Additional Information
Book Details
Abstract
Accounting Simplified is a step-by-step introduction to financial accounting written in plain simple language. Taking students from the very basics to the elementary principles of management accounting, the text emphasises the real-world application of accounting methods and the importance of practising skills in order to reinforce learning. Drawing on years of experience as a university lecturer marking student exam papers, the author uses plenty of worked examples to set out the details of each topic before providing self-test questions for quick revision.
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Cover | Cover | ||
| Accounting Simplified | i | ||
| Contents | v | ||
| Preface | xiii | ||
| Acknowledgements | xiv | ||
| Introduction to accounting | 1 | ||
| Objectives | 1 | ||
| Introduction | 1 | ||
| What is accounting? | 2 | ||
| Accounting groups | 2 | ||
| Financial and management accounting | 3 | ||
| The need for financial accounting | 5 | ||
| Users of business accounts | 5 | ||
| Revising the basics | 7 | ||
| Double entry | 9 | ||
| Objectives | 9 | ||
| Double-entry system | 9 | ||
| Source of transactions | 10 | ||
| The ledger | 12 | ||
| A ledger account | 13 | ||
| Subsidiary books | 17 | ||
| Understanding ledger entries | 18 | ||
| What the books tell us | 23 | ||
| Ledger accounts | 25 | ||
| Objectives | 25 | ||
| Balancing the ledger accounts | 25 | ||
| Carry forwards | 28 | ||
| Cash book | 30 | ||
| Objectives | 30 | ||
| Introduction | 30 | ||
| The 2-column cash book | 31 | ||
| Source documents | 32 | ||
| The 3-column cash book | 32 | ||
| Balancing the cash book | 34 | ||
| Bank reconciliation | 36 | ||
| Objectives | 36 | ||
| Introduction | 36 | ||
| Definitions | 37 | ||
| Bank reconciliation statement | 37 | ||
| Petty cash book | 42 | ||
| Objectives | 42 | ||
| Introduction | 42 | ||
| Petty cash vouchers | 43 | ||
| Value added tax | 46 | ||
| Objectives | 46 | ||
| Introduction | 46 | ||
| Adjustments to VAT | 47 | ||
| VAT ledger account | 47 | ||
| Trade discount | 49 | ||
| Cash discounts | 50 | ||
| Purchases and returns day books | 53 | ||
| Objectives | 53 | ||
| Books of original (prime) entry | 53 | ||
| Purchases day book | 54 | ||
| Purchases returns book | 55 | ||
| Sales and returns day books | 58 | ||
| Objectives | 58 | ||
| Sales day book | 58 | ||
| Sales returns book | 59 | ||
| Control accounts | 62 | ||
| Objectives | 62 | ||
| Introduction | 62 | ||
| Advantages of control accounts | 63 | ||
| Limitations of control accounts | 63 | ||
| Sales ledger (debtors) control account | 64 | ||
| Purchase ledger (creditors) control account | 65 | ||
| Contra accounts (set-offs) | 65 | ||
| Balances on both sides | 67 | ||
| Accruals and prepayments | 70 | ||
| Objectives | 70 | ||
| Accruals | 70 | ||
| Prepayments | 72 | ||
| Depreciation | 75 | ||
| Objectives | 75 | ||
| Introduction | 75 | ||
| Straight line depreciation | 76 | ||
| Reducing balance method | 77 | ||
| Revaluation method | 80 | ||
| Sale of fixed assets | 81 | ||
| Summary of depreciation | 83 | ||
| Appreciation of fixed assets | 83 | ||
| Bad debts | 86 | ||
| Objectives | 86 | ||
| Introduction | 86 | ||
| Provision for bad debts | 87 | ||
| Recovery of bad debts | 90 | ||
| The journal | 92 | ||
| Objectives | 92 | ||
| Introduction | 92 | ||
| Why use a journal? | 92 | ||
| Trial balance | 96 | ||
| Objectives | 96 | ||
| Introduction | 96 | ||
| Errors affecting the trial balance | 98 | ||
| Period-end adjustments | 99 | ||
| From trial balance to financial statements | 101 | ||
| Errors and suspense accounts | 104 | ||
| Objectives | 104 | ||
| Introduction | 104 | ||
| Suspense account | 105 | ||
| Revision | 112 | ||
| Objectives | 112 | ||
| Introduction | 112 | ||
| The valuation of stock | 120 | ||
| Objectives | 120 | ||
| Introduction | 120 | ||
| Valuation methods | 120 | ||
| Using different methods | 123 | ||
| Net realisable value | 123 | ||
| Trading account | 126 | ||
| Objectives | 126 | ||
| Introduction | 126 | ||
| Returns and carriage | 126 | ||
| Stock | 127 | ||
| Returns | 128 | ||
| Treatment of carriage charges | 128 | ||
| Sales | 128 | ||
| Transfer of balances | 129 | ||
| Cost of sales | 130 | ||
| Linking trading and profit and loss | 131 | ||
| Profit and loss account | 133 | ||
| Objectives | 133 | ||
| Introduction | 133 | ||
| Format of the profit and loss account | 133 | ||
| What is profit? | 134 | ||
| Classification of expenditure | 134 | ||
| Changes to net profit | 136 | ||
| Manufacturing account | 140 | ||
| Objectives | 140 | ||
| Introduction | 140 | ||
| Direct costs | 141 | ||
