Additional Information
Book Details
Abstract
The world of financial accounting is changing rapidly, with all listed companies in the EU now required to publish their financial statements according to IFRS. Financial Accounting: An International Approach is written to reflect the latest financial accounting developments and their implications, and is the ideal text for non-specialist students.
Aimed at those students who wish to pursue careers as managers in business or similar organisations, the book offers an innovative, practical and interactive approach to the subject. Focusing on the use of financial information rather than simply presenting technical methodology, and bearing the non-specialist in mind, the authors explain the ground rules of book-keeping, but never to the detriment of essential underlying concepts.
The book is suitable for introductory level courses in Financial Accounting for a general degree in Business/Management and Economics.
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Cover | Cover | ||
| Financial Accounting | i | ||
| Contents | iii | ||
| List of figures | ix | ||
| List of tables | xi | ||
| Foreword | xiv | ||
| Preface | xvi | ||
| Guided tour of the book | xviii | ||
| Acknowledgements | xx | ||
| The framework of financial reporting | 1 | ||
| Introduction to financialaccounting | 3 | ||
| Objectives | 3 | ||
| Introduction | 3 | ||
| History of accounting | 3 | ||
| Accounting, accountability and the accounts | 6 | ||
| Forms of business units | 7 | ||
| Objectives of enterprises in society | 9 | ||
| Main users of financial information of an enterprise | 13 | ||
| Management accounting and financial accounting | 15 | ||
| Notes on terminology | 17 | ||
| Summary | 18 | ||
| References and research | 18 | ||
| Questions | 19 | ||
| Case study | 20 | ||
| Key accounting concepts | 22 | ||
| Objectives | 22 | ||
| Introduction | 22 | ||
| The accounting harmonisation process in the EU | 23 | ||
| The objective of financial statements | 24 | ||
| Underlying assumptions | 25 | ||
| Qualitative characteristics of financial information | 25 | ||
| Constraints on relevant and reliable information | 29 | ||
| Hierarchy of concepts | 30 | ||
| Summary | 32 | ||
| References and research | 32 | ||
| Questions | 33 | ||
| Case study | 33 | ||
| Financial position andfinancial performance | 35 | ||
| Balance sheet:an overall view | 37 | ||
| Objectives | 37 | ||
| Introduction | 37 | ||
| Purpose of a balance sheet | 41 | ||
| The effect of trading operations on a balance sheet | 44 | ||
| Balance sheet layouts | 51 | ||
| Accounting conventions and the balance sheet | 60 | ||
| Balance sheet structure and ratio analysis | 61 | ||
| Summary | 64 | ||
| References and research | 64 | ||
| Questions | 65 | ||
| Case study | 67 | ||
| Income statement: an overall view | 69 | ||
| Objectives | 69 | ||
| Introduction | 69 | ||
| Nature and purpose of an income statement | 70 | ||
| The effect of trading operations on the income statement | 71 | ||
| Income statement layouts | 75 | ||
| Accounting conventions and the income statement | 77 | ||
| Ratios relating to the income statement | 82 | ||
| Summary | 82 | ||
| References and research | 83 | ||
| Questions | 83 | ||
| Case study | 86 | ||
| Revenues and trade receivables | 87 | ||
| Objectives | 87 | ||
| Introduction | 87 | ||
| Realisation convention | 89 | ||
| Accounting for revenues | 92 | ||
| Trade receivables and bad debt provisions | 94 | ||
| Construction contracts | 95 | ||
| Ratios relating to revenues and trade receivables | 96 | ||
| Summary | 97 | ||
| References and research | 98 | ||
| Questions | 98 | ||
| Case study | 100 | ||
| Inventories and cost of sales | 102 | ||
| Objectives | 102 | ||
| Introduction | 102 | ||
| Inventories, cost of sales and accounting equation | 103 | ||
| Main valuation methods | 105 | ||
| Gross profit resulting from different valuation methods | 107 | ||
| Lower of cost and net realisable value | 108 | ||
| Characteristics and consequences of LIFO | 110 | ||
| Effects of inventory misstatements | 111 | ||
| Ratios relating to inventory | 113 | ||
| Summary | 114 | ||
| References and research | 115 | ||
| Questions | 115 | ||
| Case study | 117 | ||
| Tangible and intangible assets | 118 | ||
| Objectives | 118 | ||
| Introduction | 118 | ||
| Tangible assets – property, plant and equipment (PPE) | 121 | ||
| Leased assets | 128 | ||
| Intangible assets | 131 | ||
| Impairment losses | 135 | ||
| Depletion of natural resources | 137 | ||
| Ratios relating to tangible and intangible assets | 137 | ||
| Summary | 139 | ||
| References and research | 140 | ||
| Questions | 140 | ||
