Companies of Tehran Stock Exchange

Discuss about the Companies of Tehran Stock Exchange.

A trial balance is a statement which is prepared with taking the closing balance of the different ledger accounts where the debit total balance matches the credit total balance. In simple words, a trial balance uses closing balance of different ledger accounts which have debit or credit balances and the statement tallies. If the statement does not tally then there may be certain errors in the statement. The main use of a trial balance is to check the mathematical accuracy of the transactions as recorded in the ledger accounts. Every business prepares a trial balance periodically to ensure that the books of accounts which are made following double entry system are free from errors which may be due to calculations. This is possible because under double entry system, the total of debit side will always be equal to the total of credit side. This the principle which is followed by a trial balance (Needles, Powers and Crosson 2013).

If the trial matches it only means that the mathematical accuracy is there but it does not mean that their may not be any accounting errors. The matching of trial balance only shows that there are no calculation errors but there still maty be material errors present in the books of accounts. For example, an error of omission of an entry will not be identifiable as the trial balance will match. Another example which can be given is that of bookkeeping error which means that equal debit and credit been entered into wrong accounts. In this case also, the trial balance will match but still there is an error in the financial statements.

As per the matching concept of account all the expenses should be reported in the same period in which the income which is related to such an expense is realized. In other words, this is an accounting principle which requires to recognize expenses and income in a related way (Shipman, Swanquist and Whited 2016).  As per the matching concept two methods which are popularly used in accounting are Accrual system of recognizing and Cash system of Recognizing.

Under the accrual system of accounting the expenses are recognizes in the year in which such an expense has been incurred and it does not matter whether cash is paid for such transaction. In other words, accrual basis of accounting is not dependent on the cash received or cash paid for recognizing and recording of transactions. Whereas in the case of cash basis of accounting expenses are recorded when cash is actually paid by the business irrespective of the fact when the expenses was incurred. Therefore, the major difference between cash basis and accrual basis is the timing of recognition of transactions.

Conceptual Framework refers to a system which is followed by organizations in reporting accounting items and is important in the preparation of the annual reports of a business while considering the rules and regulations which are universally established (Weil, Schipper and Francis 2013). The enhancing qualities characteristics of the financial statements are given below:

  1. Comparability: This principle states that the financial statements should be prepared by following such principles which facilitates the users of the financial statements to compare the results of the performance of the business with other organization as well as different periods for the same organization. This principle helps business and the users to ascertain the overall growth in the business.
  2. Verifiability: The principle suggest that the information which are presented in the financial statements of the company should be such that it can be easily be verified by the business. Any financial information is verifiable if the shareholders of the company can confirm that the financial information are fairly represented.
  3. Timeliness: The principle states that financial information if not presented to the shareholders in time of their decision-making process, then it is not at all useful. The principle makes it clear that the information should be provided to the investors before they are able to take decisions.
  4. Understandability: As per this principle, the financial information which are depicted in the annual reports should be simple and easy to understand and no such information should be included without appropriate notes and explanations which are complex in nature and difficult to understand.
  5. The use of credit cards will definitely reduce the risks which are associated with normal credit facilities. The loan amount can directly be dealt with the credit card company. the process of credit which was previously available will change due to the new credit card facilities. The credit card facilities will be making the e-commerce facility much easier. The cost which are to be incurred in case of credit card is related to interest which is charged at the end of the month. The credit cards are normally protected with a pin code which is different for different individuals.
  6. Account Receivables forms a major part of the financial statements of the company as it is related to credit sales of the business. The recording and monitoring of account receivable will not be affected by the introduction of credit cards in the business (Hope, Thomas and Vyas 2013). This because credit card can be used up to a certain limit which is not that much in most of the cases, however account receivables transaction may be of lumpsum amount due to a big order. Therefore, it is necessary for the business to keep track of the account receivables as effective management of such items results in increased generation of sales.