| Indirect costs | 141 | ||
| Stock | 141 | ||
| Apportioning expenses | 142 | ||
| Balance sheet | 147 | ||
| Objectives | 147 | ||
| Introduction | 147 | ||
| Definitions – assets | 148 | ||
| Definitions – liabilities | 149 | ||
| Definitions – capital | 150 | ||
| Additional definitions | 150 | ||
| Balance sheet layout | 152 | ||
| Balance sheet presentation | 154 | ||
| Valuation in the balance sheet | 161 | ||
| Revision | 162 | ||
| Objectives | 162 | ||
| Final accounts | 162 | ||
| Net worth | 163 | ||
| Revision questions | 163 | ||
| Summary | 175 | ||
| Incomplete records | 176 | ||
| Objectives | 176 | ||
| Introduction | 176 | ||
| Preparing accounting records | 176 | ||
| Calculating the trading results | 177 | ||
| Financial statements | 177 | ||
| Accounting concepts | 185 | ||
| Objectives | 185 | ||
| Introduction | 185 | ||
| Fundamental concepts | 186 | ||
| Other concepts | 187 | ||
| Qualitative characteristics – a summing up | 189 | ||
| The requirements of accounting standards | 190 | ||
| Partnerships | 192 | ||
| Objectives | 192 | ||
| Introduction | 192 | ||
| Sole trader | 192 | ||
| Partnership | 193 | ||
| Accounting for partnerships | 193 | ||
| Partnership agreement | 194 | ||
| Profit and loss appropriation account | 195 | ||
| Changes in the partnership | 200 | ||
| Limited liability partnership | 203 | ||
| Non-profit making organisations | 204 | ||
| Objectives | 204 | ||
| Introduction | 204 | ||
| Limited liability companies | 210 | ||
| Objectives | 210 | ||
| Introduction | 210 | ||
| The nature of limited companies | 210 | ||
| Private limited companies (Ltd) | 211 | ||
| Public limited companies (Plc) | 212 | ||
| Share capital | 212 | ||
| Dividends | 217 | ||
| Bonus shares | 219 | ||
| Reserves | 220 | ||
| Rights issue | 220 | ||
| Debentures | 221 | ||
| Application and allotment of shares | 222 | ||
| Shares or debentures? | 224 | ||
| Amalgamations | 225 | ||
| Company financial reports | 231 | ||
| Objectives | 231 | ||
| Introduction | 231 | ||
| The content of financial statements | 231 | ||
| Annual report | 242 | ||
| Reporting on the internet | 247 | ||
| Revision | 248 | ||
| Objectives | 248 | ||
| Introduction | 248 | ||
| Cash flow statements | 268 | ||
| Objectives | 268 | ||
| Introduction | 268 | ||
| Why is cash so important? | 269 | ||
| What is a cash flow statement? | 269 | ||
| The contents of the cash flow statement | 270 | ||
| The working capital cycle | 273 | ||
| The cash flow statement | 275 | ||
| Advantages of a cash flow statement | 276 | ||
| Analysis of financial statements – an introduction | 284 | ||
| Objectives | 284 | ||
| Introduction | 284 | ||
| Key factors in using ratios | 284 | ||
| How are ratios used? | 284 | ||
| Limitations of ratios | 285 | ||
| Introduction to cost accounting | 307 | ||
| Objectives | 307 | ||
| Introduction | 307 | ||
| Terminology | 307 | ||
| Costing methods | 308 | ||
| Break-even analysis | 323 | ||
| Objectives | 323 | ||
| Introduction | 323 | ||
| Types of cost | 323 | ||
| Margin of safety | 324 | ||
| Budgeting | 332 | ||
| Objectives | 332 | ||
| Introduction | 332 | ||
| Budget | 333 | ||
| The objectives of budgeting | 333 | ||
| Budget preparation | 333 | ||
| Benefits of a budget | 335 | ||
| Stages in the budget process | 336 | ||
| Different types of budget | 338 | ||
| Cash budget | 340 | ||
| Budgets for control | 345 | ||
| Standard costing | 346 | ||
| Objectives | 346 | ||
| Introduction | 346 | ||
| Benefits of standard costing | 346 | ||
| Setting the standards | 347 | ||
| Variance analysis | 348 | ||
| Types of variance | 349 | ||
| Revision | 356 | ||
| Objectives | 356 | ||
| Introduction | 356 | ||
| Investment appraisal | 370 | ||
| Objectives | 370 | ||
| Introduction | 370 | ||
| Financial management | 370 | ||
| Initial assessment | 371 | ||
| Methods of calculation | 373 | ||
| Analysis of discounted methods | 379 | ||
| Choosing a method | 380 | ||
| Revision | 385 | ||
| Objectives | 385 | ||
| Introduction | 385 | ||
| Computerised accounting | 404 | ||
| Objectives | 404 | ||
| Introduction | 404 | ||
| Buying a system | 405 | ||
| Accounting by computer | 407 | ||
| Limitations of computers | 408 | ||
| International accounting – the future | 411 | ||
| Objectives | 411 | ||
| Introduction | 411 | ||
| Accounting practices | 412 | ||
| Financial statements | 412 | ||
| Accounting standard setters | 413 | ||
| Changes in terminology | 414 | ||
| Changes in financial statement presentation | 415 | ||
| International Accounting Standards | 418 | ||
| Appendix 1: Self-test answers | 422 | ||
| Appendix 2: Present value table | 635 | ||
| Index | 637 |