Accounting and Finance for Business

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Were you looking for the book with access to MyAccountingLab? This product is the book alone, and does NOT come with access to MyAccountingLab. Buy Accounting and Finance for Business with MyAccountingLab access card, 1/e (ISBN 9780273774051) if you need access to the MyAccountingLab as well, and save money on this brilliant resource.   Accounting and Finance for Business provides a comprehensive coverage for those who are coming to the subject of accounting and finance for the first time, at either undergraduate or postgraduate level. With many case studies using real-life companies across a range of industries and countries, the text brings the subject to life by applying theory to practice wherever possible. The authors have adopted a very clear writing style – avoiding jargon wherever possible – and the many illustrations serve to make the text clear and accessible. Current topics such as Environmental Accounting have been included to ensure the text’s relevance to contemporary university accounting and finance courses.     Key features:   Includes nearly 500 questions and three complete practice exam papers A running case study to link theory to practice Many fully worked exercises showing step-by-step how to solve problems QR codes used throughout to give you fast access to relevant web materials Focuses on 'real world' international case studies, examples include Tesco, Facebook, Puma, Groupon and Walmart Includes chapters on Decision Making, Environmental Accounting and Contemporary Issues in Finance Fully up-dated in line with current International Financial Reporting Standards (IFRS)   Need extra support? This product is the book alone, and does NOT come with access to MyAccountingLab.   This title can be supported by MyAccountingLab, an online homework and tutorial system which can be fully integrated into an instructor's course.   You can benefit from MyAccountingLab at a reduced price by purchasing a pack containing a copy of the book and an access card for MyAccountingLab: Accounting and Finance for Business with MyAccountingLab access card, 1/e (ISBN 9780273774051). Alternatively, buy access to MyAccountingLab and the eText – an online version of the book - online at www. MyAccountingLab.com.   Cover Contents Preface Guided tour Acknowledgements 1 The background to accounting 1.1 Introduction 1.2 What is accounting? 1.3 Who uses accounting? 1.4 Financial accounting and management accounting 1.5 Accounting assumptions and characteristics 1.5.1 Underlying Assumption 1: The accrual basis 1.5.2 Underlying Assumption 2: Going concern 1.5.3 Fundamental QC 1: Relevance 1.5.4 Fundamental QC 2: Faithful representation 1.5.5 Enhancing QC 1: Comparability 1.5.6 Enhancing QC 2: Verifiability 1.5.7 Enhancing QC 3: Timeliness 1.5.8 Enhancing QC 4: Understandability 1.6 Assets, liabilities and equity 1.6.1 Assets 1.6.2 Liabilities 1.6.3 Equity 1.7 The accounting equation 1.7.1 How does the value of equity change? 1.8 Alternative terminology 1.9 Summary 1.10 Chapter glossary 2 Processing financial data 2.1 Introduction 2.2 The dual aspect of transactions 2.3 How the system works 2.4 Checking the maths 2.5 Optimising the system 2.5.1 The cash book 2.5.2 The petty cash book 2.5.3 Analysed cash books and petty cash books 2.5.4 Day books 2.5.5 The journal 2.6 Computerised accounting systems 2.7 Summary 2.8 Chapter glossary 3 Adjusting and summarising data 3.1 Introduction 3.2 Financial periods 3.3 Accounting adjustments 3.3.1 Inventory adjustments 3.3.2 Accruals 3.3.3 Prepayments 3.3.4 Depreciation 3.4 Basics of the financial summaries 3.4.1 The income statement 3.4.2 The statement of financial position 3.5 Summary 3.6 Chapter glossary 4 The income statement and statement of financial position 4.1 Introduction 4.2 The income statement 4.2.1 Format of the income statement 4.2.2 Manufacturing businesses 4.2.3 Trading businesses 4.2.4 Service businesses 4.3 Income statements of partnerships and limited companies 4.4 The statement of financial position 4.5 Published income statements and statements of financial position 4.6 Preparing the summaries from accounting data 4.7 Summary 4.8 Chapter glossary 5 Further aspects of assets and liabilities 5.1 Introduction 5.2 Sales of non-current assets 5.3 Inventory valuation 5.3.1 The importance of the valuation 5.3.2 FIFO and AVCO 5.4 Bad and doubtful debts 5.4.1 Bad debts 5.4.2 Doubtful debts 5.5 Current and non-current liabilities 5.6 Summary 5.7 Chapter glossary Revision of Chapters 1–5 6 Limited liability companies and other types of business organisation 6.1 Introduction 6.2 Sole proprietorships 6.3 Partnerships 6.3.1 Accounting requirements of partnerships 6.3.2 Partnership accounts 6.3.3 Partnership income statements 6.3.4 Partnership statement of financial position 6.3.5 Limited liability partnerships 6.4 Limited liability companies 6.4.1 Accounting specifically for limited companies 6.4.2 Share capital and reserves 6.4.3 Changes to share capital 6.5 Sources of finance 6.5.1 Long-term sources of finance: share sales 6.5.2 Long-term sources of finance: loans 6.5.3 Long-term sources of finance: finance leases 6.5.4 Short-term sources of finance: bank overdrafts 6.5.5 Short-term sources of finance: debt factoring and invoice discounting 6.5.6 Internal sources of finance 6.6 Published financial summaries 6.7 Groups of companies 6.8 Summary 6.9 Chapter glossary 7 Cash flow statements 7.1 Introduction 7.2 Cash flows and working capital 7.3 The cash flow statement 7.4 Summary 7.5 Chapter glossary 8 Analysing company reports 8.1 Introduction 8.2 Data for analysis 8.3 The first stage: preliminary research 8.4 The second stage: horizontal and vertical analysis 8.4.1 Interpreting the analysis 8.5 The third stage: ratio analysis 8.5.1 Profitability ratios 8.5.2 Efficiency ratios 8.5.3 Short-term solvency and liquidity ratios 8.5.4 Long-term solvency and liquidity ratios 8.5.5 Investment ratios 8.6 The validity of the financial statements 8.7 Summary 8.8 Chapter glossary Revision of Chapters 6–8 9 Management accounting 9.1 Introduction 9.2 Defining management accounting 9.3 The classification of costs 9.3.1 Analysis by function 9.3.2 Analysis by type 9.3.3 Analysis by behaviour 9.3.4 Analysis by time 9.4 Summary 9.5 Chapter glossary 10 Absorption costing and marginal costing 10.1 Introduction 10.2 Absorption costing 10.2.1 Stage 1: Allocation of costs to cost centres 10.2.2 Stage 2: Apportionment of overheads 10.2.3 Stage 3: Reapportionment of overheads 10.2.4 Stage 4: Absorption of production centre costs into products 10.3 Advantages and disadvantages of absorption costing 10.4 Activity-based costing (ABC) 10.5 Absorption costing and activity-based costing compared 10.6 Marginal costing 10.7 Using the contribution for 'what-if' calculations 10.8 Product costing 10.9 Specific order costing 10.9.1 Job costing 10.9.2 Quotations and job cost sheets 10.9.3 Batch costing 10.9.4 Contract costing 10.10 Operation costing 10.10.1 Process costing 10.10.2 Service costing 10.11 Summary 10.12 Chapter glossary 11 Standard costing 11.1 Introduction 11.2 Variances 11.2.1 Setting standards 11.3 Direct material variances 11.4 Direct labour variances 11.5 Overhead variances 11.5.1 Variable overhead variances 11.5.2 Fixed overhead variances 11.6 Summary 11.7 Chapter glossary 12 Break-even and cost–volume–profit analysis 12.1 Introduction 12.2 Break-even charts 12.2.1 A combination of graphs 12.2.2 Interpreting the chart 12.2.3 Changes in costs and revenue 12.2.4 Limitations of break-even charts 12.3 Profit/volume charts 12.4 Summary 12.5 Chapter glossary 13 Business planning 13.1 Introduction 13.2 Long- and short-term planning 13.3 Limiting factors 13.4 To budget or not to budget? 13.5 Preparing a budget 13.6 The cash budget 13.7 Master budgets 13.8 Flexible budgeting 13.9 Zero-based budgeting 13.10 Summary 13.11 Chapter glossary 14 Investment appraisal 14.1 Introduction 14.2 Present values and future values 14.2.1 From present values to future values 14.2.2 From future values to present values 14.3 Investment appraisal using discounting techniques 14.3.1 Discounted cash flow (DCF) 14.3.2 Net present value (NPV) 14.3.3 Internal rate of return (IRR) 14.3.4 Using spreadsheets to calculate NPV and IRR 14.4 Investment appraisal using non- discounting techniques 14.4.1 Payback period 14.4.2 Accounting rate of return (ARR) 14.5 Summary 14.6 Chapter glossary Revision of Chapters 9–14 15 Decision-making 15.1 Introduction 15.2 The background to decision-making 15.2.1 One-off decisions 15.2.2 Forward-looking information 15.2.3 Probability testing 15.2.4 Opportunity costs 15.2.5 Relevant costs 15.2.6 Net cash flow 15.2.7 Data availability 15.3 Cost classification 15.3.1 Fixed and variable costs 15.3.2 Relevant and non-relevant costs 15.3.3 Avoidable and non-avoidable costs 15.3.4 Sunk costs 15.3.5 Committed costs 15.3.6 Opportunity costs 15.4 Types of decision 15.4.1 Closure or shut-down decision 15.4.2 Make or buy decision 15.5 Pricing decisions 15.5.1 External pricing 15.5.2 Internal pricing 15.5.3 Other internal pricing strategies 15.6 Special orders 15.7 The Balanced Scorecard 15.7.1 The learning and growth perspective 15.7.2 The business process perspective 15.7.3 The customer perspective 15.7.4 The financial perspective 15.8 Summary 15.9 Chapter glossary 16 Contemporary issues in finance 16.1 Introduction 16.2 What is integrated reporting? 16.3 The International Integrated Reporting Framework 16.3.1 Key principles 16.4 Socially responsible investing 16.5 Executive pay, remuneration policy and shareholder 'democracy' 16.6 Accounting standards, 'fair value' and pensions 16.7 Credit ratings and financial implications 16.8 Summary 16.9 Chapter glossary 17 Environmental accounting 17.1 Introduction 17.2 What is environmental accounting? 17.3 How does environmental accounting work? 17.4 What is environmental accounting used for? 17.5 Types of environmental accounting 17.5.1 Natural resource asset accounts 17.5.2 Pollution and material physical flow accounts 17.5.3 Monetary and hybrid accounts 17.5.4 Environmentally-adjusted macroeconomic aggregates 17.6 Problems with environmental accounting 17.7 Summary 17.8 Chapter glossary Appendix 1: Answers to self-check questions Appendix 2: Answers to self-study questions Appendix 3: Answers to case study questions Appendix 4: Answers to revision sections Index A B C D E F G H I J K L M N O P Q R S T U V W Z