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    Prefatory Items LETTER OF TRANSMITTAL August 08

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    Prefatory Items
    August 08, 2018.

    Dr. Vijay Wagh
    Sheila Raheja School of Business Management & Research,
    Bandra, Mumbai – 400051.

    Re: Project is an attempt to study the Auditing and Review of Jaylon Impex Pvt Ltd.

    Dear Sir,
    The report outline in the research proposal of August 27, 2018 is complete. We have personally supervised the project, conducted the statically analysis and prepared this report.

    The report addresses the research on Auditing and Review of Jaylon Impex Pvt Ltd. We are about to submit the report on the causes of accident and its prevention on Western express highway. The report will consist of the brief research study on condition of the road, weather condition, number of deaths happened, people are not following the rules and regulations on Western Express Highway. The report will help us in managing t Auditing & review will helps to protect assets and reduce the possibility of fraud.

    So please allow us to start this research work about Auditing and Review.

    Thanking You,
    Yours Sincerely,
    Roll no Name Signature
    153 Prince R. Yadav
    To study the Auditing & review process of Jaylon Impex Pvt Ltd
    Sr.No Names Roll No.

    1 Prince R. Yadav 148
    Dr. Vijay Wagh
    Sheila Raheja School of Business Management & Research

    Is my original work and not copied from elsewhere nor submitted before for any degree, diploma or course to any Institute or university or due acknowledgement has been given in the bibliography to all sources be they printed electronic or personal.

    This project is done in the partial fulfillment of the requirement for the degree of MASTER OF MANAGEMENT STTUDIES by MUMBAI UNIVERRSITY.

    This information incorporated in this project is true and original to the best of my knowledge.

    I take this opportunity to specially gratify Dr. Vijay Wagh. Director, Sheila Raheja School of Business Management & Research, for permitting me to undertake this study and also Placement Head. Prof. Vivek Sharma. For his exemplary guidance, monitoring and constant encouragement throughout the course of internship project.

    I am deeply indebted to my guide Prof, Komal Kashyap for not only for her valuable and enlightened, but also for the freedom she rendered me during this project work.

    Faculty members, who have extended their kind help, guidance and suggestion without which it could not have been possible for me to complete this project.

    I also take this opportunity to express my gratitude to Company Mentor Mr. Jay Kaushik for his cardinal support, valuable information and guidance, which has help me in completing this task through various phases during the project.

    Prince Yadav
    Roll No. F 148
    Specialization- Finance
    SRBS, Mumbai
    March,23 2018.

    Dr. Vijay Wagh
    Sheila Raheja School of Business Management & Research,
    Bandra, Mumbai – 400051.

    Report: Presentation of research report
    Respected sir,
    The report outlined in the research proposal of March23, 2018, is complete. We have personally supervised the project, conducted the statistical analysis and prepared the report along with the research associates:-
    Prince Yadav
    The report addresses the key causes of the increase in the accident on Western Express Highway. The key research question involves To Examine the accidents on western express presents conclusions which should enable you to make informed decisions. Thus the conclusions confirm to the deliverables described in the proposal letter.

    We successfully accomplished the research project as described in the outline. We were able meet our goals for interviewing the students, corporate personnel and common people of all the age groups in the timely fashion.

    Dr. Vijay Wagh,
    Sheila Raheja School of Business Management, Bandra.

    Sign (Dr. Vijay Wagh)
    This is certify to that the project entitled ” A study on Auditing and Review of Jaylon Impex Pvt Ltd.” is he bonafied work carried out by MAYUR .K.TARE student of M.M.S, SHEILA RAHEJA SCHOOL OF BUSINESS MANAGEMENT. During the year 2018-2019 in the partial fulfillment of the requirement for the degree of Master of Management Studies and that the project has not formed the basis for the award of any other degree, associateship, fellowship or any other similar titles.

