Accounting and Finance for Non-Specialists,9780273679622

Accounting and Finance for Non-Specialists

by ;
ISBN13: 9780273679622
ISBN10: 0273679627
Format: Paperback
Pub. Date: 2003-08-01
Publisher(s): Ft Pr
List Price: $110.00

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Summary

Now in its fourth edition, this successful text introduces the basic principles and underlying concepts of accounting and finance. It adopts a practical, non-technical approach, making it the ideal text for students from non-accounting disciplines. The text is written from a 'user' perspective, demonstrating ways in which accounting statements and financial information can be used to improve the quality of decision making.

Author Biography

Eddie McLaney is a visiting fellow in Accounting and Finance at the University of Plymouth Business School.

Table of Contents

Preface xi
Acknowledgements xv
1 Introduction to accounting and finance
1(18)
Introduction
1(1)
Objectives
1(1)
What are accounting and finance?
1(2)
Accounting and user needs
3(2)
Accounting as a service function
5(1)
The threshold of materiality
6(1)
Costs and benefits of accounting information
6(1)
Accounting as an information system
7(2)
Planning and control
9(2)
Business objectives
11(1)
Has accounting become too interesting?
12(1)
Financial and management accounting
13(2)
Why do I need to know anything about accounting and finance?
15(1)
Summary
16(1)
Key terms
17(1)
Further reading
18(1)
Review questions
18(1)
2 Measuring and reporting financial position
19(33)
Introduction
19(1)
Objectives
19(1)
The major financial statements - an overview
19(5)
The balance sheet
24(6)
The effect of trading operations on the balance sheet
30(2)
The classification of assets
32(2)
The classification of claims
34(1)
Balance sheet formats
35(3)
The balance sheet as a position at a point in time
38(1)
Accounting conventions and the balance sheet
39(6)
The basis of valuation of assets on the balance sheet
45(2)
Interpreting the balance sheet
47(1)
Summary
47(2)
Key terms
49(1)
Review questions
49(1)
Exercises
49(3)
3 Measuring and reporting financial performance
52(34)
Introduction
52(1)
Objectives
52(1)
The profit and loss account (income statement)
52(2)
Relationship between the profit and loss account and the balance sheet
54(1)
The format of the profit and loss account
54(2)
The profit and loss account - some further aspects
56(3)
Profit measurement and the recognition of revenue
59(2)
Profit measurement and the recognition of expenses
61(4)
Profit measurement and the calculation of depreciation
65(9)
Profit measurement and stock costing methods
74(3)
Profit measurement and the problem of bad debts
77(3)
Interpreting the profit and loss account
80(1)
Summary
81(1)
Key terms
82(1)
Review questions
83(1)
Exercises
83(3)
4 Accounting for limited companies
86(36)
Introduction
86(1)
Objectives
86(1)
The nature of limited companies
86(4)
Management of companies - the role of directors
90(1)
Public and private companies
90(1)
Capital (owners' claim) of limited companies
91(11)
Restriction of the right of shareholders to make drawings of capital
102(4)
The profit and loss account and balance sheet of limited companies
106(3)
Directors' duty to account - the role of law
109(2)
The role of accounting standards
111(1)
The role of the Financial Services Authority in company accounting
111(1)
Auditors
112(5)
Summary
117(2)
Key terms
119(1)
Review questions
119(1)
Exercises
119(3)
5 Measuring and reporting cash flows
122(25)
Introduction
122(1)
Objectives
122(1)
The cash flow statement
122(3)
The main features of the cash flow statement
125(5)
Reporting the cash flow statement
130(9)
What does the cash flow statement tell us?
139(2)
Summary
141(1)
Key terms
141(1)
Review questions
142(1)
Exercises
142(5)
6 Analysing and interpreting financial statements
147(39)
Introduction
