, Brief contents
Preface xv
How to use this book xvii
1 Introduction to accounting 1
2 Measuring and reporting financial position 34
3 Measuring and reporting financial performance 75
4 Accounting for limited companies (1) 119
5 Accounting for limited companies (2) 163
6 Measuring and reporting cash flows 207
7 Recognising and reporting assets and liabilities 243
8 Analysing and interpreting financial statements (1) 275
9 Analysing and interpreting financial statements (2) 322
10 Reporting the financial results of groups of companies 358
11 Increasing the scope of financial reporting 416
12 Governing a company 455
Appendix A Recording financial transactions 507
Appendix B Glossary of key terms 526
Appendix C Solutions to self-assessment questions 537
Appendix D Solutions to critical review questions 548
Appendix E Solutions to selected exercises 557
Index 593
Credits 609
vi BRIEF CONTENTS
,Contents
Preface xv
How to use this book xvii
1 Introduction to accounting 1
Introduction 1
Learning outcomes 1
What is accounting? 2
Who are the users of accounting information? 2
The conflicting interests of users 4
How useful is accounting information? 4
Providing a service 6
Weighing up the costs and benefits 9
Accounting as an information system 11
Management accounting and financial accounting 13
Scope of this book 15
The changing face of accounting 16
Accounting for business 18
What is the purpose of a business? 18
What kinds of business ownership exist? 19
How are businesses organised? 22
The quest for wealth creation 23
Meeting the needs of other stakeholders 23
Balancing risk and return 26
Accounting for ethics 27
Not-for-profit organisations 29
Summary 30
Key terms 32
References 32
Further reading 33
Critical review questions 33
2 Measuring and reporting financial position 34
Introduction 34
Learning outcomes 34
CONTENTS vii
, The major financial statements – an overview 35
The statement of financial position 39
The effect of trading transactions 46
Classifying assets 48
Classifying claims 50
Statement layouts 51
Capturing a moment in time 53
The role of accounting conventions 54
Money measurement 59
Valuing assets 62
Meeting user needs 67
Self-assessment question 68
Summary 69
Key terms 71
Reference 71
Further reading 71
Critical review questions 71
Exercises 72
3 Measuring and reporting financial performance 75
Introduction 75
Learning outcomes 75
The income statement 76
Different roles 77
Income statement layout 78
Further issues 80
Recognising revenue 83
Recognising expenses 86
Profit, cash and accruals accounting 90
Depreciation 91
Costing inventories 101
Trade receivables problems 107
Uses and usefulness of the income statement 110
Self-assessment question 111
Summary 111
Key terms 113
Further reading 114
Critical review questions 114
Exercises 114
4 Accounting for limited companies (1) 119
Introduction 119
Learning outcomes 119
The main features of limited companies 120
Legal safeguards 123
Public and private companies 123
Taxation 125
viii CONTENTS
Preface xv
How to use this book xvii
1 Introduction to accounting 1
2 Measuring and reporting financial position 34
3 Measuring and reporting financial performance 75
4 Accounting for limited companies (1) 119
5 Accounting for limited companies (2) 163
6 Measuring and reporting cash flows 207
7 Recognising and reporting assets and liabilities 243
8 Analysing and interpreting financial statements (1) 275
9 Analysing and interpreting financial statements (2) 322
10 Reporting the financial results of groups of companies 358
11 Increasing the scope of financial reporting 416
12 Governing a company 455
Appendix A Recording financial transactions 507
Appendix B Glossary of key terms 526
Appendix C Solutions to self-assessment questions 537
Appendix D Solutions to critical review questions 548
Appendix E Solutions to selected exercises 557
Index 593
Credits 609
vi BRIEF CONTENTS
,Contents
Preface xv
How to use this book xvii
1 Introduction to accounting 1
Introduction 1
Learning outcomes 1
What is accounting? 2
Who are the users of accounting information? 2
The conflicting interests of users 4
How useful is accounting information? 4
Providing a service 6
Weighing up the costs and benefits 9
Accounting as an information system 11
Management accounting and financial accounting 13
Scope of this book 15
The changing face of accounting 16
Accounting for business 18
What is the purpose of a business? 18
What kinds of business ownership exist? 19
How are businesses organised? 22
The quest for wealth creation 23
Meeting the needs of other stakeholders 23
Balancing risk and return 26
Accounting for ethics 27
Not-for-profit organisations 29
Summary 30
Key terms 32
References 32
Further reading 33
Critical review questions 33
2 Measuring and reporting financial position 34
Introduction 34
Learning outcomes 34
CONTENTS vii
, The major financial statements – an overview 35
The statement of financial position 39
The effect of trading transactions 46
Classifying assets 48
Classifying claims 50
Statement layouts 51
Capturing a moment in time 53
The role of accounting conventions 54
Money measurement 59
Valuing assets 62
Meeting user needs 67
Self-assessment question 68
Summary 69
Key terms 71
Reference 71
Further reading 71
Critical review questions 71
Exercises 72
3 Measuring and reporting financial performance 75
Introduction 75
Learning outcomes 75
The income statement 76
Different roles 77
Income statement layout 78
Further issues 80
Recognising revenue 83
Recognising expenses 86
Profit, cash and accruals accounting 90
Depreciation 91
Costing inventories 101
Trade receivables problems 107
Uses and usefulness of the income statement 110
Self-assessment question 111
Summary 111
Key terms 113
Further reading 114
Critical review questions 114
Exercises 114
4 Accounting for limited companies (1) 119
Introduction 119
Learning outcomes 119
The main features of limited companies 120
Legal safeguards 123
Public and private companies 123
Taxation 125
viii CONTENTS
