Accounting for Managers (5th Revised edition)

Accounting for Managers (5th Revised edition)

By: Paul M. Collier (author)Paperback

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This revised and updated fifth edition of Accounting for Managers builds on the international success of the previous editions in explaining how accounting is used by non-financial managers. Emphasizing the interpretation rather than the construction of accounting information, Accounting for Managers encourages a critical, rather than an unthinking acceptance of accounting techniques. Whilst immensely valuable for planning, decision-making and control, users of accounting information need to recognize the assumptions behind, and the limitations of particular accounting techniques. As in the previous editions, the book links theory with practical examples and case studies drawn from real business situations across a wide range of manufacturing, retail and service industries.

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About Author

Dr Paul M. Collier was Professor of Accounting at Monash University in Melbourne, Australia. He was previously at Aston Business School in Birmingham, UK. Paul is currently a consultant and investor in a hospitality business but retains an ongoing association in various academic projects with Monash University. Before becoming an academic, Paul was chief financial officer of a listed company and has worked in senior financial and general management positions in the UK and Australia. He has also conducted numerous executive education courses. Paul has been a board member of a large UK Housing Association and an Australian health service. This book is a result of his practical experience as a producer and user of accounting information as well as his teaching and training experience in the UK and Australia. A comprehensive package of supplementary material is available on the book companion website at, including PowerPoint slides, multiple choice questions for each chapter, and additional questions and solutions.


