of
revenues and expenses of particular accounting period whether they are received paid in
cash or not under cash system of accounting the revenues and expenses are recorded
only if they are actually received paid in case irrespective of the accounting period to
which they belong. But under accrual method, the revenues and expenses relating to that
particular accounting period only are considered. The accountant records revenues as
they are earned and expenses as they are incurred not necessary when case changes
hands. Under this concept, to a specific accounting period.
From this concept of accounting, one chief problem arises viz, the segregation of
‘capital ’and ‘revenue’ items. Any increase in the owners Equity resulting from business
operations ‘revenue’ and any decrease is called ‘expense’. Therefore, excess of revenues
over expenses is called ‘income’ and if expenses exceed revenues it is called ‘lost’.
Expenses and revenues related to period may be paid or unpaid.
REALISATION CONCEPT:
According to this concept profit should be accounted for only when it is actually realized.
Revenue is recognized only when sale is effected or the services are rendered. Sale is
considered to be made when the property in goods passes to buyer and he is legally liable
to pay. However to recognize the sale receipt is not essential. Even credit sale is result in
realization as it creates a definite asset called ‘Account Receivable’. However there are
certain exceptions to the concept: contract accounts, hire purchases etc. Similarly
incomes like commission, interest, rent etc. are shown in P&L account on accrual basis
though may be not realized in cash on date of preparing.
Revenue is recognize at the time of production when product can be mandated easily at
an objectively determined price. In the case of long term contracts the contractor may
elect to take up revenue as ended on the basis of percentage of work completed during
particular period.
ACCOUNTING CONVENTIONS
Conventions are the customs or traditions guiding the preparations of accounting
statements. They are adopted to make financial statements clear and meaningful. They
represent usage or methods generally accepted and customarily used. These are
statements or rules of practice employed or followed with common consent. These exist
in the cases where there are different alternatives, which are equally logical and some of
these are generally accepted having consideration of cost, time, habit or convenience.
Compilations of such conventions take the form of Generally Accepted Accounting
Practices or Procedures. Some areas of convention relate to methods of depreciation,
stock valuation, method of accounting etc.
CONVENTION OF MATERIALITY:
The accountant should attach importance to material details and ignore insignificant
details. If this is not done accounts will be overburdened with minute details. As per the
American Accounting Association, an item should be regarded as material, if there is
reason to believe that knowledge of it would influence the decision of informed investor.
Therefore, keeping the convention of materiality in view, unimportant items are either
left out or merged with other items. Some items are shown as footnotes like: contingent
liabilities, market value of investments etc. The decision to regard any information as
material should be taken objectively.
However, any item may be material for one purpose but immaterial for another, material
for one concern but immaterial for another or material one year but immaterial for next
year. Practical considerations assume more importance than theoretically correct way of
recording information.
CONVENTION OF CONSISTENCY:
The comparison of one accounting period with the other is possible only when the
convention of consistency is followed. It means accounting from one accounting period
to another should be on the same basis. For example: A company may adopt a straight
line method, written down value method, or any other method of providing depreciation
on fixed assets. But is expected that the company follows a particular method of
depreciation consistently. Similarly, if stock is valued at cost or at market price
whichever is less, this principle should be followed every year. Any change from one
method to another would lead to inconsistency. However, consistency does not mean non
flexibility. It should permit introduction of improved techniques of accounting.
Consistency also means that different businesses are using the same kind of accounting
principles and materials in maintenance of accounts and preparation of financial
statements. This is ensured by GAAP.
CONVENTION OF CONSERVATISM:
It refers to the policy of “Playing safe”. As per the convention all prospective losses are
taken into consideration but not all prospective profits. In other words “anticipate no
profit but provide for all possible losses”. However, this convention is being criticized on
the ground that it goes not only against the convention of full disclosure but also against
the concept of matching costs and revenues. It encourages creation of secret reserves by
making excess provision for depreciation, bad and doubtful debts etc. some degree of
conservatism is inevitable where objective data is not available.
ACCOUNTING STANDARDS
Some of the Accounting Standards that ACC uses are discussed below:
ACC uses both the methods i.e. Straight Line Method (SLM) and Written Down Value
Method (WDV). Straight Line Method (SLM) of depreciation is followed in Butibori unit
and Written Down Value Method (WDV) of depreciation is followed in Kalwe, Kymore
and Madukkarai when the goods are transferred to and fro. But since the company has
come into existence, they are using SLM only.
(AS-9)Revenue Recognition:
It is the gross inflow of cash, receivables or other considerations arising in the course of
ordinary activities of the reporting entity from sale of goods, rendering services, and from
the use of entities resources by other yielding interest, dividend and royalties.
Exceptions:
• Realized capital gains arising out of disposal of non-current assets.
Eg: Appreciation in the value of fixed assets.
• Unrealized holing gains in the value of current assets. Eg: increase in the market
value of stock in trade.
• Natural increase in the herds of livestock agricultural and forest products.
• Realized/ unrealized gains arising out of fluctuations in the foreign exchange rate
and translation of foreign currency financial statements.
• Realized gain from discharge of an obligation at a lesser amount than carrying of
amount.
• Unrealized gains resulting from restatement of the carrying amount of the
obligation.