Accounting and Finance for Non-Specialists

 Content: 1. Introduction to accounting and finance  Introduction  Learning objectives  What are accounting and finance?  Accounting and user needs  Not-for-rofit organisations  Accounting as a service function  The threshhold of materiality  Costs and benefits of accounting information  Accounting as an information system  Planning and control  Management and financial accounting  Has accounting become too interesting?  Why do I need to know anything about accounting and finance?  Business objectives  \"Summary\"  \"Key terms\"  \"Further reading\"  \"Review questions \"  \" 2. Measuring and reporting financial position  Introduction  Learning objectives  The major financial statements - an overview  The balance sheet  The effect of trading operations on the balance sheet  The classification of assets  The classification of claims  Balance sheet formats  The balance sheet as a position at a point in time  Accounting conventions and the balance sheet  Accounting for goodwill and product brands  The basis of valuation of assets on the balance sheet  Interepting the balance sheet  \"Summary\"  \"Key terms\"  \"Further reading\"  \"Review questions\"  3. Measuring and reporting financial performance  Introduction  Learning objectives  The income statement (profit and loss account)  Relationship between the income statement and the balance sheet  The format of the income statement  The income statement - some further aspects  Profit measurement and the recognition of revenue  Profit measurement and the recognition of expenses  Profit measurement and the calculation of depreciation  Profit measurement and inventory costing methods  Profit measurement and the probem of bad or doubtful debts  Interpreting the income statement  \"Summary\"  \"Key terms\"  \"Further reading\"  \"Review questions\"  4. Accounting for limited companies  Introduction  Learning objectives  Generating wealth through limited companies  Managing a company - corporate governance and the role of directors  Financing limited companies  Raising share capital  Loans and other sources of finance  Restriction on the right of shareholders to make drawings of capital  Accounting for limited companies  The directors\' duty to account  The need for accounting rules  The main sources of accounting rules  Directors report  Auditors  Accounting rules and the quality of financial statements  \"Summary\"  \"Key terms\"  \"Further reading\"  \"Review questions\"  5. Measuring and reporting cash flows  Introduction  Learning objectives  The cash flow statement  Preparing the cash flow statement  What does the cash flow statement tell us?  \"Summary\"  \"Key terms\"  \"Further reading\"  \"Review questions\"  6. Analysing and interpreting financial statements  Introduction  Learning objectives  Financial ratios  Financial ratio classifications  The need for comparison  Calculating the ratios  A brief overview  Profitability  Efficiency  The relationship between profitability and efficiency  Liquidity  Gearing  Investment ratios  Trend analysis  Ratios and prediction models  Limitations of ratio analysis  \"Summary\"  \"Key terms\"  \"Further reading\"  \"Review questions\"  7. Cost-volume-profit analysis  Introduction  Learning objectives  The behaviour of costs  Fixed costs  Variable costs  Semi-fixed costs  Break-even analysis  Contribution  Margin of safety and operation gearing  Marginal analysis  Accepting/rejecting special contracts  The most efficient use of scarce resources  Make or buy decisions  Closing or continuation decisions  \"Summary\"  \"Key terms\"  \"Further reading\"  \"Review questions\"  8. Full costing  Introduction  Learning objectives  The nature of full costing  Deriving full costs in a single product operation  Deriving full costs in multi-product organisations  Activity based costing (ABC)  Uses of full cost information  Criticisms of full costing  \"Summary\"  \"Key terms\"  \"Further reading\"  \"Review questions\"  9. Budgets  Introduction  Learning objectives  Budgets, long term plans and corporate objectives  Time horizon of plans and budgets  Budgets and forecasts  The interrelationship of various budgets  The uses of budgets  The extent that budgets are prepared  Preparing the cash budget  Preparing other budgets  Using budgets for control  Comparing the actual performance with the budget  Stadard quantities and cost  Reasons for adverse variances  Investigating variances  Compensating variances  Making budgetary control effective  Limitations of the traditional approach to control through variances and standards  Behavioural aspects of budgetary control  \"Summary\"  \"Key terms\"  \"Further reading\"  \"Review questions\"  10. Making capital investment decisions  Introduction  Learning objectives  The nature of investment decisions  Methods of investment appraisal  Accounting rate of return (ARR)  Payback period (PP)  Net present value (NPV)  Why NPV is superior to ARR and PP  Internal rate of return (IRR)  Some practical points  Investment appraisal in practice  \"Summary\"  \"Key terms\"  \"Further reading\"  \"Review questions\"  11. Managing working capital  Introduction  Learning objectives  The nature and purpose of working capital  The scale of working capital  Managing inventories (stock)  Managing receivables (debtors)  Managing cash  Managing trade payables (creditors)  \"Summary\"  \"Key terms\"  \"Further reading\"  \"Review questions\"  12. Financing a business  Introduction  Learning objectives  Sources of finance  Internal sources of financing  Sources of external finance  Gearing and the long term finance decision  Share issues  The role of the stock exchange  Short term sources of external finance  Providing long term finance for the small business  \"Summary\"  \"Key terms\"  \"Further reading \"  \"Review questions\"  Glossary of key terms  Solutions to self-assessment questions  Solutions to selected exercises  Index