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Useful Advices - Principles of Accounting and Accounting Assumptions
In the modem world no business can afford to remain secretive because various parties such as creditors, employees, taxation authorities, investors, public and government etc., are interested to know about the affairs of the business. Affairs of the business can be studied mai
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
nly by consulting final accounts and the balance sheet of the particular business. Final accounts and the balance sheet are end products of book-keeping. Because of the importance of these statements it became necessary for the accountants to develop some principles, concepts
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
and conventions which may be regarded as fundamentals of accounting. Such fundamentals having wide acceptance give reliability and creditability to the financial statements prepared by the accountants. The need for 'generally accepted accounting principles' arises for two reas
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
ons: First, to be logical and consistent in recording the transactions and second, to conform to, the established practices and procedures.
There is no agreement among the accountants as regards the basic concepts of accounting. There is no uniformity in generally accepted ac
There is no agreement among the accountants as regards the basic concepts of accounting. There is no uniformity in generally accepted ac
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
counting principles (GAPP). The terms-axioms, assumptions, conventions, concepts, generalizations, methods, rules, doctrines, techniques, postulates, standards and canons are used freely and inconsistently in the same sense.
Principles
"A general law or rule
Principles
"A general law or rule
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
, adopted or professed as a guide to action, a settled ground or basis of conduct or practice." This definition given by dictionaries comes nearest to describing what most accountants mean by the word 'Principle'. Care should be taken to make it clear that as applied to accoun
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
ting practice, the world principle, does not connote a rule for which there can be no deviation. An accounting principle is not a principle in the sense that it admits of no conflict with other principles.
Postulates
Mean to assume without proof, to take for
Postulates
Mean to assume without proof, to take for
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
granted or positive consent, a position assumed as self- evident. Postulates are assumptions but they are not arbitrary deliberate assumptions but generally recognized assumptions which reflect the judgment of 'facts' or trend or events, assumptions which have been borne out
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
in past by facts supposed by legal institutions making them enforceable to some extent.
Doctrines
Mean principles of belief: what the scriptures teach on any subject. It refer to an established principle propagated by a teacher which is followed in strict fa
Doctrines
Mean principles of belief: what the scriptures teach on any subject. It refer to an established principle propagated by a teacher which is followed in strict fa
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
ith. But in accounting practice, no such doctrine need be adhered to but the word denotes the general principles or policies to be followed.
Axiom
Denotes a statement of truth which cannot be questioned by anyone.
Standards
Refer to the ba
Axiom
Denotes a statement of truth which cannot be questioned by anyone.
Standards
Refer to the ba
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
sis expected in accounting practice, under different circumstances. In Indian context, the Institute of Chartered Accountants of India (ICAI) constituted an Accounting Standards Board on 21st April, 1977. The main function of ASB is to formulate accounting standards taking int
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
o consideration the applicable laws, customs, usages and business environment.
Accounting Assumptions
The International Accounting Standards Committee (lASC) as well as the Institute of Chartered Accountants of India (ICAI) treat (vide IAS-I & AS-I) the foll
Accounting Assumptions
The International Accounting Standards Committee (lASC) as well as the Institute of Chartered Accountants of India (ICAI) treat (vide IAS-I & AS-I) the foll
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
owing as the fundamental accounting assumptions:
(1) Going concern
In the ordinary course, accounting assumes that the business will continue to exist and carry on its operations for an indefinite period in the future. The entity is assumed to remain in oper
(1) Going concern
In the ordinary course, accounting assumes that the business will continue to exist and carry on its operations for an indefinite period in the future. The entity is assumed to remain in oper
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
ation sufficiently long to carry out its objects and plans. The values attached to the assets will be on the basis of its current worth. The assumption is that the fixed assets are not intended for re-sale. Therefore, it may be contended that a balance sheet which is prepared
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
on the basis of record of facts on historical costs cannot show the true or real worth of the concern at a particular date. The underlying principle there is that the earning power and not the cost is the basis for valuing a continuing business. The business is to continue ind
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
efinitely and the financial and accounting policies are followed to maintain the continuity of the business unit.
(2) Consistency
There should be uniformity in accounting processes and policies from one period to another. Material changes, if any, should be
(2) Consistency
There should be uniformity in accounting processes and policies from one period to another. Material changes, if any, should be
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
disclosed even though there is improvement in technique. A change of method from one period to another will affect the result of the trading materially. Only when the accounting procedures are adhered to consistently from year to year the results disclosed in the financial sta
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
tements will be uniform and comparable.
(3) Accrual
Accounting attempts to recognize non-cash events and circumstances as they occur. Accrual is concerned with expected future cash receipts and payments: it is the accounting process of recognizing assets, li
(3) Accrual
Accounting attempts to recognize non-cash events and circumstances as they occur. Accrual is concerned with expected future cash receipts and payments: it is the accounting process of recognizing assets, li
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
abilities or income for amounts expected to be received or paid in future. Common examples of accruals include purchases and sales of goods or services on credit, interest, rent (not yet paid), wages and salaries, taxes. Thus, we make record of all expenses and incomes relatin
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
g to the accounting period whether actual cash has been disbursed or received or not. If a fundamental accounting assumption (i.e. Going concern, consistency and accrual) is not followed (in the preparation of financial statements) the fact should be disclosed. [AS-I para 27].
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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