Factoring may be defined as a source of financing wherein the account receivables of the business are sold to financial intermediary who are known as factors at a discount. In simple words, it is a source of procuring funds by selling off the receivables of the business. It is to be clearly understood that factoring is not same as a loan and the funds which are received are not to be considered as debt capital of the business (Michalski 2014

Provision for bad debt are allowed in financial statements in order to estimate the losses which the business might incur. As per the principle of Conservatism, a business must always recognize probable losses or liabilities and record the same ahead of income or assets. Therefore, the business has to recognize such a doubtful debt as a provision. If the provision is not allowed than it will affect the profit which is generated by the business which will be showing profits in excess and also impact the value of debtors in the balance sheet of the company.

  1. Percentage of Sales Method: The method estimates the amounts which are uncollectible from the credit sales of a period. The method is based on the percentage of previous year’s actual uncollectible amounts to previous year’s credit sales (Jassaud and Kang 2015). Under this method any existing balance in the allowance when year end adjustment is being calculated are ignored.
  2. Percentage of Receivables Method: In this method an estimation is made in order to determine the desired size of allowance for uncollectible accounts. it is basically the expenses which the business expects to incur in terms of percentage. This the mostly used technique where allowance of doubtful debts are shown and in contra entry effect the amount is deducted from account receivables.

For the purpose of calculating the value of depreciation, the initial cost of the machinery is taken which is shown at 65,000. The other items which are included in the cost of machine are cost to deliver the machine to site which is shown at 3500. In addition to this, the installation costs and the repair made to the machinery are also a part of the cost of the machinery. The reason for this because such costs incurred on the machinery is increasing the useful life of the asset and thereby is to be capitalized. The depreciable value of the machinery as shown in the above table comes to 84500. The amount which is paid for painting the name of the company on the machinery and the expenses incurred on the damaged door which was due to machinery entering the factory will not be considered as a part of the cost of the machinery as such expenses does not increasing the useful life of the machine or adds any value to the machinery.

The two most popular methods which are used for the purpose of calculating the depreciation are Straight line method and Diminishing value method. In case of straight line method of depreciation, a fixed amount is charged as depreciation. In the case of Diminishing value method, depreciation is charged on the value of the asset and is on the basis of certain rate of depreciation. The amount which is charged as depreciation is changing and variable in nature (Del Giudice, Manganelli and De Paola 2016).

In the case of straight line method, the net profit will be deducted by the same amount of depreciation and the amount under this method remains fixed. If the company uses Diminishing value method then the amount of depreciation charged by the company diminishes with every year. The profit in case of diminishing value method will be more in comparison to straight line method of depreciation.

The revaluation of assets is done when the market value of the assets is more than the historical cost of the asset. The asset’s value can either be appreciated or depreciated depending on the type of revaluation which is the company is planning on the assets (Tabari and Adi 2014). Normally in any business assets are recorded on the basis of historical costs. The market value of the assets is always fluctuating and therefore there is a high probability that the market value of the asset will be more than the historical cost of the assets. Therefore, it is up to the choice of the management whether to value the asset at historical cost or revalue the asset and show the same at revalued cost. The revaluation of the asset allows the companies to ensure that the asset value is up to date with the market value of the asset. It is also to be remembered that the method of revaluation allows both upward and downward revaluation which is appreciation of the assets as well as depreciation of the assets.

As per the tables which are shown above perpetual system for measuring inventory is more suitable as the profit under the method is more than the profit generated under periodic system of inventory measurement. In addition to this, the perpetual system has its own advantage as it continuously updates the inventory records of the business to ensure that everything is up to date. As shown by the table above the net profit under perpetual inventory system is 7200 whereas the net profit under periodic inventory system is 6905 and hence perpetual system of inventory is to be followed.

The lower of cost or net realizable value is a principle which is widely followed concept which is used in inventory valuation. The concept states that the inventory should be valued at cost or net realizable value of the inventory which ever is lower. Net realizable value means the value at which the inventory is expected to be sold.

