Contemporary accounting : a strategic approach for users

Description

Prelims Half title title Imprint Brief contents Contents Preface A new approach Guide to the text Guide to the online resources About the authors Acknowledgements Part 1: Financial Accounting Chapter 1: Introduction to accounting Learning objectives Introduction 1.1 What is accounting? 1.2 For what purpose is accounting information used? 1.3 Who uses accounting information? Internal users External users 1.4 Limits on the usefulness of accounting information Accounting as a business function 1.5 Choice of accounting systems 1.6 Regulatory and environmental considerations 1.7 Economic consequences of accounting information Compensation plans Debt contracts Political costs The dual reason for selection of accounting policies 1.8 Careers in accounting Accounting firms Industry and commerce Not-for-profit entities Professional membership Study tools Chapter 2: Business structures and financial reporting Learning objectives Introduction 2.1 Types of business structures The sole trader Partnerships Companies 2.2 Financial statements for a public company 2.3 The framework for setting accounting standards Financial Reporting Council Australian Accounting Standards Board The political nature of accounting standard setting International Accounting Standards The Corporations Act Securities exchange influence on financial reporting 2.4 The conceptual framework Objectives of a conceptual framework The Revised Conceptual Framework 2.5 External audits The auditor The expectation gap Independence Study tools Chapter 3: Sustainability reporting, ethicsand corporate governance Learning objectives 3.1 Sustainability reporting The Global Reporting Initiative (GRI) Integrated reporting 3.2 Ethics in accounting 3.3 Governance What is meant by ‘corporate governance’? Issues in corporate governance 3.4 Board of directors 3.5 Enforcement of corporate governance Study tools Chapter 4: Different measurement methods Learning objectives 4.1 Profit and wealth 4.2 Historic cost 4.3 Replacement cost 4.4 Value in use 4.5 Net realisable value 4.6 Current accounting practice 4.7 Fair value Conclusion Study tools Chapter 5: Presentation of financial position and the worksheet Learning objectives Introduction 5.1 Business activities and the worksheet Common errors in recording of transactions 5.2 Definition and purpose of the balance sheet The purpose of the balance sheet 5.3 Elements of the balance sheet Assets Categories of assets 5.4 Liabilities Current liabilities Non-current liabilities Assets and liabilities 5.5 Owners’ equity 5.6 The balance sheet equation A simple balance sheet 5.7 Some balance sheet ratios 5.8 Influences on the format of the balance sheet Types of business Users of accounts Limitations of the balance sheet Format used in the book Study tools Chapter 6: Presentation of financial performance and the worksheet Introduction Learning objectives 6.1 Financial performance measurement 6.2 Income and revenue Increases in assets Decreases in liabilities Excluding contributions by owners Revenue recognition Examples of revenue recognition 6.3 Expenses Reductions in assets Increases in liabilities Excluding distributions to owners The recognition principle Examples of expenses 6.4 The profit or loss statement 6.5 Balance sheet and profit or loss statement 6.6 Statement of profit or loss and other comprehensive income 6.7 Factors affecting the format of the profit or loss statement Types of business Users of accounts 6.8 Earnings (or profit) management 6.9 The statement of changes in equity 6.10 The worksheet Study tools Chapter 7: Presentation of cash flows Learning objectives Introduction 7.1 Cash and cash equivalents 7.2 Internal control of cash 7.3 The statement of cash flows Purpose 7.4 What does a statement of cash flows show? 7.5 Cash flow from operating activities 7.6 Cash flow from investing activities Cash flow from financing activities Increase or decrease in cash in the period Interest, dividends and income tax Non-cash investing and financing activities Study tools Chapter 8: Accounting for selected assets Learning objectives Introduction 8.1 Accounts receivable Bad and doubtful debts 8.2 Accounting policies for bad and doubtful debts and implications for users 8.3 Inventory Valuing inventory 8.4 Establishing the cost of inventories AASB 102 Inventories Effects of price changes 8.5 Accounting policies for inventories and implications for users 8.6 Property, plant and equipment, and depreciation 8.7 Methods of depreciation Why depreciate? The straight-line method The reducing-balance method Units-of-production method 8.8 Accounting policies for depreciation and implications for users 8.9 Intangible assets The cost of intangible assets Research and development Patents Copyright Trademarks or brand names Franchises 8.10 Accounting for intangible assets Study tools Chapter 9: Accounting for selected liabilities and sources of financing Learning objectives Introduction 9.1 Accounts payable, provisions and accruals 9.2 Taxation Temporary differences 9.3 Sources of finance Short-term finance Medium-term finance Long-term finance 9.4 Equity finance Sole proprietorships Partnerships Limited companies 9.5 Classification as equity or debt 9.6 Financing structures and financial risk Study tools Chapter 10: Analysis of financial statements Learning objectives Introduction 10.1 Users’ information needs The investor group Lenders Employees Analysts Auditors Management Common information needs 10.2 Projections and predictions 10.3 The common needs explained 10.4 Techniques of analysis Comparison of financial statements over time Trend analysis 10.5 Ratio analysis Benchmarks Profitability ratios Efficiency ratios Short-term solvency ratios Long-term solvency ratios 10.6 Market-based ratios 10.7 Key limitations of financial statement analysis Information problems Comparison problems over time Comparison problems