List of figures | p. xi |
List of tables | p. xiii |
Preface | p. xv |
Acknowledgements | p. xvii |
Acronyms | p. xviii |
The world of accounting and finance | p. 1 |
Introduction to business accounting | p. 3 |
Introduction | p. 3 |
Business entities | p. 4 |
The accountancy profession | p. 12 |
Nature and purpose of accounting | p. 13 |
Overview of financial accounting | p. 15 |
Overview of management accounting | p. 18 |
Accounting principles | p. 23 |
Conclusions | p. 27 |
Practice questions | p. 28 |
The importance of cash | p. 30 |
Introduction | p. 30 |
The finance gap | p. 31 |
Main sources of finance | p. 34 |
Need for cash flow information | p. 39 |
Preparing a cash flow forecast | p. 41 |
Planning capital requirements | p. 46 |
Preparing a cash flow statement for management | p. 48 |
Conclusions | p. 51 |
Practice questions | p. 51 |
Financial accounting | p. 55 |
The accounting system | p. 57 |
Introduction | p. 57 |
Main sources of data | p. 58 |
Double-entry bookkeeping | p. 59 |
Recording transactions | p. 62 |
Preparing a trial balance | p. 71 |
Limitations of a trial balance | p. 77 |
Conclusions | p. 78 |
Practice questions | p. 78 |
Regulatory framework for financial reporting | p. 81 |
Introduction | p. 81 |
Need for regulation | p. 82 |
International harmonization and convergence | p. 89 |
Company law | p. 93 |
UK accounting standards | p. 98 |
International financial reporting standards | p. 101 |
The future of UK GAAP | p. 107 |
Conclusions | p. 109 |
Practice questions | p. 109 |
Conceptual framework for financial reporting | p. 112 |
Introduction | p. 112 |
Need for a conceptual framework | p. 113 |
Objective of general purpose financial reporting | p. 115 |
Qualitative characteristics of usefulness | p. 118 |
Elements of financial statements | p. 121 |
Recognition and measurement of elements | p. 124 |
Concepts of capital and capital maintenance | p. 125 |
Conclusions | p. 127 |
Practice questions | p. 127 |
Statement of comprehensive income | p. 129 |
Introduction | p. 129 |
Purpose of the statement of comprehensive income | p. 130 |
Preparing a draft statement of comprehensive income | p. 133 |
Difference between cash and profit | p. 139 |
Inventory, accruals and prepayments | p. 142 |
Depreciation of property, plant and equipment | p. 144 |
Bad debts and doubtful receivables | p. 148 |
Finalizing the statement of comprehensive income | p. 149 |
Conclusions | p. 152 |
Practice questions | p. 153 |
Statement of financial position | p. 157 |
Introduction | p. 157 |
Purpose of the statement of financial position | p. 158 |
Preparing a draft statement of financial position | p. 159 |
Inventory, accruals and prepayments | p. 168 |
Depreciation of property, plant and equipment | p. 169 |
Bad debts and doubtful receivables | p. 172 |
Finalizing the statement of financial position | p. 173 |
Conclusions | p. 177 |
Practice questions | p. 178 |
Consolidated financial statements | p. 183 |
Introduction | p. 183 |
Group structure of companies | p. 184 |
Consolidated statement of financial position at acquisition | p. 188 |
Consolidated statement of financial position after acquisition | p. 196 |
Consolidated statements of comprehensive income and changes in equity | p. 198 |
Associates | p. 201 |
Joint arrangements | p. 205 |
Conclusions | p. 211 |
Practice questions | p. 211 |
Financial statement analysis | p. 214 |
Introduction | p. 214 |
Ratio analysis | p. 215 |
Investment ratios | p. 216 |
Profitability ratios | p. 222 |
Liquidity and efficiency ratios | p. 227 |
Gearing ratios | p. 231 |
Trend analysis | p. 233 |
Limitations of ratio analysis | p. 234 |
Conclusions | p. 235 |
Practice questions | p. 236 |
Ethics, governance and corporate social responsibility | p. 241 |
Introduction | p. 241 |
Ethics and the professional accountant | p. 242 |
Corporate governance | p. 246 |
Development of the corporate governance code in the UK | p. 248 |