  1. The revenues of the company are recognized at fair value of the consideration received or receivable. The revenues of the business are recognized following accrual basis of accounting which allows business to recognize revenues as and when the transaction take place.
  2. The inventories of the company were recognized on lower of cost and net realizable value based on the rolling average selling price of the business. The inventory of the company has a stock loss provision as identified in key audit matters.
  3. Depreciation amount of the company is calculated on the basis of straight line method of depreciation as mentioned in the notes to accounts of the company. The amount of depreciation was reported as accumulated depreciation and the notes to accounts shows the break-up of accumulated depreciation.

The company has made a sustainability report which shows that the company has shown in the financial statements and the company has won Climate Leadership Award and has the title of the most profitable business in carbon reduction activity.

The company is committed to making the working environment as efficient as possible in global supply chain and also ensure that the products which are provided by the company qre of ethical in nature and sustainable. An ethical sourcing policy was implemented in 2017 across the group.

Reference

Del Giudice, V., Manganelli, B. and De Paola, P., 2016, July. Depreciation methods for firm’s assets. In International Conference on Computational Science and Its Applications(pp. 214-227). Springer, Cham.

Hope, O.K., Thomas, W.B. and Vyas, D., 2013. Financial reporting quality of US private and public firms. The Accounting Review, 88(5), pp.1715-1742.

Jassaud, N. and Kang, M.K., 2015. A strategy for developing a market for nonperforming loans in Italy (No. 15-24). International Monetary Fund.

Michalski, G., 2014. Factoring and the firm value.

Needles, B.E., Powers, M. and Crosson, S.V., 2013. Principles of accounting. Cengage Learning.

Shipman, J.E., Swanquist, Q.T. and Whited, R.L., 2016. Propensity score matching in accounting research. The Accounting Review, 92(1), pp.213-244.

Tabari, N.Y. and Adi, M., 2014. Factors Affecting the Decision to Revaluation of Assets in Listed Companies of Tehran Stock Exchange (TSE). International Journal of Scientific Management and Development, 2(8).

Weil, R.L., Schipper, K. and Francis, J., 2013. Financial accounting: an introduction to concepts, methods and uses. Cengage Learning.

BoomGrades.com
is a name in assignment
writing services that students trust. We offer our assignment writing
services for a wide variety of assignment
including essays, dissertations, case
studies and more. Students can place their order with us anytime as we function
24×7, and get their copies at unbeatable prices. We guarantee that all of our
solutions are plagiarism-free.

Calculate the price
Make an order in advance and get the best price
Pages (550 words)
$0.00
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with Boom Grades
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
Testimonials
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Religious studies
I recommend this service they always help. I got an A in this project thanks.
Customer 452507, October 5th, 2021
Classic English Literature
Absolutely LOVE the essay I received. I really appreciate it so much.
Customer 452529, October 25th, 2021
Exercise Science
Thank you so much for your time.
Customer 452545, December 5th, 2021
Public Health
Thank you so much !!
Customer 452589, November 28th, 2023
world civilization
Thank you for the quick response
Customer 452509, June 27th, 2021
Classic English Literature
Great Work as Usual. Thank you . I received an A on the paper!
Customer 452531, November 9th, 2021
English comp
Got a 94% thank you!
Customer 452509, June 27th, 2021
Classic English Literature
Awesome Job... you are the best!
Customer 452531, November 27th, 2021
Gerontology
Thank you so much this looks great !!!!
Customer 452585, November 4th, 2023
english comp
Thank you for all your hard time.
Customer 452509, June 27th, 2021
Medicine
Great content.
Customer 452549, February 8th, 2022
English 101
perfect! thanks!
Customer 452543, December 1st, 2021
11,595
Customer reviews in total
96%
Current satisfaction rate
3 pages
Average paper length
37%
Customers referred by a friend
OUR GIFT TO YOU
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat