Accounting (3rd Revised edition)

Accounting (3rd Revised edition)

By: Michael Jones (author)Paperback

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Description

Accounting 3e provides a very accessible and easy-to-follow introduction to accounting. It is intended as a core textbook for students studying accounting for the first time: either those following an undergarduate degree in a business school, or non-business studies students stuyding an accounting course. This includes students on both accounting and non-accounting degrees and also MBA students. Designed to be both engaging and accessible to the student, Accounting 3e features: * A lively presentational style integrating cartoons and soundbites * Company Camera boxes presenting financial data from a wide variety of international companies, such as Heineken, Nokia and Volkswagen. * Real Life Nuggets offering contemporary examples from the business press that give the body of the text a real-life resonance. * End of chapter questions of escalating difficulty, together with accompanying answers, enabling the student to develop their understanding of the key concepts discussed in the text. * A rich supporting website including solutions, extra question material and powerpoint slides for lecturers, multiple choice quizzes and an online glossary for students.

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About Author

Michael Jones is Professor of Financial Reporting and Director of the Financial Reporting and Business Communication Unit at the University of Bristol, and also author of Financial Accounting, Management Accounting, and Creative Accounting, Fraud, and International Accounting Scandals, also published by John Wiley & Sons, Ltd.

Contents

About the Author xv About the Book xvii Acknowledgements xxiii 1 INTRODUCTION TO ACCOUNTING 1 Introduction 2 Nature of Accounting 2 Importance of Accounting 4 Financial Accounting and Management Accounting 5 Users of Accounts 6 Accounting Context 8 Types of Accountancy 12 Types of Accountant 17 Limitations of Accounting 20 Conclusion 20 Discussion Questions 22 SECTION A: FINANCIAL ACCOUNTING: THE TECHNIQUES 23 2 THE ACCOUNTING BACKGROUND 25 Introduction 26 Financial Accounting 26 Language of Accounting 28 Student Example 36 Why Is Financial Accounting Important? 40 Accounting Principles 40 Accounting Conventions 41 Conclusion 43 Discussion Questions 44 Numerical Questions 45 Appendix 2.1: Illustration of a Consolidated Income Statement for Marks & Spencer plc 2010 46 Appendix 2.2: Illustration of a Consolidated Statement of Financial Position for Marks and Spencer plc 2010 48 Appendix 2.3: Illustration of a Consolidated Statement of Cash Flows for Marks and Spencer 2010 50 Appendix 2.4: Illustration of a Consolidated Income Statement for Volkswagen 2009 52 Appendix 2.5: Illustration of a Consolidated Balance Sheet (Statement of Financial Position) for Volkswagen 2009 53 Appendix 2.6: Illustration of a Consolidated Cash Flow Statement (Statement of Cash Flows) for Volkswagen 2009 55 3 RECORDING: DOUBLE-ENTRY BOOKKEEPING 57 Introduction 58 The Accounting Equation 59 Worked Example 64 Computers 76 Conclusion 76 Discussion Questions 77 Numerical Questions 77 4 MAIN FINANCIAL STATEMENTS: THE INCOME STATEMENT (PROFIT AND LOSS ACCOUNT) 83 Introduction 84 Context 84 Defi nitions 86 Layout 88 Main Components 89 Profi t 97 Listed Companies 100 Capital and Revenue Expenditure 100 Limitations 101 Interpretation 101 Conclusion 101 Discussion Questions 102 Numerical Questions 102 5 MAIN FINANCIAL STATEMENTS: THE STATEMENT OF FINANCIAL POSITION (BALANCE SHEET) 104 Introduction 105 Context 106 Definitions 107 Layout 108 Main Components 110 Limitations 121 Interpretation 122 Listed Companies 123 Conclusion 123 Discussion Questions 124 Numerical Questions 125 Appendix 5.1: Horizontal Format of Statement of Financial Position 126 6 PREPARING THE FINANCIAL STATEMENTS 127 Introduction 128 Main Financial Statements 128 Trial Balance to the Income Statement (Profi t and Loss Account) and the Statement of Financial Position (Balance Sheet) 130 Adjustments to Trial Balance 134 Comprehensive Example 142 Conclusion 146 Discussion Questions 146 Numerical Questions 147 7 PARTNERSHIPS AND LIMITED COMPANIES 159 Introduction 160 Context 161 Partnerships 162 Limited Companies 168 Distinctive Accounting Features of Limited Companies 172 Accounting Treatment For Limited Companies 181 Limited Company Example: Stevens, Turner Ltd 183 Limited Companies: Published Accounts 188 Conclusion 193 Discussion Questions 194 Numerical Questions 195 Appendix 7.1: Example of an Income Statement (Profit and Loss Account) using UK GAAP (Manchester United Ltd) 205 Appendix 7.2: Example of a Statement of Financial Position (Balance Sheet) using UK GAAP (Manchester United Ltd) 206 8 MAIN FINANCIAL STATEMENT: THE STATEMENT OF CASH FLOWS 208 Introduction 209 Importance of Cash 210 Context 212 Cash and the Bank Account 212 Relationship between Cash and Profi t 216 Preparation of Statement of Cash Flows 218 Conclusion 232 Discussion Questions 232 Numerical Questions 233 Appendix 8.1: Main Headings for the Cash Flow