Financial Accounting

Description

Written by an expert teacher in Financial Accounting, the eighth edition of this well-respected text retains all the features that have contributed to the book’s popularity: focus on the accounting equation, an even greater range of student activities throughout each chapter, a clear and accessible writing style, and extensive use of real-world case studies. With a strong emphasis on the 2018 Conceptual Framework of the International Accounting Standards Board, Financial Accounting: An Introduction guides students in understanding the ‘why’ and not just the ‘what’ of financial accounting. Key features: Definitions and terminology are aligned with the 2018 IASB Conceptual Framework New case studies giving examples from real-world companies Activities aligned to each section of a chapter to encourage students to explore and consider issues from different angles Expanded for this edition, experience-driven conversations between two managers are included throughout, updated with an even more practical emphasis Coverage on fair value throughout Exploration of the Strategic Report and Directors’ Report Fully up-to-date with International Financial Reporting Standards (IFRS) Focuses on specific knowledge outcomes, with end-of-chapter self-evaluation Questions are graded according to difficulty to test student understanding Financial Accounting: An Introduction is a core textbook for undergraduates on Business Studies degrees, undergraduates on Accounting courses, students studying accounting for MBA and postgraduate courses, and professional courses where accounting is introduced for the first time.   Visit www.pearsoned.co.uk/weetman for a suite of resources to accompany this textbook, including: A companion website for students, containing multiple choice questions to enable you to test your knowledge A complete solutions guide for lecturers PowerPoint slides for each chapter for lecturers Front Cover Half Title Page Title Page Copyright Page Contents in Brief Contents Preface to the eighth edition Publisher’s acknowledgements Part 1 A conceptual framework: setting the scene Chapter 1 Who needs accounting? Real World Case Learning outcomes 1.1 Introduction 1.2 The development of a conceptual framework 1.3 The Conceptual Framework for Financial Reporting 1.4 Types of business entity 1.5 Users and their information needs 1.6 Financial statements 1.7 Summary Further reading Questions Activities for study groups Notes and references Supplement: Introduction to the terminology of business transactions Test your understanding Chapter 2 A systematic approach to financial reporting: the accounting equation Real World Case Learning outcomes 2.1 Introduction 2.2 The accounting equation 2.3 Defining assets 2.4 Examples of assets 2.5 Recognition of assets 2.6 Measurement of assets 2.7 Defining liabilities 2.8 Examples of liabilities 2.9 Recognition of liabilities 2.10 Measurement of liabilities 2.11 The ownership interest 2.12 Assurance for users of financial statements 2.13 Summary Further reading Questions Activities for study groups Notes and references Supplement: Debit and credit bookkeeping Test your understanding Chapter 3 Financial statements from the accounting equation Real World Case Learning outcomes 3.1 Introduction 3.2 Who is in charge of the accounting system? 3.3 The accounting period 3.4 The statement of financial position (balance sheet) 3.5 The income statement (profit and loss account) 3.6 The statement of cash flows 3.7 Usefulness of financial statements 3.8 Summary Questions Activities for study groups Supplement: Using the accounting equation to analyse transactions Test your understanding Chapter 4 Ensuring the quality of financial statements Real World Case Learning outcomes 4.1 Introduction 4.2 Qualitative characteristics of financial statements 4.3 Accounting principles 4.4 Applying prudence 4.5 Regulation of financial reporting 4.6 Reviewing published financial statements 4.7 Summary Further reading Questions Activities for study groups Notes and references Part 2 Reporting the transactions of a business Chapter 5 Accounting information for service businesses Real World Case Learning outcomes 5.1 Introduction 5.2 Analysing transactions using the accounting equation 5.3 Illustration of accounting for a service business 5.4 A process for summarising the transactions: a spreadsheet 5.5 Financial statements as a means of communication 5.6 Summary Questions Supplement: Recording transactions in ledger accounts: a service business Test your understanding Chapter 6 Accounting information for trading businesses Real World Case Learning outcomes 6.1 Introduction 6.2 Goods purchased for resale 6.3 Manufacturing goods for resale 6.4 Illustration of accounting for a trading business 6.5 A process for summarising the transactions: a spreadsheet 6.6 Financial statements of M. Carter, wholesaler 6.7 Summary Questions Supplement: Recording transactions in ledger accounts: a trading business Test your understanding Part 3 Recognition in financial statements Chapter 