Financial Accounting: An International Introduction, 6th Edition

Cover......Page 1
Title Page......Page 4
Copyright Page......Page 5
Contents......Page 6
Foreword to the first edition......Page 12
Preface......Page 14
Acknowledgements......Page 16
Abbreviations......Page 17
Part 1 The Context of Accounting......Page 20
  Objectives......Page 22
  1.1 Purposes and users of accounting......Page 23
  1.2 Entities......Page 26
  1.3 Accounting regulation and the accountancy profession......Page 29
  1.4 Language......Page 31
  1.5 Excitement in accounting......Page 32
  Summary......Page 33
  Multiple choice questions......Page 34
  Exercises......Page 35
  Objectives......Page 36
  2.2 The balance sheet......Page 37
  2.3 The income statement......Page 44
  2.4 Two simple equations......Page 50
  2.5 How cash flows fit in......Page 51
  Multiple choice questions......Page 53
  Exercises......Page 54
  Objectives......Page 58
  3.1 Introduction......Page 59
  3.2 Underlying concepts......Page 61
  3.3 The IASB’s list of qualitative characteristics......Page 64
  3.4 A hierarchy of concepts and some inconsistencies......Page 66
  3.5 The reporting entity......Page 68
  References and research......Page 69
  Exercises......Page 70
  Objectives......Page 72
  4.1 Introduction: various ways to regulate accounting......Page 73
  4.2 Legal systems......Page 74
  4.3 Examples of regulation......Page 75
  4.5 SMEs and partnerships......Page 81
  Summary......Page 82
  Multiple choice questions......Page 83
  Exercises......Page 84
  Objectives......Page 85
  5.1 Introduction: the international nature of the development of accounting......Page 86
  5.2 Classification......Page 87
  5.3 Influences on differences......Page 94
  5.4 Harmonization of financial reporting......Page 104
  5.5 The International Accounting Standards Board......Page 110
  Summary......Page 113
  References and research......Page 114
  Multiple choice questions......Page 115
  Exercises......Page 116
  Objectives......Page 118
  6.1 Introduction......Page 119
  6.2 Balance sheets (statements of financial position)......Page 120
  6.3 Comprehensive income......Page 126
  6.4 The 2013 Directive’s formats......Page 133
  6.6 Cash flow statements......Page 135
  6.8 Other general disclosure requirements......Page 138
  6.9 Wider disclosure considerations: corporate social reporting, Corporate governance and ethics......Page 141
  Summary......Page 143
  Multiple choice questions......Page 144
  Exercises......Page 145
  Objectives......Page 146
  7.2 Ratios and percentages......Page 147
  7.3 Profit ratios......Page 148
  7.4 Profitability ratios......Page 154
  7.5 Liquidity ratios......Page 161
  7.7 Funds management ratios......Page 162
  7.8 Introduction to investment ratios......Page 164
  7.9 Some general issues about ratios......Page 165
  Summary......Page 168
  Multiple choice questions......Page 169
  Exercises......Page 171
Part 2 Financial Reporting Issues......Page 178
  Objectives......Page 180
  8.2 Primacy of definitions......Page 181
  8.3 Hierarchy of decisions about assets and liabilities......Page 183
  8.4 Income (including revenue) and expenses......Page 193
  Summary......Page 199
  Multiple choice questions......Page 200
  Exercises......Page 202
  Objectives......Page 204
  9.1 Preamble: a tale of two companies......Page 205
  9.2 Introduction......Page 206
  9.3 The recognition of assets......Page 207
  9.4 Should leased assets be recognized......Page 209
  9.5 Depreciation of cost......Page 212
  9.6 Impairment......Page 224
  9.7 Measurement based on fair value......Page 226
  9.9 A mix of values......Page 230
  Summary......Page 231
  Multiple choice questions......Page 232
  Exercises......Page 234
  Objectives......Page 236
  10.1 Introduction......Page 237
  10.2 Counting inventory......Page 239
  10.3 Valuation of inventory at historical cost......Page 240
  10.4 Inventory flow......Page 241
  10.5 Other cost methods......Page 245
  10.6 Valuation of inventory using exit values......Page 246
  10.7 Practice......Page 247
  Summary......Page 248
  Multiple choice questions......Page 250
  Exercises......Page 251
  Objectives......Page 253
  11.1 Introduction......Page 254
  11.2 Cash and receivables......Page 255
  11.3 Investments......Page 257
  11.4 Liabilities......Page 260
  11.5 Equity......Page 265
  11.6 Reserves and provisions......Page 269
  11.7 Comparisons of debt and equity......Page 272
  Summary......Page 273
  References and research......Page 274
  Exercises......Page 275
  Objectives......Page 276
  12.1 Introduction......Page 277
  12.2 International differences in the determination of taxable income......Page 279
  12.3 Tax rates and tax expense......Page 281
  12.4 Deferred tax......Page 282
  Multiple choice questions......Page 286
  Exercises......Page 287
  Objectives......Page 289
  13.1 Introduction......Page 290
  13.2 An outline of the IAS 7 approach......Page 291
  13.3 Reporting cash flows from operating activities......Page 293
  13.4 The preparation of cash flow statements......Page 294
  13.5 A real example......Page 299
  Multiple choice questions......Page 302
  Exercises......Page 303
  Objectives......Page 305
  14.1 Introduction: the group......Page 306
  14.2 Investments related to the group......Page 309
  14.3 Accounting for the group......Page 312
  14.4 Uniting/pooling of interests......Page 321
  14.5 The equity method......Page 322
  14.6 Conclusion on group relationships......Page 324
  References and research......Page 325
  Multiple choice questions......Page 326
  Exercises......Page 327
  Objectives......Page 330
  15.2 Transactions......Page 331
  15.3 Translation of financial statements......Page 334
  15.4 A numerical illustration......Page 335
  Summary......Page 337
  Multiple choice questions......Page 338
  Exercises......Page 339
Part 3 Analysis......Page 342
  Objectives......Page 344
  16.2 More on investment ratios......Page 345
  16.3 Interpreting the balance sheet......Page 352
  16.5 Valuation through market values......Page 354
  16.6 Accounting policies and financial appraisal......Page 355
  16.7 Creative accounting......Page 363
  References and research......Page 364
  Multiple choice questions......Page 365
  Exercises......Page 366
  Objectives......Page 370
  17.2 Language......Page 371
  17.4 Accounting differences......Page 375
  17.5 Help by multinationals......Page 376
  17.6 Increasing international harmonization......Page 377
  References and research......Page 381
  Exercises......Page 382
  Annex: GlaxoSmithKline plc: notes on reconciliation from IFRS to US GAAP......Page 383
Appendices......Page 388
 Appendix A Double-entry bookkeeping......Page 390
 Appendix B An outline of the content of International Financial Reporting Standards......Page 435
 Appendix C An outline of the content of the Eu’s Fourth Directive on company law (as amended in 2001, 2003, etc.), and a note on the 2013 replacement Directive......Page 446
 Appendix D Answers to multiple choice questions......Page 449
 Appendix E Feedback on exercises......Page 451
Glossary of terms......Page 469
Index......Page 488