    Place: Mumbai
    Signature of the GuideSignature of Director
    Executive summary
    Executive Summary :-
    A research conducted under the accident happened on Western Express Highway.
    The report addresses the key causes of being why the most accidents happened in western express highway. Executive summary is presented in three parts consisting of a conceptual analysis followed by an analysis of relevant existing literature review in the area of understanding the causes of accidents as well as rules and regulations
    Problem Statement :-To study the effect of accidents on Western Express Highway.

    Research Objective:-
    1) To study the impact of Traffic Rules at W.E.H
    2) To study the weather condition on W.E.H.

    3) To study the Traffic on W.E.H.

    Hypothesis set 1
    H0– Traffic will not have an impact on W.E.H.

    H1– Traffic will have an impact on W.E.H.

    Hypothesis set 2
    H0 – Condition of road does not an impact on W.E.H.

    H1– Condition of road has an impact on W.E.H.

    Hypothesis set 3
    H0 – weather conditionon road does not have an impact on W.E.H.

    H1– weather condition on road has an impact on W.E.H.

    Research Design
    This Research Design is a combination of Exploratory Research and descriptive research.

    Literature Review:
    This Research conducted by various elements including primary data collection by circulating questionnaire, secondary data through various online articles, books, websites, newspapers etc. This Project gives idea about the accidents on western express highway. For more detail study in which this is defined.

    Introduction to Accidents on Western Express Highway.
    How road Accidents Happened
    How different factors of Roads contribute in Accidents:
    About Western Express Highway
    Accidents happened On Western Express Highway
    Death spots on Western Express Highway
    Major spots where Accidents happened
    Some of the cases of deadly Accidents happened on Western Express Highway
    Hospitals on around Western Express Highway in case accidents happened.

    How to reduce or prevent road accident on western express highway
    Accident rate which are caught by police
    Ways to Avoid Car Accidents
    Data collection method:-
    Collection method:- Survey
    Instrument:- Questionnaire
    Contact method:- Internet.

    Sampling strategy
    The study is all about the “Accident rate On W.E.H”
    Hence, object of the study to examine the people who are being part of accident on W.E.H
    People who are being part of accident on W.E.H
    In this can we will use Probability Sampling.

    1. Homogeneity is very high.

    2. The Sampling frame is available.

    3. Density of Population is very high.

    In this method we will apply Multistage area sample.

    Sample size for this research will be 120 People.

    Gender: Male and Female.

    Age: Above 20 years.

    Profile: Common People, Business man and open for all other above age group of 20 years.

    Planned for Data Analysis
    Data gathering through survey (questionnaire) and calculations will be performed on the historical data with the help of Microsoft Excel.

    Finding No. 01:It is observed that 48% of the respondent that Not following the rules is the main reason for the accident on Western Express Highway.

    Finding No. 02:It is revealed that 57.6% of the respondent Accident happens at age of 18-25, such while 32% at age of 26-35,such while 7.2% at age of 36-45 and remaining 3.2% at the age of 45 and above.

    Finding No. 03:It is observed that 48% respondent that most of the accidents are happen on Western Express Highway at Night.

    Finding No. 04:It is noticed that, 34.4% respondent that Motorcycle are most victims of accident, such while 39.2% for Motor Cars, such while 19.2% for truck and remaining 7.1 % for buses.
    Finding No. 05:It is noticed that, 32.8% respondent that Steering Mechanism or Braking System failure are the main causes that vehicle condition is affect to accident on WEH.
    Finding No. 06:It is noticed that, 60.8% of 125 respondents that Fog and Rainfall weather condition they both are effected for accident on Western Express Highway, such while 23.2% for rainfall and remaining 16% for fog .

    Finding No. 07:It is noticed that, 38.4% of 125 respondents that Poth Holes are the Main Factor of road condition that affects the accidents on Western Express Highway, such while 21.6% for Slippery Road and Street Light condition and remaining 17.6% for wrongly placed Speed Breaker.

