Financial and Management Accounting An Introduction

Front Cover
Title Page
Copyright Page
Contents in Brief
Contents
Preface to the eighth edition
Publisher’s acknowledgements
FINANCIAL ACCOUNTING
	Part 1 A conceptual framework: setting the scene
		Chapter 1 Who needs accounting?
			Real World Case
			Learning outcomes
			1.1 Introduction
			1.2 The development of a conceptual framework
			1.3 The Conceptual Framework for Financial Reporting
			1.4 Types of business entity
			1.5 Users and their information needs
			1.6 Financial statements
			1.7 Summary
			Further reading
			Questions
			Activities for study groups (4 or 5 per group)
			Notes and references
			Supplement: Introduction to the terminology of business transactions
			Test your understanding
		Chapter 2 A systematic approach to financial reporting: the accounting equation
			Real World Case
			Learning outcomes
			2.1 Introduction
			2.2 The accounting equation
			2.3 Defining assets
			2.4 Examples of assets
			2.5 Recognition of assets
			2.6 Measurement of assets
			2.7 Defining liabilities
			2.8 Examples of liabilities
			2.9 Recognition of liabilities
			2.10 Measurement of liabilities
			2.11 The ownership interest
			2.12 Assurance for users of financial statements
			2.13 Summary
			Further reading
			Questions
			Activities for study groups
			Notes and references
			Supplement: Debit and credit bookkeeping
			Test your understanding
		Chapter 3 Financial statements from the accounting equation
			Real World Case
			Learning outcomes
			3.1 Introduction
			3.2 Who is in charge of the accounting system?
			3.3 The accounting period
			3.4 The statement of financial position (balance sheet)
			3.5 The income statement (profit and loss account)
			3.6 The statement of cash flows
			3.7 Usefulness of financial statements
			3.8 Summary
			Questions
			Activities for study groups
			Supplement: Using the accounting equation to analyse transactions
			Test your understanding
		Chapter 4 Ensuring the quality of financial statements
			Real World Case
			Learning outcomes
			4.1 Introduction
			4.2 Qualitative characteristics of financial statements
			4.3 Accounting principles
			4.4 Applying prudence
			4.5 Regulation of financial reporting
			4.6 Reviewing published financial statements
			4.7 Summary
			Further reading
			Questions
			Activities for study groups
			Notes and references
	Part 2 Reporting the transactions of a business
		Chapter 5 Accounting information for service businesses
			Real World Case
			Learning outcomes
			5.1 Introduction
			5.2 Analysing transactions using the accounting equation
			5.3 Illustration of accounting for a service business
			5.4 A process for summarising the transactions: a spreadsheet
			5.5 Financial statements as a means of communication
			5.6 Summary
			Questions
			Supplement: Recording transactions in ledger accounts: a service business
			Test your understanding
		Chapter 6 Accounting information for trading businesses
			Real World Case
			Learning outcomes
			6.1 Introduction
			6.2 Goods purchased for resale
			6.3 Manufacturing goods for resale
			6.4 Illustration of accounting for a trading business
			6.5 A process for summarising the transactions: a spreadsheet
			6.6 Financial statements of M. Carter, wholesaler
			6.7 Summary
			Questions
			Supplement: Recording transactions in ledger accounts: a trading business
			Test your understanding
	Part 3 Recognition in financial statements
		Chapter 7 Published financial statements
			Real World Case
			Learning outcomes
			7.1 Introduction
			7.2 International influences
			7.3 Accounting framework