Preface to the Fifth Edition xiii About the Author xvii Acknowledgements xix PART I Context of Accounting 1 1 Introduction to Accounting 3 Accounting, accountability, and the account 3 A short history of accounting 5 Introducing the functions of accounting 7 The role of financial accounting 7 The role of management accounting 8 Recent developments in accounting 10 The relationship between financial accounting and management accounting 12 A critical perspective 14 Conclusion 16 References 16 Questions 17 2 Accounting and its Relationship to Shareholder Value and Corporate Governance 19 Capital and product markets 19 Shareholder value ]based management 21 Shareholder value, strategy, and accounting 23 Company regulation and corporate governance 25 Risk management, internal control, and accounting 28 A critical perspective 29 Conclusion 30 References 30 Questions 31 3 Recording Financial Transactions and the Principles of Accounting 33 Business events, transactions, and the accounting system 33 The double entry: recording transactions 35 Extracting financial information from the accounting system 38 Basic principles of accounting 42 Cost terms and concepts: the limitations of financial accounting 45 Conclusion 47 References 47 Questions 47 4 Management Control, Accounting, and its Rational ]Economic Assumptions 51 Management control systems 51 Planning and control in organizations 54 Non ]financial performance measurement 58 A theoretical framework for accounting 64 Conclusion 65 References 65 Websites 67 Questions 67 5 Interpretive and Critical Perspectives on Accounting and Decision Making 69 Research and theory in management control and accounting 70 Alternative paradigms 73 The interpretive paradigm and the social construction perspective 75 Culture, control, and accounting 77 The radical paradigm and critical accounting 78 Power and accounting 80 Creative accounting, ethics, and accounting 84 Conclusion 90 References 91 Questions 93 PART II The Use of Financial Statements for Decision Making 95 6 Constructing Financial Statements: IFRS and the Framework of Accounting 97 International Financial Reporting Standards (IFRS) 98 Framework for the Preparation and Presentation of Financial Statements 100 True and fair view 103 Reporting profitability: the Income Statement and Statement of Comprehensive Income 104 Reporting financial position: the Balance Sheet or Statement of Financial Position 107 The matching principle and accruals accounting 109 Depreciation 111 Specific IFRS accounting treatments 112 Reporting cash flow: the Statement of Cash Flows 116 Differences between the financial statements 118 A theoretical perspective on financial statements 120 A critical perspective on financial statements and accounting standards 121 Conclusion 122 Reference 122 Websites 122 Appendix to Chapter 6: List of IFRS and FRS 123 Questions 125 7 Interpreting Financial Statements 129 Annual Reports 129 The context of financial statements 131 Ratio analysis 132 Profitability 133 Liquidity 135 Gearing 135 Activity/efficiency 136 Working capital 137 Managing receivables 138 Managing inventory 138 Managing payables 139 Managing working capital 139 Shareholder return 140 The relationship between financial ratios 141 Interpreting financial statements using ratios 143 Using the Statement of Cash Flows 145 Limitations of ratio analysis 152 A wider view on corporate reporting 156 Intellectual capital 157 Institutional theory 158 Corporate social and environmental responsibility 158 Applying different perspectives to financial statements 161 Conclusion 162 References 163 Questions 163 8 Accounting for Inventory 171 Introduction to inventory 171 Methods of costing inventory in manufacturing 175 Management accounting statements 180 Conclusion 181 Questions 182 PART III Using Accounting Information for Decision Making, Planning, and Control 185 9 Accounting and Information Systems 187 Introduction to accounting and information systems 187 Methods of data collection 188 Big data 190 Types of information system 190 Business processes 192 Information systems design and controls 194 Conclusion 196 References 196 Questions 196 10 Marketing Decisions 197 Marketing strategy 197 Cost behaviour 199 Cost volume profit analysis 201 Alternative approaches to pricing 208 Segmental profitability 212 Customer profitability analysis 216 Conclusion 219 References 219 Questions 220 11 Operating Decisions 223 The operations function 223 Managing operations manufacturing 225 Managing operations services 227 Accounting for the cost of spare capacity 228 Capacity utilization and product mix 229 Theory of Constraints 231 Operating decisions: relevant costs 232 Supply chain management, total cost of ownership, and supplier cost analysis 237 The cost of quality 239 Environmental cost management 241 Conclusion 246 References 247 Questions 247 12 Human Resource Decisions 251 Human resources and accounting 251 The cost of labour 252 Relevant cost of labour 255 Conclusion 261 References 262 Questions 262 13 Overhead Allocation Decisions 267 Cost classification 267 The overhead allocation problem 271 Shifts in management accounting thinking 272 Alternative methods of overhead allocation 273 Differences between absorption and activity ]based costing 282 Contingency theory 285 International comparisons 286 Behavioural implications of management accounting 287 Conclusion 290 References 291 Questions 292 14 Strategic Investment Decisions 297 Strategy 297 Capital expenditure evaluation 298 Accounting rate of return 301 Payback 304 Discounted cash flow 304 Comparison of techniques 307 Conclusion 311 References 311 Appendix to Chapter 14: Present value factors 311 Questions 313 15 Performance Evaluation of Business Units 317 Structure of business organizations 317 The decentralized organization and divisional performance measurement 320 Controllability 323 Comparison of methods 326 Transfer pricing 327 Transaction cost economics 329 Conclusion: a critical perspective 330 References 331 Questions 332 16 Budgeting 335 What is budgeting? 335 The budgeting process 336 The profit budget 339 Cash forecasting 345 A behavioural perspective on budgeting 349 A critical perspective: beyond budgeting? 350 Conclusion 354 References 354 Questions 354 17 Budgetary Control 359 What is budgetary control? 359 Variance analysis 361 Flexible budgets and sales variances 362 Flexible budgets and cost variances 363 Interpreting variances 365 Criticism of variance analysis 366 Applying different perspectives to management accounting 368 Conclusion 368 References 369 Questions 369 18 Strategic Management Accounting 371 Trends in management accounting 371 Strategic management accounting 372 Accounting techniques to support strategic management accounting 374 Lean production, lean accounting, and backflush costing 381 Conclusion 384 References 384 Further reading 385 Questions 386 PART IV Supporting Information 387 Readings 389 Reading 1 Cooper and Kaplan (1988). How cost accounting distorts product costs 390 Reading 2 Dent (1991). Accounting and organizational cultures: a field study of the emergence of a new organizational reality 403 Glossary of Accounting Terms 435 Solutions to Questions 449 Index 509

Product Details

  • publication date: 08/05/2015
  • ISBN13: 9781119002949
  • Format: Paperback
  • Number Of Pages: 544
  • ID: 9781119002949
  • weight: 870
  • ISBN10: 111900294X
  • edition: 5th Revised edition

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