7. Conservatism concept : conservatism concept means to record the inventories in lower price, comparing the market price and actual cost.

In the term of inventories first they add all types of inventories (raw materials on hand, raw materials in transit, work in process, finished goods, spare part and spare parts in transit) and put it in the balance sheet. Although we don’t know the market price of those inventories but we can estimate that the actual price is lower than the market price, so they record it.

8. Consistency concept : In this financial statement  in case of depreciation, they use straight-line method.

In this report they give ten years review at the very beginning. By going through this review we find that in each  period they depreciate their fixed asset on the basis of straight-line method. It means they follow the consistency policy. Firstly they estimate the life time  of their particular fixed asset  and then depreciate fixed asset by dividing with the life time of the particular asset.

9. Double-Entry concept : in this financial statement every item is taken from the adjusted trial balance, which is prepared  on the basis of  double entry concept. Though they doesn’t mentioned that they use double entry concept but we know that when transaction occur, we record it first in journal, then ledger and finally in trial balance. All of these accounts are prepare on the basis of double entry concept. For accrual concept some items left at the end of the period. To add those transactions with previous record book we prepare journal, ledger and adjusted trial balance. And finally from this adjusted trial balance we take the items and prepare cash flow statement, profit and loss account, and balance sheet.

10. Objectivity principle : Objectivity means the post entry measurement. In the financial statements the amount we put of different transactions take from the different documents. For example, the amount that we put against payment to suppliers is taken from the purchase invoice. They don’t assume this amount by comparing the market because they follow the objectivity principle.

11. Stable dollar concept :   In the purpose of  purchasing spare parts they use stable dollar concept. They import 79.54% from abroad and paid in dollar. Rest of 20.46% procured from local source and paid in taka. As the company is in our country, so they prepare their financial statement on the basis of taka. For this they convert the dollar into taka to maintain the base of money which they use in their financial statement. 

12. Matching concept : In the profit and loss account they put 258,162,317 tk  against sales. But here they don’t consider that the amount they have got or not. The transaction happened and they record it. When they receive money from the debtor they put the amount 249,240,140 in cash flow statement. Here we see that the transaction of sales recorded in two accounts but the amount are not same because the amount of sales and the amount of collection are not equal. In this term they follow the matching concept to match the sales.

Conclusion

From the following financial statement I describe about twelve principals which are used to prepare this statement. There are still some principals, which are used but not described because they are not much important. To prepare this assignment I face many problems but I have tried to make it better. At last I can say that the man who wants to continue his study in B.B.A must know about these principals because it is very important for his future career.