147(1)
Objectives
147(1)
Financial ratios
147(1)
Financial ratio classification
148(1)
The need for comparison
149(1)
Calculating the ratios
150(2)
Profitability
152(4)
Efficiency
156(5)
The relationship between profitability and efficiency
161(2)
Liquidity
163(2)
Gearing
165(4)
Investment ratios
169(7)
Trend analysis
176(2)
Ratios and prediction models
178(1)
Limitations of ratio analysis
178(2)
Summary
180(1)
Key terms
181(1)
Review questions
181(1)
Exercises
182(4)
7 Cost-volume-profit analysis
186(28)
Introduction
186(1)
Objectives
186(1)
The behaviour of costs
186(1)
Fixed costs
187(2)
Variable costs
189(1)
Semi-fixed (semi-variable) costs
190(2)
Break-even analysis
192(4)
Contribution
196(1)
Margin of safety and operating gearing
196(4)
Profit-volume charts
200(1)
Weaknesses of break-even analysis
201(1)
Marginal analysis
201(2)
Accepting/rejecting special contracts
203(1)
The most efficient use of scarce resources
204(2)
Make-or-buy decisions
206(1)
Closing or continuation decisions
207(3)
Summary
210(1)
Key terms
210(1)
Review questions
211(1)
Exercises
211(3)
8 Full costing
214(28)
Introduction
214(1)
Objectives
214(1)
The nature of full costing
214(1)
Deriving full costs in a single-product operation
215(1)
Deriving full costs in multi-product operations
216(14)
Activity-based costing (ABC)
230(6)
Uses of full-cost information
236(1)
Criticisms of full costing
237(1)
Summary
238(1)
References
239(1)
Review questions
239(1)
Exercises
239(3)
9 Budgeting
242(40)
Introduction
242(1)
Objectives
242(1)
Budgets, long-term plans and corporate objectives
242(2)
Time horizon of plans and budgets
244(1)
Budgets and forecasts
245(1)
The interrelationship of various budgets
245(2)
The uses of budgets
247(3)
An example of a budget - the cash budget
250(3)
Preparing other budgets
253(4)
Using budgets for control - flexible budgets
257(1)
Comparison of the actual performance with the budget
258(11)
Standard quantities and costs
269(1)
Reasons for adverse variances
270(1)
Investigating variances
271(2)
Compensating variances
273(1)
Making budgetary control effective
274(1)
Limitations of the traditional approach to control through variances and standards
274(1)
Behavioural aspects of budgetary control
275(2)
Summary
277(1)
Key terms
278(1)
Review questions
278(1)
Exercises
278(4)
10 Making capital investment decisions 282(36)
Introduction
282(1)
Objectives
282(1)
The nature of investment decisions
282(2)
Methods of investment appraisal
284(1)
Accounting rate of return (ARR)
285(4)
Payback period (PP)
289(3)
Net present value (NPV)
292(9)
Internal rate of return (IRR)
301(3)
Some practical points
304(4)
Investment appraisal in practice
308(1)
Summary
309(2)
Key terms
311(1)
Review questions
311(1)
Exercises
311(6)
Appendix: present value table
317(1)
11 Managing working capital 318(34)
Introduction
318(1)
Objectives
318(1)
The nature and purpose of working capital
318(2)
The scale of working capital
320(2)
Managing stocks
322(7)
Managing debtors
329(7)
Managing cash
336(7)
Managing trade creditors
343(1)
Summary
344(2)
Key terms
346(1)
Review questions
347(1)
Exercises
347(5)
12 Financing a business 352(39)
Introduction
352(1)
Objectives
352(1)
Sources of finance
352(1)
Long-term sources of external finance
353(11)
Gearing and the long-term financing decision
364(3)
Short-term sources of finance
367(5)
Internal sources of financing
372(5)
The role of the Stock Exchange
377(2)
Providing long-term finance for the small business
379(1)
Venture capital and long-term financing
379(2)
Business angels
381(1)
Government assistance
381(1)
Share issues
382(3)
Summary
385(1)
Key terms
386(1)
Review questions
386(1)
Exercises
387(4)
Glossary of key terms 391(10)
Solutions to self-assessment questions 401(12)
Solutions to selected exercises 413(16)
Index 429

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