The UK Corporate Governance Code (2010) | p. 250 |
Overview of international corporate governance codes | p. 253 |
Environmental and corporate social responsibility | p. 255 |
Conclusions | p. 260 |
Practice questions | p. 261 |
Management accounting | p. 265 |
Importance of cost information | p. 267 |
Introduction | p. 267 |
Management's need for information | p. 268 |
Cost accounting | p. 270 |
Classifying costs and expenses | p. 273 |
Elements of total cost | p. 277 |
Conclusions | p. 280 |
Practice questions | p. 280 |
Costing for product direct costs | p. 283 |
Introduction | p. 283 |
Material control | p. 284 |
Costing direct materials | p. 286 |
Advantages and disadvantages of different costing methods | p. 291 |
Costing direct labour | p. 292 |
Costing direct expenses | p. 295 |
Conclusions | p. 296 |
Practice questions | p. 296 |
Costing for indirect costs | p. 298 |
Introduction | p. 298 |
Absorption costing | p. 299 |
Allocating and apportioning production overheads | p. 301 |
Calculating the production overhead absorption rate | p. 304 |
Calculating the production cost per unit | p. 306 |
Apportioning service cost centre overheads | p. 307 |
Predetermined overhead absorption rates | p. 310 |
Conclusions | p. 311 |
Practice questions | p. 312 |
Activity-based costing | p. 314 |
Introduction | p. 314 |
Need for an alternative to absorption costing | p. 315 |
Main stages in activity-based costing | p. 317 |
Activities and cost drivers | p. 318 |
The decision to adopt activity-based costing | p. 320 |
Costing for marketing and administration overheads | p. 321 |
Advantages and disadvantages of activity-based costing | p. 322 |
Conclusions | p. 324 |
Practice questions | p. 324 |
Marginal costing | p. 327 |
Introduction | p. 327 |
Classifying costs by behaviour | p. 328 |
Calculating contribution | p. 331 |
Breakeven analysis | p. 332 |
Contribution analysis | p. 335 |
Limiting factors | p. 338 |
Limitations and the relevant range | p. 340 |
Conclusions | p. 341 |
Practice questions | p. 341 |
Budgetary planning and control | p. 344 |
Introduction | p. 344 |
Importance of business planning | p. 345 |
Main stages in budgetary control | p. 346 |
Purpose of budgetary control | p. 349 |
Budget setting | p. 351 |
Fixed and flexible budgets | p. 356 |
Advantages and disadvantages of budgetary control systems | p. 360 |
Conclusions | p. 361 |
Practice questions | p. 362 |
Standard costing | p. 364 |
Introduction | p. 364 |
Standard costs and revenues | p. 365 |
Variance analysis | p. $66 |
Direct materials variance | p. 367 |
Direct labour variance | p. 370 |
Advantages and disadvantages of standard costing | p. 372 |
Conclusions | p. 373 |
Practice questions | p. 373 |
Capital investment appraisal | p. 375 |
Introduction | p. 375 |
Purpose of capital investment appraisal | p. 376 |
Simple payback period method | p. 378 |
Advantages and disadvantages of the simple payback method | p. 382 |
Accounting rate of return | p. 383 |
Advantages and disadvantages of the accounting rate of return | p. 386 |
Conclusions | p. 388 |
Practice questions | p. 389 |
Discounting methods of investment appraisal | p. 391 |
Introduction | p. 391 |
Time value of money | p. 392 |
Net present value | p. 394 |
Internal rate of return | p. 396 |
Discounted payback period | p. 398 |
Advantages and disadvantages of discounted cash flow methods | p. 401 |
Conclusions | p. 402 |
Practice questions | p. 403 |
Issues in management accounting | p. 405 |
Introduction | p. 405 |
Strategic management accounting | p. 406 |
Market-orientated accounting | p. 411 |
Target costing | p. 415 |
Balanced scorecard | p. 418 |
Accounting for quality | p. 425 |
Environmental management accounting | p. 428 |
Conclusions | p. 431 |
Practice questions | p. 432 |
Appendix: Present value table for ¿1 at compound interest | p. 436 |
Glossary of terms | p. 437 |
Index | p. 447 |
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