    Finding No. 08:It is observed that 40% of the respondent 0-5% of the chance that road crossing affects the accident on Western Express Highway.

    Finding No. 09:It is revealed that, 88.8% of respondents using mobile Phones while driving can affects the accidents happening on western express highway, such while remaining 11.2% no for the using mobile Phones while driving can affects the accidents.

    Finding No. 10:It is noticed that, 42.4% of all respondents chosen3.5% of peoplenon licensed people contributed in accidents on Western Express Highway.

    Finding No. 11:It is noticed that, 42.4% of all respondents thinks that deaths due to road accidents are increasing on Western Express highway.

    Hypothesis Testing:
    Findings of Set 1: –% respondent prefer that traffic have impact on western express highway. Hence, WE ACCEPT H1 and REJECT HO.

    Findings of Set 2: –% respondents are prefer that Condition of road has an impact on western express highway. Hence, WE ACCEPT H1 and REJECT H0.

    Findings of Set 3: –% respondents that weather condition on road has an impact on western express highway. Hence, WE ACCEPT H1 and REJECT H0.

    The WEH, divided into 12 traffic divisions, is akin to the spine of Mumbai, but the 25.33-km stretch from Dahisar to Bandra is definitely not a smooth ride.

    During peak hours, the priority is to keep the traffic moving. The offences are registered during non-peak hours to ensure smooth traffic.
    The intensity of traffic is higher in the evening than in the morning. The main reason is because traffic is on the left side in the morning while in the evening; vehicles are on the right side.
    Most vehicles moving from north Mumbai towards Bandra have the commonly-used diversions on the left, as a result of which traffic moves faster in the morning than in the evening.

    The conditions are worse in the monsoon as the roads are riddled with potholes. The root cause of Mumbai’s pothole troubles is the poor quality of roads built by contractors. Substandard work is a recurring theme every monsoon
    Road safety will only be completely observed if appropriate action is initiated against contractors who don’t do their jobs properly. We would need to do something to improve bandwidth of highway
    Sr. No Topics Page no
    Prefatory Items 1
    1 Title Page 2
    2 Declaration 3
    3 Acknowledgement 4 Letter of Authorization 4
    5 Letter of Transmittal 6 Certificate 7 Executive Summary 5-10
    8 Table of Contents 11
    Chapter Index 12
    Table Index 13
    Graph Index 14
    Introduction 15
    Problem Statement 16
    7 Research Objective 17
    8 Research Hypothesis 18
    9 Research Design 19
    10 Literature Review 20-96
    Methodology 97
    12 Data Collection 102-103
    13 Data Analysis 104-116
    14 Hypothesis Testing 117-121
    15 Limitations 122-123
    Conclusions 124
    16 Findings 125-126
    Appendices 127
    18 Research Proposal 131-138
    19 Bibliography 139-141
    Exercises : Rough Assignments 142-143

    Problem Statement
    To Study the Auditing & review process of Jaylon Impex Pvt Ltd.

    Research Objectives
    To study the Auditing & review process of Jaylon Impex Pvt Ltd
    Hypothesis sets
    Hypothesis set 1
    H0– Auditing & review will not helps to protect assets and reduce the possibility of fraud.

    H1– Auditing & review will helps to protect assets and reduce the possibility of fraud.

    Research Design
    This Research Design is a combination of Exploratory Research and descriptive Research.

    Literature Review
    Literature Review
    What is Auditing ?
    Introduction of Auditing
    The audit is an intelligent and critical examination of the books of accounts of the business.

    Auditing is done by the independent person or body of persons qualified for the job with the help of statements, papers, information and comments received from the authorities so that the examiner can confirm the authenticity of financial accounts prepared for a fixed term and report that:
    The balance sheet exhibits an accurate and fair view of the state of affairs of concern;
    The profit and loss accounts reveal the right and balanced view of the profit and loss for the financial period;
    The accounts have been prepared in conformity with the law.

    Thus, it will be seen that the duty of an auditor is much more than a mere comparison of the balance sheet and accounts with the books.

    But, apart from doing this, he has to satisfy himself according to his information and the explanations given to him.

    Meaning of Auditing
    The term audit is derived from a Latin word “audire” which means to hear authenticity of accounts is assured with the help of the independent review.

    Audit is performed to ascertain the validity and reliability of information. Examination of books and accounts with supporting vouchers and documents to detect and prevent error, fraud is the primary function of auditing.

    Auditor has to check the effectiveness of internal control systems for determining the extent of checking out the audit.

    Initially its meaning and use were confined merely to cash audit, and the auditor has to ascertain whether the persons are responsible for the maintenance of accounts had adequately accounted for all the cash receipts and the payment on behalf of this principle.

    But the word audit has an extensive usage, and it now means a thorough scrutiny of the books of accounts and its ultimate aim is to verify the financial position disclosed by the balance sheet and profit and loss accounts of a company.

    In short, an audit implies an investigation and a report. The process of checking and vouching continues until the study is completed and the auditor enables himself to report under the terms of his appointment.

    The term auditing has been defined by different authorities.

    1. Spicer and Pegler: “Auditing is such an examination of books of
    accounts and vouchers of business, as will enable the auditors to
    satisfy himself that the balance sheet is properly drawn up, so as
    to give a true and fair view of the state of affairs of the businessand that the profit and loss account gives true and fair view of the
    profit/loss for the financial period, according to the best of
    information and explanation given to him and as shown by the
    books; and if not, in what respect he is not satisfied.”
    2. Prof. L.R.Dicksee. “auditing is an examination of accounting
    records undertaken with a view to establish whether they correctly
    and completely reflect the transactions to which they relate.

    (a). Audit is a systematic and scientific examination of the books of
    accounts of a business;
    (b). Audit is undertaken by an independent person or body of persons
    who are duly qualified for the job.

    (c) Audit is a verification of the results shown by the profit and loss
    account and the state of affairs as shown by the balance sheet.

    (d). Audit is a critical review of the system of accounting and internal

    (e). Audit is done with the help of vouchers, documents, information and
    explanations received from the authorities.

    (f) The auditor has to satisfy himself with the authenticity of the
    financial statements and report that they exhibit a true and fair view
    of the state of affairs of the concern.

    (g )The auditor has to inspect, compare, check, review, scrutinize the
    vouchers supporting the transactions and examine correspondence,
    minute books of share holders, directors, Memorandum of
    Association and Articles of association etc., in order to establish
    correctness of the books of accounts.

    There are two main objectives of auditing. The primary objective
    and the secondary or incidental objective.

    a. Primary objective – as per Section 227 of the Companies Act
    1956, the primary duty (objective) of the auditor is to report to
    the owners whether the balance sheet gives a true and fair view
    of the Company’s state of affairs and the profit and loss A/c
    gives a correct figure of profit of loss for the financial year.

    b. Secondary objective – it is also called the incidental objective
    as it is incidental to the satisfaction of the main objective. The
    incidental objective of auditing are:
    i. Detection and prevention of Frauds, and
    ii. Detection and prevention of Errors.

    Detection of material frauds and errors as an incidental objective of
    independent financial auditing flows from the main objective of
    determining whether or not the financial statements give a true and
    fair view. As the Statement on auditing Practices issued by the
    Institute of Chartered Accountants of India states, an auditor should
    bear in mind the possibility of the existence of frauds or errors in the
    accounts under audit since they may cause the financial position to
    be mis-stated.

    Fraud refers to intentional misrepresentation of financial information
    with the intention to deceive. Frauds can take place in the form of
    manipulation of accounts, misappropriation of cash and
    misappropriation of goods. It is of great importance for the auditor
    to detect any frauds, and prevent their recurrence. Errors refer to
    unintentional mistake in the financial information arising on account
    of ignorance of accounting principles i.e. principle errors, or error
    arising out of negligence of accounting staff i.e. Clerical errors.

    The auditor is given a free hand to the books, accounts, statements enabling him to thoroughly check them and if satisfied to certify that books have been properly drawn up and represent a true view of the financial position of the business. He gives his special attention to the direction of errors which may be innocently or intentionally committed.

    In the case of former the auditor discovers the errors by vouching the transactions and by comparing and tallying the balances between and amongst various books. But in the case of latter such errors are classified as frauds as it leads to defrauding the proprietors. The frauds could be detected by a thorough checking of the books and documents such as cash book, vouchers, invoices, wage sheets, etc
    The term fraud means the willful misrepresentation made with an
    intention of deceiving others. It is a deliberate mistake committed in the
    accounts with a view to get personal gain. In accounting, fraud means two

    a. Defalcation involving misappropriation of either cash or goods.

    b. Fraudulent manipulation of accounts not involving defalcation.

    Fraud Covers the Following


    1 By misappropriating the receipt by not recording the same in the
    2 By destroying the carbon copy or counter foil of the receipt and
    misappropriating the cash received
    3 By entering lesser amount on the counterfoil and misappropriating
    the difference between money actually-received and the amount
    entered on the counterfoil of the receipt book
    4 By not recording the receipt of sale of a casual nature for example
    sale of scrap, sale of old newspapers etc.

    5 By omitting to record cash donations received by non-profit making
    charitable institutions
    6 By misappropriating the cash received on discounting the bills
    receivable and showing them as bills outstanding on hand.

    7 By misappropriating cash received from debtors and concealing the
    same by giving artificial credit to the debtors in the form of bad debts,
    discount or sales return etc.

    8 By adopting the method of “teeming and lading” or “lapping process”.

    Under this method cash received from one debtor is misappropriated
    and deficiency in that debtors account is made good when another
    payment is received from second debtor by crediting the second
    debtors account less by that amount. This process is carried outround the year.

    9 By suppressing the cash sales by not recording them or by treating
    the cash sales as credit sales.

    10 By misappropriating the sale proceeds of VPP sales or sales of
    goods on approval basis by treating the transaction as goods
    received or not approved.

    11 By under casting receipt side total of the cashbook
    12 By recording fictitious or bogus payments
    13 By recording more payments than actual amounts paid by altering
    the figures on the vouchers.

    It implies presentation of accounts more favorably than what they
    actually are. Window dressing means showing a wrong picture. The fraud
    through manipulation of accounts is also known as window dressing
    because accounts are manipulated to show a wrong picture of the profit
    or loss of the business and its financial state of affairs. Generally this type
    of fraud is committed by the people at the top management level. This
    does not involve any misappropriation of cash or goods but it is either
    over statement of profit or understatement of the same. Such fraud is
    committed with certain objective and is relatively difficult to detect.


