Page 111 - DCOM409_CONTEMPORARY_ACCOUNTING

Contemporary Accounting

Notes 15. If any security is given by way of a mortgage or charge on all or any of its property, the
loan is termed as …………..
16. If a company borrows loans without giving any security, then such loans are termed as
………………..

8.6 Disclosure Requirements Concerning Profit & Loss Accounts

A company shall disclose the following notes to their accounts :
1. Revenues from operations: Revenue from operations shall be classified as:
(a) Sale of products;
(b) Sale of Services;
(c) Other operating revenues (specify nature);
Less:
(d) Discounts, allowances, and returns;
(e) Excise duty/service tax.
These shall include sales or service charges to customers for the goods and/or services
provided during the period. This section shall include information about duties, taxes,
discounts, allowances and returns in order to determine net sales or net revenues.
2. Cost of sales/services: These are costs directly associated with generating revenues and
shall include (to be disclosed separately):
(a) Change in inventories – Opening (less closing) inventories of finished goods and
work-in-process;
(b) Cost of direct materials consumed arrived at by adding net purchases (purchases
less discounts, returns and allowances plus freight-in) to beginning inventory to
obtain direct materials available. From the cost of direct materials available, the
ending inventory is deducted;
(c) Other external charges (such as the hire of plant and machinery or the cost of casual
labour used in the productive process);
(d) Direct labour (ESOP and ESPP expenses to be disclosed separately);
(e) All direct production overheads;
(f) Depreciation and amortization that can reasonably be allocated to the production
function;
(g) Indirect overheads that can reasonably be allocated to the production function;
(h) Product development expenditure not qualifying for recognition as an intangible
asset and amortization of development expenditure recognized as an intangible
asset;
(i) Inventory write downs/reversals;
(j) All direct overheads in providing services;
(k) All allocable indirect overheads in providing services;
(l) Cost of goods traded-in arrived at by adding net purchases (purchases less discounts,
returns, and allowances plus freight-in) to beginning inventory to obtain the cost of
goods available for sale. From the cost of goods available for sale amount, the
ending inventory is deducted;
(m) Other cost of sales.

106 LOVELY PROFESSIONAL UNIVERSITY