CIA 1.

1
ACCOUNTING CONCEPT
AND CONVENTION
WITH REFERENCE TO
DOMINO’S PIZZA, INC.

School of Business and Management

SEPTEMBER 2022
SUBMITTED BY:
Identified item: Deferred Tax and Assets

Statement in which identified: Consolidated Statement of Financial Position,

assets side in non-current assets

Principle related with: Accrual Concept

Reason: Deferred tax is payable in future and a transaction is recorded when it

occurs not when the cash for it is received or paid.

Identified item: Property Plant and Equipment

Statement in which identified: Consolidated Statement of Financial Position,

assets side in non-current assets

Principle related with: Cost Concept

Reason: Property Plant and Equipment are fixed assets recorded at a price paid
for them.

Identified item: Total Equity

Statement in which identified: Consolidated Statement of Financial Position in

equity

Principle related with: Business Entity Concept

Reason: For true picture of business a company is implied to be separate and

distinct from its owner.

Identified item: Profit of the period

Statement in which identified: Consolidated Statement of Profit & Loss in debit

side
Principle related with: Matching Concept

Reason: Subtraction of cost from revenue leads to the right calculation of the
profit of the period.

Identified item: Intangible assets

Statement in which identified: Consolidated Statement of Financial Position in

non-current assets.

Principle related with: Money measurement concept

Reason: Intangible assets affects the profit & loss of the business but are not
recorded in ledger.

Identified item: Cash and cash equivalents

Statement in which identified: Consolidated Statement of Financial Position in

current assets.

Principle related with: Going Concern Concept

Reason: Company is expected to be ongoing, and Cash and cash equivalents is

seen as a future capital investment and crisis money.

Identified item: Inventories

Statement in which identified: Consolidated Statement of Financial Position

assets side in current assets

Principle related with: Prudence Convention

Reason: Under Prudence provision for bad & doubtful debts is made, so the value
of inventory is taken at cost or net realization value whichever is low.
Identified item: Food Equipment and Packaging Expenses

Statement in which identified: Consolidated Statement of Profit & Loss in

credit side

Principle related with: Materiality Convention

Reason: Food Equipment and Packaging Expenses effect the decision of a user
and under materiality anything that affects the decision of the user is disclosed.

Identified item: Income Tax Expenses

Statement in which identified: Consolidated Statement of Profit & Loss in

profit before tax

Principle related with: Full Disclosure Convention

Reason: For creditors, proprietors, and investors trust in company’s financial

statements’ accuracy and integrity all significant information which is of material
interest to them is disclosed.

Identified item: Depreciation and amortization expense

Statement in which identified: Consolidated Statement of Profit & Loss in

credit side

Principle related with: Consistency Convention

Reason: A company is expected to apply same practices year after year.

So, if depreciation is provided on a particular method in a year, then same
method should be followed year after year.