7 Published financial statements Real World Case Learning outcomes 7.1 Introduction 7.2 International influences 7.3 Accounting framework 7.4 Statement of financial position (balance sheet) 7.5 Income statement (profit and loss account) 7.6 Statement of cash flows 7.7 Group structure of companies 7.8 Group financial statements 7.9 Small and medium-sized entities (SMEs) 7.10 Beyond the annual report 7.11 Summary Further reading Useful websites Questions Activities for study groups Notes and references Supplement 7.1: Information to be presented on the face of the statement of financial position, as required by IAS 1 Supplement 7.2: Balance sheet format 1, as prescribed by theCompanies Act 2006 Supplement 7.3: Information to be presented on the face of theincome statement, as required by IAS 1 Supplement 7.4: UK Companies Act profit and loss account format 1 – list of contents Chapter 8 Non-current (fixed) assets Real World Case Learning outcomes 8.1 Introduction 8.2 Definitions 8.3 Recognition and measurement 8.4 Users’ needs for information 8.5 Information provided in the financial statements 8.6 Usefulness of published information 8.7 Depreciation: an explanation of its nature 8.8 Reporting non-current (fixed) assets and depreciation in financial statements 8.9 Summary Further reading Questions Activities for study groups Notes and references Supplement: Recording non-current (fixed) assets and depreciation Test your understanding Chapter 9 Current assets Real World Case Learning outcomes 9.1 Introduction 9.2 Definitions 9.3 The working capital cycle 9.4 Recognition and measurement 9.5 Users’ needs for information 9.6 Information provided in the financial statements 9.7 Measurement and recording 9.8 Inventories (stocks) of raw materials and finished goods 9.9 Receivables (debtors) 9.10 Prepayments 9.11 Revenue recognition 9.12 Summary Questions Activities for study groups Notes and references Supplement: Bookkeeping entries for (a) bad and doubtful debts; and (b) prepayments Test your understanding Chapter 10 Current liabilities Real World Case Learning outcomes 10.1 Introduction 10.2 Definitions 10.3 Recognition and measurement 10.4 Users’ needs for information 10.5 Information provided in the financial statements 10.6 Measurement and recording 10.7 Accruals and the matching concept 10.8 Liabilities for taxation 10.9 Summary Questions Activities for study groups Notes and references Supplement: Bookkeeping entries for accruals Test your understanding Chapter 11 Provisions and non-current (long-term) liabilities Real World Case Learning outcomes 11.1 Introduction 11.2 Users’ needs for information 11.3 Information provided in the financial statements 11.4 Provisions 11.5 Deferred income 11.6 Non-current (long-term) liabilities 11.7 Summary Questions Activities for study groups Notes and references Supplement: Bookkeeping entries for provisions and deferred income Test your understanding Chapter 12 Ownership interest Real World Case Learning outcomes 12.1 Introduction 12.2 Definition and recognition 12.3 Presentation of ownership interest 12.4 Statement of changes in equity 12.5 Users’ needs for information 12.6 Information provided in the financial statements 12.7 Dividends 12.8 Issue of further shares on the Stock Exchange 12.9 Summary Questions Activities for study groups Notes and references Supplement: A spreadsheet for adjustment to a trial balance at the end of the accounting period Test your understanding Part 4 Analysis and issues in reporting Chapter 13 Ratio analysis Real World Case Learning outcomes 13.1 Introduction 13.2 A note on terminology 13.3 Systematic approach to ratio analysis 13.4 Investors’ views on risk and return 13.5 Pyramid of ratios 13.6 Use and limitations of ratio analysis 13.7 Worked example of ratio analysis 13.8 Linking ratios to the statement of cash flows 13.9 Combining ratios for interpretation 13.10 Summary Questions Notes and references Chapter 14 Reporting corporate performance Real World Case Learning outcomes 14.1 Introduction 14.2 Strategy and performance 14.3 Other guidance in analysis 14.4 Segmental information 14.5 Off-balance sheet finance 14.6 Corporate social responsibility 14.7 Corporate governance 14.8 Meaning of ‘fair presentation’ and ‘true and fair view’ 14.9 Measurement of value 14.10 Risk reporting 14.11 Developing issues: how valid is the stakeholder model? 14.12 Summary Further reading Questions Activities for study groups Notes and references Chapter 15 Reporting cash flows Real World Case Learning outcomes 15.1 Introduction 15.2 The direct method and the indirect method 15.3 Preparing a statement of cash flows: the indirect method 15.4 Preparing a statement of cash flows: the direct method 15.5 Interpretation of cash flow information 15.6 Illustration 15.7 Summary Further reading Questions Notes and references Financial accounting terms defined Appendices I Information extracted from annual report of Safe and Sure Group plc, used throughout Financial Accounting II Solutions to numerical and technical questions in Financial Accounting Index