between entities Study tools Chapter 11: From the worksheet to debits and credits Learning objectives Introduction 11.1 The traditional approach 11.2 Ledgers, journals and a trial balance Ledgers The journal 11.3 End-of-period adjustments Comparison with the worksheet approach 11.4 Final accounts 11.5 Computerised accounting systems Study tools Part 2: Strategic management accounting Chapter 12: Introduction to strategic management accounting Learning objectives Introduction 12.1 Managerial decision making and accounting information 12.2 External stakeholders and access to management and other accounting information 12.3 The organisation as a value chain The industry value chain Information technology and the value chain 12.4 Strategic management Strategy choice Strategy implementation 12.5 Strategic management and management accounting information 12.6 Factors influencing the form and types of management accounting information Organisational size as a determinant of management accounting system design Organisational structure as a determinant of management accounting system design Technology as a determinant of management accounting system design Environmental factors as a determinant of management accounting system design Management accounting information and other organisational settings 12.7 Accounting information systems and organisational control: a behavioural perspective Study tools Chapter 13: Performance measurement and evaluation frameworks Learning objectives Introduction 13.1 Organisational goals and performance measurement Performance measurement 13.2 What is a performance measure and what properties should it have? The strategic nature of performance measures 13.3 Organisational structure and performance measurement systems Executive remuneration and business performance 13.4 The use of financial measures to assess organisational performance Investment centres and financial performance measures 13.5 Non-financial measures: an alternative view of organisational performance 13.6 The BSC: a comprehensive performance management framework Evaluating organisational performance with a Balanced Scorecard Integrated reporting and the balanced scorecard Study tools Chapter 14: Costs and cost behaviour Learning objectives Introduction 14.1 Management’s need for information about costs 14.2 Cost behaviours Linear cost functions The relevant range of activity The choice of the independent variable Variable costs Fixed costs Cost behaviour: assumptions and limitations Estimating costs 14.3 The cost assignment process Direct and indirect manufacturing costs Costing systems and the implication for costs Product and period costs Past and future manufacturing costs 14.4 Traditional volume-based costing systems and accounting for overhead Costing methods: absorption and variable costing Absorbing overheads Traditional volume-based costing systems Predetermined overhead absorption rates 14.5 Activity-based costing systems 14.6 Presenting cost information for management purposes: manufacturing statements Variable costing versus absorption costing Study tools Chapter 15: Budgeting and performance reporting Learning objectives Introduction 15.1 The purpose of budgets Encourage planning Coordinate functions within an organisation A form of communication Provide a basis for responsibility accounting Provide a basis for a control mechanism Authorise expenditure Motivate employees 15.2 The budget process The budget period 15.3 Preparation of the master budget 15.4 Sales and production budgets 15.5 Budgeting for overhead expenditure Study tools Chapter 16: Cost-volume-profit analysis Learning objectives Introduction 16.1 CVP analysis Break-even: the general principles of CVP analysis The underlying assumptions of CVP analysis 16.2 The contribution margin method The contribution margin ratio 16.3 The margin of safety 16.4 Break-even analysis: models and charts The total revenue formula The total cost formula The total profit formula The total contribution formula What happens at the BEP? The break-even chart 16.5 Limitations of CVP analysis Study tools Chapter 17: Accounting for decision making: with and without resource constraints Learning objectives Introduction Decisions where there are no resource constraints Decisions where there are resource constraints Mutually exclusive decisions 17.1 Costs and benefits relevant to decision making Future and sunk (past) costs Differential (incremental) costs Avoidable and unavoidable costs Opportunity costs Replacement costs Comparison with traditional costing methods 17.2 Costs and benefits relevant to specific decisions The meaning of relevance 17.3 Fixed and variable costs and the contribution approach The range of products 17.4 Closing an unprofitable section: the contribution margin approach 17.5 Decision making with constraints 17.6 The contribution approach with one scarce resource 17.7 Make or buy decisions Where there is spare capacity Where there is no spare capacity 17.8 Qualitative factors Customers Employees Competitors Legal constraints Suppliers Study tools Chapter 18: Capital investment decisions Learning objectives Introduction 18.1 The strategic importance of capital investment decisions 18.2 Capital investments and life-cycle issues 18.3 The capital investment decision-making process 18.4 Capital investment: an accrual-based decision tool Accounting rate of return (ARR) 18.5 Capital investment: Cash-based decision tools Payback period Discounted cash-flow techniques Net present value (NPV) Internal rate of return (IRR) Comparison of NPV and IRR 18.6 Qualitative factors and capital investment decisions 18.7 Post-implementation audit Study tools Appendix 1 Extracts from Woolworths Ltd 2018 Annual Report Appendix 2 Present and future value factor tables Table 1 Future value of $1 Table 2 Present value of $1 Table 3 Future value of $1 per period Table 4 Present value of $1 per period Glossary References Index