FINANCIAL

ACCOUNTING
ASSIGNMENT

NAME: KRISHNA SARIA

ROLL NO: 10377
SECTION: 1
SEMESTER: 1
COURSE: BCOM (HONS)
COMPANY CHOSEN
TATA COMPANY LTD.
One of India's oldest and biggest corporations
was created in 1868 by Jamsetji Tata and is
known as the Tata Group. Tata was first founded
as a trading corporation before diversifying into
steel, autos, telephones, and hospitality sectors.
Tata Steel was established in 1907 and quickly
became prominent in the world steel industry as
India's first integrated steel mill. The stories
about Tata Group's accomplishments go beyond
business.
The company saw enormous growth and global
expansion under Ratan Tata's inspirational
leadership. The IT services and consulting
division of Tata, TCS, has become a market
leader in the software sector. The history of Tata
Group shows that it now conducts business
across more than 100 nations and numerous
industries. Tata, renowned for its moral
standards and generosity, still represents Indian
enterprise and its impact on the world stage.
RATAN NAVAL TATA (FORMER CHAIRMAN)

N CHANDRASEKARAN(CHAIRMAN)

VENU SRINIVASAN (DIRECTOR)

Let’s now look at the company annual report that has been issued
for the year 2022-23. These images represent a brief description
about the report.
Now lets look at the consolidated balance sheet and profit and loss.
Accounting Concepts Identification:

1.Accrual Basis Accounting: Most companies use

accrual basis accounting, which recognizes revenue
and expenses when they are earned or incurred, not
necessarily when cash changes hands. This concept
ensures that financial statements reflect economic
reality rather than just cash movements.
2.Materiality: Information is considered material if
its omission or misstatement could influence the
economic decisions of users. The annual report
should disclose material information.
3.Going Concern Assumption: The financial
statements assume that the company will continue
to operate in the foreseeable future. If there are
doubts about the company's ability to continue as a
going concern, it should be disclosed.
4.Full Disclosure: Financial statements should
provide all relevant information which explain
accounting policies, contingencies, and other
relevant information necessary for users to make
informed decisions.
5.Consolidation: If a company has subsidiaries or
significant investments in other entities, it must
consolidate their financial statements into its own to
provide a complete picture of its financial position.
Interpretation of these principles and explaining
how are they followed in an Annual Report

1.Accrual Basis of Accounting :-An annual report

demonstrates the accrual basis of accounting through its
financial statements, particularly the income statement
(also known as the statement of profit and loss or
statement of comprehensive income) and the balance sheet
(also known as the statement of financial position)

Income Statement: Recognition of Revenue: Under the

accrual basis, revenue is recognized when it is earned,
regardless of when cash is received. In the income
statement, you'll see revenues reported when products are
delivered or services are provided to customers, not
necessarily when the payment is received. This reflects the
economic reality of the transaction.

Matching Expenses: Expenses are matched with the

revenues they help generate. This means that expenses are
recognized in the same period as the related revenue. For
example, if a company incurs costs to produce goods that
will be sold in the next accounting period, these costs are
recognized as assets (e.g., inventory).
Balance Sheet: Accrued Liabilities: Accrued liabilities,
like accrued salaries or accrued taxes, represent
expenses that have been incurred but not yet paid.
They are recorded as liabilities on the balance sheet
until they are settled with cash.

Deferred Revenue: If a company receives cash from

customers for goods or services that it has not yet
delivered, this is recorded as deferred revenue or
unearned revenue on the balance sheet.

2.Materiality :- An annual report of a company typically

contains a section that addresses materiality, which is
crucial for providing investors and stakeholders with a
clear understanding of the company's financial health
and performance.

Notes to the Financial Statements: The annual report

includes detailed notes to the financial statements,
where significant accounting policies and estimates are
disclosed.

Financial Statements: Material items such as significant

gains or losses, changes in accounting policies, or large
transactions are typically highlighted.
3.Going Concern Assumption :-It assumes that a company
will continue to operate in the foreseeable future, without
any plans to liquidate or cease operation.

Auditor's Report: The auditor's report, which is prepared

by an independent auditing firm, often includes a
paragraph addressing the going concern assumption. The
auditor assesses the company's ability to continue as a
going concern and provides an opinion on whether the
financial statements are prepared under this assumption.

Financial Statements: The financial statements

themselves, including the balance sheet, income
statement, statement of cash flows, and statement of
shareholders' equity, are prepared on the basis of the
going concern assumption. These statements reflect the
company's financial position and performance as if it will
continue to operate for the foreseeable future are done
under this assumption.

4.Full Disclosure :- The full disclosure principle requires

companies to provide all relevant and material
information, both financial and non-financial, that could
impact the decisions of users of the financial statements.

Financial Statements: The core of an annual report

consists of financial statements, including the balance
sheet, income statement, statement of cash flows, and
statement of shareholders' equity. These statements
provide a detailed account of the company's financial
performance and position, ensuring transparency in
financial reporting.
Management's Discussion and Analysis (MD&A): The
MD&A section typically appears in the front part of an
annual report. It provides management's perspective on
the company's financial performance, discussing the
reasons behind the results, financial trends, and future
plan.

5.Consolidation :- An annual report shows consolidation

when a company has subsidiaries, meaning it has
control over one or more other entities Consolidated

Financial Statements: The most significant aspect of

demonstrating consolidation in an annual report is the
presentation of consolidated financial statements.
These consolidated financial statements include:

Consolidated Balance Sheet: This combines the assets,

liabilities, and equity of the parent company and its
subsidiaries into a single balance sheet.

Consolidated Income Statement: This presents the

combined revenues, expenses, and net income of the
parent company and its subsidiaries.

Consolidated Statement of Cash Flows: This

summarizes the cash inflows and outflows of the entire
consolidated group.

Tata Ltd. Has provided us with the consolidated balance

sheet and profit and loss which shows it’s investment
and control over other entities. So it follows the
consolidation principle.