    1. When vouchers, invoices, cheques, contracts are missing etc.

    2. When control account does not agree with subsidiary books.

    3. When the difference in trial balance is difficult to locate.

    4. When there are greater fluctuation in G.P. and N.P. ratios.

    5. When there is difference between the balance and the confirmation
    of the balance by the parties.

    6. When there is difference between the stock as per records and the
    stock physically counted.

    7. When the explanation given by the client is not satisfactory.

    8. When there is a overwriting of some figures.

    9. When there is a contradiction in the explanation given by different

    1. Check the opening balances from the balance sheet of the last year.

    2. Check the posting into respective ledger accounts
    3. Check the total of the subsidiary books.

    4. Verify all the castings and the carry forwards.

    5. Ensure that the list of debtors and creditors tally with the ledger

    6. Make sure that all accounts from the ledger are taken into accounts.

    7. Verify the total of the trial balance.

    8. Compare the various items from the trial balance with that of the
    previous year.

    9. Find out the amount of difference and see whether an item of half or
    such amount is entered wrongly.

    10. Check differences involving round figures as Rs. 1,000; Rs. 100 etc .

    11. See where there is misplacement or transposition of figures that is 45
    for 54; or 81 for 18 etc.

    12. Ultimately careful scrutiny is the only remedy for detection of errors.

    13. See that no entry of the original book has remained unposted.


    1. Examine all aspects of the finance.

    2. Vouch all the receipts from the counterfoils or carbon copies or cash
    memos, sales mart reports etc.

    3. Check thoroughly the salary and wages register.

    4. Verify the methods of valuation of stocks.

    5. Check up stock register, goods inwards notes, goods out wards
    books and delivery challans etc
    6. Calculate various ratios in order to detect fraudulent manipulation of
    7. Go through the details of unusual items.

    8. Probe into the details of the problems when there is a suspicion.

    9. Exercise reasonable skill and care while performing the duty.

    10. Make surprise visit to check the accounts.

    At this stage, it must be clear that the objective of an audit of
    financial statements is to enable an auditor to express an opinion
    on such financial statements. In fact, it is the auditor’s opinion which
    helps determination of the true and fair view of the financial position
    and operating results of an enterprise. It is very significant to note
    that the AAS-2 makes it a subtle point that such an opinion
    expresses by the auditor is neither an assurance as to the future
    viability of the enterprise nor the efficiency or effectiveness with
    which management has conducted affairs of the enterprise. Further,
    the process of auditing is such that it suffers from certain inherent
    limitations, i.e., the limitation which cannot be overcome
    irrespective of the nature and extent of an audit procedure. It is very
    important to understand these inherent limitations of an audit since
    understanding of the same would only provide clarity as to the
    overall objectives of an audit. The inherent limitations are
    I. First of all, auditor’s work involve exercise of judgment, for
    example, in deciding the extent of audit procedures and in
    assessing the reasonableness of the judgment and
    estimates made by the management in preparing the
    financial statements. Further much of the evidence available
    to the auditor can enable him to draw only reasonable
    conclusions there from. The audit evidence obtained by an
    auditor is generally persuasive in nature rather than
    conclusive in nature. Because of these factors, the auditor
    can only express an opinion. Therefore, absolute certainty in
    auditing is rarely attainable. There is also likelihood that
    some material misstatements of the financial information
    resulting from fraud or error, if either exists, may not be

    II. The entire audit process is generally dependent upon the
    existence of an effective system of internal control. Further, it
    is clearly evident that there always be some risk of an
    internal control system failing to operate as designed. No
    doubt, internal control system also suffers from certain
    inherent limitations. Any system of internal control may be
    ineffective against fraud involving collusion among
    employees or fraud committed by management. Certain
    levels of management may be in a position to override
    controls; for example, by directing subordinates to records
    transactions incorrectly or to conceal them, or by
    suppressing information relating to transactions. Such
    inherent limitations of internal controls system also contribute
    to inherent limitations of an audit.

    Generally following are the Limitations of auditing
    1. Non-detection of errors/frauds:- Auditor may not be able to detect
    certain frauds which are committed with malafide intentions.

    2. Dependence on explanation by others:- Auditor has to depend on
    the explanation and information given by the responsible officers of
    the company. Audit report is affected adversely if the explanation
    and information prove to be false.

    3. Dependence on opinions of others:- Auditor has to rely on the views
    or opinions given by different experts viz Lawyers, Solicitors,
    Engineers, Architects etc. he can not be an expert in all the fields
    4. Conflict with others: – Auditor may have differences of opinion with
    the accountants, management, engineers etc. In such a case
    personal judgement plays an important role. It differs from person to

    5. Effect of inflation : – Financial statements may not disclose true
    picture even after audit due to inflationary trends.