Statement (Statement of Cash Flows) for Sole Traders, Partnerships and some Non-Listed Companies under UK GAAP 240 Appendix 8.2: Preparation of a Sole Trader s Cash Flow Statement Using the Direct Method Using UK Format 241 Appendix 8.3: Preparation of the Cash Flow Statement of Any Company Ltd using the Indirect Method Using UK GAAP 242 Appendix 8.4: Example of Statement of Cash Flow (Cash Flow Statement) Using UK GAAP (Manchester United Ltd) 245 9 INTERPRETATION OF ACCOUNTS 247 Introduction 248 Context 248 Overview 249 Importance of Ratios 251 Closer Look at Main Ratios 252 Worked Example 264 Report Format 272 Holistic View of Ratios 274 Performance Indicators 275 Limitations 276 Conclusion 277 Discussion Questions 278 Numerical Questions 279 Appendix 9.1: John Brown Plc 288 Appendix 9.2: The Cash Flows Ratio using UK GAAP 290 SECTION B: FINANCIAL ACCOUNTING: THE CONTEXT 291 10 REGULATORY AND CONCEPTUAL FRAMEWORKS 293 Introduction 294 Traditional Corporate Model: Directors, Auditors and Shareholders 295 Regulatory Framework 300 Regulatory Framework in the UK 302 Corporate Governance 307 Conceptual Framework 311 Conclusion 319 Selected Reading 320 Discussion Questions 321 11 MEASUREMENT SYSTEMS 322 Introduction 323 Overview 323 Measurement Systems 326 Deficiencies of Historical Cost Accounting 328 Illustrative Example of Different Measurement Systems 328 Real Life 331 Conclusion 332 Selected Reading 332 Discussion Questions 333 12 THE ANNUAL REPORT 334 Introduction 335 Definition 335 Context 336 Multiple Roles 337 Main Contents of the Annual Report 342 Presentation 359 Group Accounts 361 Impression Management 365 Conclusion 368 Selected Reading 369 Discussion Questions 370 13 CREATIVE ACCOUNTING 371 Introduction 372 Defi nition 374 Managerial Motivation 376 Methods of Creative Accounting 378 Example 385 Real Life 385 Case Studies 388 Creative Presentation 392 Controlling Creative Accounting 394 Conclusion 394 Selected Reading 395 Discussion Questions 396 14 INTERNATIONAL ACCOUNTING 398 Introduction 399 Context 399 Divergent Forces 401 Classification 407 Country Snapshots 407 Convergent Forces 414 Conclusion 420 Selected Reading 420 Discussion Questions 421 Appendix 14.1: List of International Standards 422 SECTION C: MANAGEMENT ACCOUNTING 425 15 INTRODUCTION TO MANAGEMENT ACCOUNTING 427 Introduction 428 Context 429 Relationship with Financial Accounting 430 Overview 432 Cost Minimisation and Revenue Maximisation 439 Use of Computers and Impact of Digital Technology 441 Art not a Science 442 Changing Nature of Management Accounting 442 Conclusion 442 Selected Reading 443 Discussion Questions 444 16 COSTING 445 Introduction 446 Importance of Cost Accounting 447 Types of Cost 448 Traditional Costing 452 Activity-Based Costing 458 Costing for Inventory Valuation 462 Different Costing Methods for Different Industries 466 Target Costing 470 Cost-Cutting 470 Conclusion 471 Discussion Questions 472 Numerical Questions 472 17 PLANNING, CONTROL AND PERFORMANCE: BUDGETING 478 Introduction 479 Management Accounting Control Systems 479 Nature of Budgeting 480 Cash Budget 484 Other Budgets 485 Manufacturing Budgets 488 Comprehensive Budgeting Example 491 Behavioural Aspects of Budgeting 496 Responsibility Accounting 500 Conclusion 502 Discussion Questions 502 Numerical Questions 503 18 PLANNING, CONTROL AND PERFORMANCE: STANDARD COSTING 508 Introduction 509 Nature of Standard Costing 510 Standard Cost Variances 511 Interpretation of Variances 520 Conclusion 521 Discussion Questions 522 Numerical Questions 523 19 SHORT-TERM DECISION MAKING 527 Introduction 528 Decision Making 528 Contribution Analysis 530 Decisions, Decisions 534 Throughput Accounting 540 Break-Even Analysis 542 Contribution Graph 546 Conclusion 548 Discussion Questions 549 Numerical Questions 549 20 STRATEGIC MANAGEMENT ACCOUNTING 554 Introduction 555 Nature of Strategic Management Accounting 557 Assessment of Current Position of the Business 559 Appraisal of Current Position of the Business 568 Strategic Choice of Future Direction 573 Conclusion 576 Selected Reading 576 Discussion Questions 577 Numerical Questions 578 21 LONG-TERM DECISION MAKING: CAPITAL INVESTMENT APPRAISAL 581 Introduction 582 Nature of Capital Investment 582 Capital Investment Appraisal Techniques 586 Payback Period 588 Accounting Rate of Return 590 Net Present Value 592 Profi tability Index 595 Internal Rate of Return (IRR) 595 Other Factors 600 Conclusion 600 Discussion Questions 601 Numerical Questions 602 Appendix 21.1: Present Value of GBP1 at Compound Interest Rate (1 r) 605 22 THE MANAGEMENT OF WORKING CAPITAL AND SOURCES OF FINANCE 606 Introduction 607 Nature of Sources of Finance 607 Short-Term Financing 608 Long-Term Financing 618 Cost of Capital 623 Conclusion 626 Discussion Questions 627 Numerical Questions 628 Glossary of Key Accounting Terms 631 Appendix: Answers 663 Index 723

Product Details

  • publication date: 05/04/2013
  • ISBN13: 9781119977186
  • Format: Paperback
  • Number Of Pages: 764
  • ID: 9781119977186
  • weight: 1458
  • ISBN10: 1119977185
  • edition: 3rd Revised edition

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