| Case study | 143 | ||
| Liabilities | 144 | ||
| Objectives | 144 | ||
| Introduction | 144 | ||
| Accounting for long-term borrowings | 145 | ||
| Liabilities, provisions and contingent liabilities | 148 | ||
| Accounting for income taxes | 151 | ||
| Ratios relating to liabilities | 158 | ||
| Summary | 160 | ||
| References and research | 160 | ||
| Questions | 161 | ||
| Case study | 163 | ||
| Owners’ equity | 164 | ||
| Objectives | 164 | ||
| Introduction | 164 | ||
| Components of the owners’ equity | 165 | ||
| Statement of changes in shareholders’ equity | 171 | ||
| Ratios relating to equity | 171 | ||
| Summary | 175 | ||
| References and research | 175 | ||
| Questions | 175 | ||
| Case study | 177 | ||
| Preparation of financial statements | 179 | ||
| How to record transactions and prepare financial statements for a single enterprise | 181 | ||
| Objectives | 181 | ||
| Introduction | 181 | ||
| The basics of double-entry bookkeeping | 182 | ||
| The recording process | 185 | ||
| Trial balance | 199 | ||
| Trial balance and recording errors | 200 | ||
| Preparation of financial statements from a trial balance | 200 | ||
| Summary | 202 | ||
| References and research | 202 | ||
| Questions | 202 | ||
| Case study | 205 | ||
| Financial statements for a group of enterprises | 207 | ||
| Objectives | 207 | ||
| Introduction | 207 | ||
| Preparation of consolidated financial statementsat the date of acquisition | 208 | ||
| Preparation of consolidated financial statements after the date of acquisition | 218 | ||
| Accounting for associated companies (equity method) | 223 | ||
| Accounting for joint ventures (proportionate consolidation) | 224 | ||
| Accounting for minority ownerships | 227 | ||
| Summary | 229 | ||
| References and research | 229 | ||
| Questions | 230 | ||
| Case study | 232 | ||
| Measuring and reporting cash flows | 234 | ||
| Objectives | 234 | ||
| Introduction | 234 | ||
| Corporate liquidity and the cash flow cycle | 235 | ||
| Objectives of a cash flow statement and its relationship with the income statement and balance sheet | 239 | ||
| Cash and cash equivalents | 240 | ||
| Activities affecting cash | 241 | ||
| How to prepare a cash flow statement | 243 | ||
| Summary | 260 | ||
| References and research | 260 | ||
| Questions | 261 | ||
| Case study | 263 | ||
| Analysis and interpretation of financial statements | 265 | ||
| Trends and common-sizestatements | 267 | ||
| Objectives | 267 | ||
| Introduction | 267 | ||
| Objectives of financial analysis | 268 | ||
| Financial analysis tools | 269 | ||
| Evaluation of trends: an illustration | 269 | ||
| Summary | 279 | ||
| References and research | 279 | ||
| Questions | 279 | ||
| Case study | 282 | ||
| Corporate liquidity and solvency | 283 | ||
| Objectives | 283 | ||
| Introduction | 283 | ||
| Short-term liquidity | 284 | ||
| Long-term solvency | 290 | ||
| Summary | 290 | ||
| References and research | 291 | ||
| Questions | 291 | ||
| Case study | 292 | ||
| Operating performance | 293 | ||
| Objectives | 293 | ||
| Introduction | 293 | ||
| Return on total assets (ROTA) | 294 | ||
| Relationship between ROE, ROTA and leverage | 297 | ||
| A note on income tax effect | 301 | ||
| Summary | 302 | ||
| References and research | 303 | ||
| Questions | 303 | ||
| Case study | 306 | ||
| Investment ratios | 308 | ||
| Objectives | 308 | ||
| Introduction | 308 | ||
| Earnings per share (EPS) | 309 | ||
| Price earnings ratio (P/E) | 313 | ||
| Other stock-market-related ratios | 314 | ||
| Summary | 317 | ||
| References and research | 317 | ||
| Questions | 317 | ||
| Case study | 319 | ||
| Current developments in corporate governance | 323 | ||
| Corporate reporting and corporate governance | 325 | ||
| Objectives | 325 | ||
| Introduction | 325 | ||
| The loss of credibility in financial reporting | 327 | ||
| Financial reporting supply chain and its participants’ roles | 331 | ||
| Financial reporting supply chain and its weaknesses | 334 | ||
| Summary | 339 | ||
| References and research | 339 | ||
| Questions | 340 | ||
| Case study | 340 | ||
| Public trust in corporate reporting | 343 | ||
| Objectives | 343 | ||
| Introduction | 343 | ||
| The three key elements of public trust | 344 | ||
| Credibility as an international issue | 345 | ||
| The seeds of change | 346 | ||
| The traditional reporting model | 353 | ||
| The three-tier model of corporate transparency | 357 | ||
| A framework for reporting the full array of information | 360 | ||
| Conclusions | 366 | ||
| Summary | 368 | ||
| References and research | 368 | ||
| Questions | 369 | ||
| Case study | 369 | ||
| Glossary | 372 | ||
| Index | 398 |