    6. Corrupt practices to influence the auditors :- The management
    may use corrupt practices to influence the auditors and get a
    favourable report about the state of affairs of the organisation.

    7. No assurance :- Auditor cannot give any assurance about future
    profitability and prospects of the company.

    8. Inherent limitations of the financial statements :- Financial
    statements do not reflect current values of the assets and liabilities.

    Many items are based on personal judgement of the owners. Certain
    non-monetary facts can not be measured. Audited statements due to
    these limitations can not exhibit true position.

    9. Detailed checking not possible :- Auditor cannot check each and
    every transaction. He may be required to do test checking.

    An audit of accounts by an independent expert assures the
    outside users that the accounts are proper and reliable. The outsiders can
    rely on the accounts if the auditor reports that the accounts are true and
    fair. The accounts are said to be true and fair:
    1. When the profit and loss shown in the profit and loss account is
    true and fair, and
    2. Also when the value of assets and liabilities shown in the
    balance sheet is true and fair. What constitutes true and fair is not
    defined under any law. However the following general guidelines may
    be laid down in connection with true and fair.

    a) Conform to accounting principles: The books of accounts
    must be kept according to the normally accepted accounting
    principles such as the concept of entity, continuity, periodical
    matching of costs and revenue, accrual and double entry system

    b) No window dressing or secret reserves: The accounts must
    show the financial position and the profit or loss as they are. I.e.

    there is neither an overstatement nor an understatement. There
    should be in other words neither window dressing nor secret
    reserves. In window dressing the accounts are made in such a
    way as to show a much better condition than the actual
    condition. The profit and the net worth are overstated
    The accounts are said to show true and fair view when the
    accounts show only the actual conditions as it is. i.e. the profit
    and the net worth are shown as they are.

    In order to show a true and fair view the auditor should ensure that:
    1. The final accounts agree with the books of accounts.

    2. The provision for depreciation is proper.

    3. The closing stock is physically verified and valued properly.

    4. Intangible assets like goodwill, patents, preliminary expenses or other
    deferred revenue expenses are written off properly.

    5. Proper provision is made for bad and doubtful debts.

    6. Capital expenses is not treated as revenue expenses and vice versa.

    7. Capital receipts are not treated as revenue receipts.

    8. Effect of changes in rate of foreign exchange on value of assets and
    liabilities is recorded in the books properly.

    9. Contingent liabilities are not treated as actual liabilities and vice

    10. Provision is made for all known losses and liabilities
    11. A reserve is not shown as a provision and vice versa
    12. Cut off transactions are recorded properly, so that all sales invoices
    are matched with goods delivered and all purchase invoices are
    matched with goods received.

    13. Transactions are recorded on accrual basis, i.e. outstanding
    expenses, prepaid expenses, income accrued and advance income
    are recorded properly.

    14. Expected or anticipated gains are not credited to the profit and loss

    15. Effect of events after the balance sheet date on the value of an asset
    and liability is disclosed in the accounts properly
    16. The exceptional or non-recurring transactions are disclosed
    separately in the accounts.

    3. Disclose all material facts: The books of accounts must disclose all
    material facts regarding revenue, expenses, assets and liabilities. Material
    means important and essential. The disclosure of important matters in the
    accounts helps the users in taking business decisions. There should be
    neither suppression of vital facts nor mis-statements.

    4. Legal requirements: In case of limited company the account must
    disclose the matters required to be disclosed under the Companies Act.

    The final accounts must be in the format prescribed under Schedule VI of
    the Companies Act, 1956. Special companies such as banks, insurance,
    electricity supply companies prepare accounts as prescribed under
    special laws. A co-operative society, a trust etc. must also prepare the
    accounts as required under relevant laws.

    5. Requirements of Institute of Chartered Accountants of India: The
    accounts must also be in accordance with the various guidelines
    prescribed by the ICAI. These guidelines are contained in the statements,
    standard and guidance notes issued by the institute from time to time.

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