			7.4 Statement of financial position (balance sheet)
			7.5 Income statement (profit and loss account)
			7.6 Statement of cash flows
			7.7 Group structure of companies
			7.8 Group financial statements
			7.9 Small and medium-sized entities (SMEs)
			7.10 Beyond the annual report
			7.11 Summary
			Further reading
			Useful websites
			Questions
			Activities for study groups
			Notes and references
			Supplement 7.1: Information to be presented on the face of the statement of financial position, as required by IAS 1
			Supplement 7.2: Balance sheet format 1, as prescribed by theCompanies Act 2006
			Supplement 7.3: Information to be presented on the face of theincome statement, as required by IAS 1
			Supplement 7.4: UK Companies Act profit and loss account format 1 – list of contents
		Chapter 8 Non-current (fixed) assets
			Real World Case
			Learning outcomes
			8.1 Introduction
			8.2 Definitions
			8.3 Recognition and measurement
			8.4 Users’ needs for information
			8.5 Information provided in the financial statements
			8.6 Usefulness of published information
			8.7 Depreciation: an explanation of its nature
			8.8 Reporting non-current (fixed) assets and depreciation in financial statements
			8.9 Summary
			Further reading
			Questions
			Activities for study groups
			Notes and references
			Supplement: Recording non-current (fixed) assets and depreciation
			Test your understanding
		Chapter 9 Current assets
			Real World Case
			Learning outcomes
			9.1 Introduction
			9.2 Definitions
			9.3 The working capital cycle
			9.4 Recognition and measurement
			9.5 Users’ needs for information
			9.6 Information provided in the financial statements
			9.7 Measurement and recording
			9.8 Inventories (stocks) of raw materials and finished goods
			9.9 Receivables (debtors)
			9.10 Prepayments
			9.11 Revenue recognition
			9.12 Summary
			Questions
			Activities for study groups
			Notes and references
			Supplement: Bookkeeping entries for (a) bad and doubtful debts; and (b) prepayments
			Test your understanding
		Chapter 10 Current liabilities
			Real World Case
			Learning outcomes
			10.1 Introduction
			10.2 Definitions
			10.3 Recognition and measurement
			10.4 Users’ needs for information
			10.5 Information provided in the financial statements
			10.6 Measurement and recording
			10.7 Accruals and the matching concept
			10.8 Liabilities for taxation
			10.9 Summary
			Questions
			Activities for study groups
			Notes and references
			Supplement: Bookkeeping entries for accruals
			Test your understanding
		Chapter 11 Provisions and non-current (long-term) liabilities
			Real World Case
			Learning outcomes
			11.1 Introduction
			11.2 Users’ needs for information
			11.3 Information provided in the financial statements
			11.4 Provisions
			11.5 Deferred income
			11.6 Non-current (long-term) liabilities
			11.7 Summary
			Questions
			Activities for study groups
			Notes and references
			Supplement: Bookkeeping entries for provisions and deferred income
			Test your understanding
		Chapter 12 Ownership interest
			Real World Case
			Learning outcomes
			12.1 Introduction
			12.2 Definition and recognition
			12.3 Presentation of ownership interest
			12.4 Statement of changes in equity
			12.5 Users’ needs for information
			12.6 Information provided in the financial statements
			12.7 Dividends
			12.8 Issue of further shares on the Stock Exchange
			12.9 Summary
			Questions
			Activities for study groups
			Notes and references
			Supplement: A spreadsheet for adjustment to a trial balance at the end of the accounting period
