Accounting and Finance for Non-Specialists

Features

• Open-learning approach with numerous activities, worked examples and questions interspersed throughout the text to aid understanding
• Range of graded end-of-chapter assessment material, including review questions and Examination style questions.
• Key terms explained at the end of each chapter and included in a comprehensive glossary.

Contents

1. Introduction to accounting and finance: Introduction; Objectives; Nature and role of accounting and finance; Accounting and user needs; Accounting as a service function; Costs and benefits of accounting information; Planning and control; Business objectives; Why do I need to know anything about accounting and finance?; Financial and management accounting; Summary; Key terms; Further reading; Review questions.

2. Measuring and reporting financial position: Introduction; Objectives; The major financial statements - an overview; The balance sheet; The effect of trading operations on the balance sheet; The classification of assets; The classification of claims; Balance sheet formats; The balance sheet as a position at a point in time; Accounting conventions and the balance sheet; The basis of valuation of assets on the balance sheet; Interpreting the balance sheet; Summary; Key terms; Review questions; Examination-style questions.

3. Measuring and reporting financial performance: Introduction; Objectives; The profit and loss account (income statement); Relationship between the profit and loss account and balance sheet; The format of the profit and loss account; The profit and loss account - some further aspects; Profit measurement and the recognition of revenue; Profit measurement and the recognition of expenses; Profit measurement and the calculation of depreciation; Profit measurement and the valuation of stocks; Profit measurement and the problem of bad and doubtful debts; Interpreting the profit and loss account; Summary; Key terms; Review questions; Examination-style questions.

4. Accounting for limited companies: Introduction; Objectives; The nature of limited companies; Management of companies - the role of directors; Public and private companies; Capital (owners? claim) of limited companies; Restrictions of the right of shareholders to make drawings of capital; The profit and loss account and balance sheet of limited companies; The directors? duty to account - the role of company law; The role of accounting standards in company accounting; The role of the Stock Exchange in company accounting; Auditors; Summary; Key terms; Review questions; Examination-style questions.

5. Measuring and reporting cash flows: Introduction; Objectives; The importance of cash and cash flow; The cash flow statement; What does the cash flow statement tell us?; Summary; Key terms; Review questions; Examination-style questions.

6. Analysis and interpretation of financial statements: Introduction; Objectives; Financial ratios; Financial ratio classification; The need for comparison; The key steps in financial ratio analysis; The ratios calculated; Profitability; Efficiency The relationship between profitability and efficiency; Liquidity; Gearing; Investment ratios; Trend analysis; Ratios and prediction models; Limitations of ratio analysis; Summary; Key terms; Review questions; Examination-style questions.

7. Cost - volume - profit analysis: Introduction; Objectives; The behaviour of costs; Fixed costs; Variable costs; Semi-fixed (semi-variable) costs; Break-even analysis; Contribution; Profit - volume charts; Margin of safety and operating gearing; Weaknesses of break-even analysis; Marginal analysis; Accepting/rejecting special contracts; The most efficient use of scarce resources; Make-or-buy decisions; Closing or continuation decisions; Summary; Key terms; Review questions; Examination-style questions

8. Full costing: Introduction; Objectives; The nature of full costing; Deriving full cost in a single-product-operation; Multi-product operations; Activity-based costing (ABC); Uses of full cost information; Criticisms of full costing; Summary; Key terms; Review questions; Examination-style questions;

9. Budgeting: Introduction; Objectives; Budgets, long-term plans and corporate objectives; Timing of plans and budgets; Budgets and forecasts; The interrelationship of various budgets; The uses of budgets; An example of a budget - the cash budget; Preparing other budgets; Using budgets for control - flexible budgets; Comparison of the actual performance with the budget; Standard quantities and costs; Reasons for adverse variances; Investigating variances; Compensating variances; Necessary conditions for effective budgetary control; Limitations of the traditional approach to control through variances and standards; Behavioural aspects of budgetary control; Summary; Key terms Review questions; Examination-style questions.

10. Capital investment decisions: Introduction; Objectives; The nature of investment decisions; Methods of investment appraisal; Accounting rate of return (ARR); Payback period (PP); Net present value (NPV); Internal rate of return (IRR); Some practical points; Investment appraisal in practice; Summary; Key terms; Review questions; Examination-style questions; Appendix: present value table.

11. The management of working capital: Introduction; Objectives; The nature and purpose of working capital; The scale of working capital; The management of stocks; The management of debtors; The management of trade creditors; Summary; Key terms; Review questions; Examination-style questions.

12. Financing the business: Introduction; Objectives; Sources of finance; Long-term sources of external finance; Gearing and the long-term financing decision; Short-term sources of finance; Long-term versus short-term borrowing; Internal sources of finance; The role of the Stock Exchange; Venture capital and long-term financing; Share issues; Summary; Key terms; Review questions; Examination-style questions; Glossary of key terms; Solutions to self-assessment questions; Solutions to selected examination-style questions;

Index.