			Test your understanding
	Part 4 Analysis and issues in reporting
		Chapter 13 Ratio analysis
			Real World Case
			Learning outcomes
			13.1 Introduction
			13.2 A note on terminology
			13.3 Systematic approach to ratio analysis
			13.4 Investors’ views on risk and return
			13.5 Pyramid of ratios
			13.6 Use and limitations of ratio analysis
			13.7 Worked example of ratio analysis
			13.8 Linking ratios to the statement of cash flows
			13.9 Combining ratios for interpretation
			13.10 Summary
			Questions
			Notes and references
		Chapter 14 Reporting corporate performance
			Real World Case
			Learning outcomes
			14.1 Introduction
			14.2 Strategy and performance
			14.3 Other guidance in analysis
			14.4 Segmental information
			14.5 Off-balance sheet finance
			14.6 Corporate social responsibility
			14.7 Corporate governance
			14.8 Meaning of ‘fair presentation’ and ‘true and fair view’
			14.9 Measurement of value
			14.10 Risk reporting
			14.11 Developing issues: how valid is the stakeholder model?
			14.12 Summary
			Further reading
			Questions
			Activities for study groups
			Notes and references
		Chapter 15 Reporting cash flows
			Real World Case
			Learning outcomes
			15.1 Introduction
			15.2 The direct method and the indirect method
			15.3 Preparing a statement of cash flows: the indirect method
			15.4 Preparing a statement of cash flows: the direct method
			15.5 Interpretation of cash flow information
			15.6 Illustration
			15.7 Summary
			Further reading
			Questions
			Notes and references
MANAGEMENT ACCOUNTING
	Part 5 Setting the scene and defining the basic tools of management accounting
		Chapter 16 Functions of management accounting
			Real World Case
			Learning outcomes
			16.1 Introduction
			16.2 Meeting the needs of internal users
			16.3 Management functions
			16.4 Role of management accounting
			16.5 Judgements and decisions: case study illustrations
			16.6 The language of management accounting
			16.7 Summary
			Further reading
			Questions
			Activities for study groups
			Notes and references
		Chapter 17 Classification of costs
			Real World Case
			Learning outcomes
			17.1 Definition of a cost
			17.2 The need for cost classification
			17.3 The meaning of ‘activity’ and ‘output’
			17.4 Variable costs and fixed costs
			17.5 Direct costs and indirect costs
			17.6 Product costs and period costs
			17.7 Cost classification for planning, decision making and control
			17.8 Cost coding
			17.9 Cost selection and reporting
			17.10 Summary
			Further reading
			Questions
			Activities for study groups
		Chapter 18 Product costs: materials, labour and overheads
			Real World Case
			Learning outcomes
			18.1 Introduction
			18.2 Accounting for materials costs
			18.3 Accounting for labour costs
			18.4 Production overheads: traditional approach
			18.5 Activity-based costing (ABC) for production overheads
			18.6 Comparing the traditional approach and ABC
			18.7 Summary
			Further reading
			Questions
			Activities for study groups
			Notes and references
	Part 6 Job costs and stock valuation
		Chapter 19 Job costing
			Real World Case
			Learning outcomes
			19.1 Introduction
			19.2 Job-cost records: an illustration
			19.3 Job costing: applying the accounting equation to transactions
			19.4 Absorption costing and marginal costing
			19.5 Moving forward
			19.6 Summary
			Questions
			Activities for study groups
	Part 7 Decision making
		Chapter 20 Break-even analysis and short-term decision making
			Real World Case
			Learning outcomes
			20.1 Introduction
			20.2 Cost behaviour: fixed and variable costs
			20.3 Break-even analysis
			20.4 Using break-even analysis
			20.5 Limitations of break-even analysis
			20.6 Applications of cost–volume–profit analysis
			20.7 Cases in short-term decision making
			20.8 Pricing decisions
			20.9 Summary
			Questions
			Activities for study groups
	Part 8 Planning and control
		Chapter 21 Preparing a budget
			Real World Case
			Learning outcomes
			21.1 Introduction
			21.2 Purpose and nature of a budget system
			21.3 Administration of the budgetary process
			21.4 The benefits of budgeting
			21.5 Behavioural aspects of budgeting
			21.6 Approaches to budgeting
			21.7 Practical example – development of a budget
			21.8 Shorter budget periods
			21.9 Summary
			Questions
			Activities for study groups
		Chapter 22 Standard costs
			Real World Case
			Learning outcomes
			22.1 Introduction
			22.2 The level of output to be used in setting standards
			22.3 The control process
			22.4 Direct materials cost variance
			22.5 Direct labour cost variance
			22.6 Variable overhead cost variance
			22.7 Fixed overhead expenditure variance
			22.8 Case study: Allerdale Ltd
			22.9 Investigating variances
			22.10 Flexible budgets and variance analysis
			22.11 Is variance analysis, based on standard costs, a useful exercise?
			22.12 A broader view of applications of variance analysis
			22.13 Summary
			Questions
			Activities for study groups
			Notes and references
		Chapter 23 Performance evaluation and feedback reporting
			Real World Case
			Learning outcomes
			23.1 Introduction
			23.2 Preparing performance reports
			23.3 Performance evaluation
			23.4 Benchmarking
			23.5 Non-financial performance measures
			23.6 The Balanced Scorecard
			23.7 Management use of performance measurement
			23.8 Summary
			Further reading
			Questions
			Activities for study groups
	Part 9 Capital investment appraisal and business strategy
		Chapter 24 Capital investment appraisal
			Real World Case
			Learning outcomes
			24.1 Purpose of capital investment appraisal
			24.2 Payback method
			24.3 Accounting rate of return
			24.4 Net present value method
			24.5 Internal rate of return
			24.6 Mutually exclusive projects
			24.7 Which methods are used in practice?
			24.8 Control of investment projects: authorisation and review
			24.9 Advanced manufacturing technologies
			24.10 Summary
			Further reading
			Questions
			Activities for study groups
			Supplement: Table of discount factors
		Chapter 25 Business strategy and management accounting
			Real World Case
			Learning outcomes
			25.1 Introduction
			25.2 Strategic management accounting
			25.3 The just-in-time approach
			25.4 Value chain analysis
			25.5 Total quality management and cost of quality
			25.6 Business process re-engineering
			25.7 Digital business and e-commerce
			25.8 Summary
			Further reading
			Questions
			Activities for study groups
			Note and reference
Financial accounting terms defined
Management accounting terms defined
Appendices
	I Information extracted from annual report of Safe and Sure Group plc, used throughout Financial Accounting
	II Solutions to numerical and technical questions in Financial Accounting
	III Solutions to numerical and technical questions in Management Accounting
Index
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