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INTRODUCTION TO ACCOUNTING BOOK

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'Introduction to Accounting' is the most practical introductory book for accounting and finance students, packed with supportive learning features and both. Introduction to Financial Accounting cover image Read this book normally found in an introductory financial accounting (principles of accounting I) text. Introduction to Accounting (Accounting and Finance series) The fully revised and updated edition of this textbook provides an accessible.


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ronaldweinland.info: Introduction to Accounting (Accounting and Finance series) ( ): Pru Marriott: Books. download products related to introduction to accounting products and see what I bought this book because I needed a review of accounting for my business. It does. and formal as possible. AN ACCOUNTANT'S JOB PROFILE: FUNCTIONS OF . ACCOUNTING. A man who is involved in the process of book keeping and.

The text is fully illustrated with worked examples, and provides student activities and end of chapter questions, many of which have been taken from major accounting examination bodies. Solutions to all activities are given at the end of each chapter, and answers to the end of chapter questions are also supplied. This new edition incorporates major changes which improve and update the previous edition. It can be easily used by students working on their own, as well as in a classroom environment. Introduction to Accounting is an essential textbook for undergraduate accounting students.

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The policies adopted must be described by the company in its report. The accounting policies used by a company must be consistent with the following four fundamental accounting concepts:. An accounting policy such as the reducing balance basis conforms to each of the four fundamental concepts. It spreads the cost of the fixed asset, over a number of accounting periods, on the assumption that the company will continue indefinitely as a going concern.

It allocates the cost of the fixed asset less residual value between accounting procedures based on benefits received. This achieves compliance with both the accruals concept and the consistency concept. Compliance with the prudence concept is also assured because, by the time the asset is written off, all foreseeable losses are provided for.

It is, of course, important for the directors to ensure that their company's accounts portray a true and fair view, because a reputation for openness and frankness is likely to make it easier to raise the finance needed to carry on business operations.

At the same time, it is necessary to guard against the possibility of the directors manipulating the accounts in order to make the company appear a more attractive proposition than is justified by the underlying commercial performance. It is for this reason that the Companies Act makes provision for appointment of independent auditors to report whether the accounts prepared and presented to the shareholders and filed with the Registrar of Companies portray a true and fair view.

The purpose of the bonus issue is to give formal acknowledgement to the fact that profits, retained by the directors in previous years, have been permanently invested in business assets and no longer remain available for distribution. This leaves a modest balance to meet operating expenses. It is therefore clear that the company has no surplus cash resources, and it was therefore perfectly reasonable to capitalize the bulk of the retained profits.

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It is possible to argue that a smaller bonus issue might have been made some years earlier, but certain formalities are involved and it is not a process management will wish to undertake on a regular basis.

A useful starting-point when answering this type of Question is to prepare a worksheet which shows the differences between the closing and opening balance sheet and lists them according to whether they represent an inflow or outflow of cash. For this Question, the worksheet appears as follows:. Variable cost of sales is 80 per cent in the case of both companies. Precision Products produces the higher gross profit margin because, on the basis of an identical investment in fixed assets, it produces a significantly higher level of sales.

The selling expenses of Precision [Page ] Products are much higher, perhaps due to the fact that they advertise their products more heavily and distribute them more widely. However, the company retains its advantage and achieves the higher net profit margin. The rates of return on both versions of capital employed are higher at Precision Products.

The difference is substantial in the case of return on owners' equity. The consequence of this, however, is that Precision Products' solvency position, at the end of 19X5, is extremely weak. The financial position at the end of 20X7 appears satisfactory when judged on the basis of relevant accounting ratios.

The liquidity ratio is 1: At the end of 20X8, the working capital appears to be too high and the company is verging on excess liquidity. The statement of funds shows that the company both raised and generated long-term funds significantly in excess of present business requirements. Funds generated from operations more than cover the dividend and plant acquisition, yet the company has issued shares, raised a loan and benefited from the sale of investments.

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A great deal of the surplus finance is tied up in stocks; a non-income-producing asset. The company's system of stock control should be examined to check whether it is being operated efficiently. The effect of financial developments during 20X8 is a very strong financial position at the end of the year, but there is some doubt whether available resources are being effectively employed.

Perhaps additional resources have been raised to finance future expansion, but there is no indication that this is the case. The stock turnover efficiency is not very good as it takes two months to convert materials to finished goods. The cash cycle of 16 weeks Extension of credit terms to Latlest seems reasonable as there is nothing to suggest in the ratios that the company is a credit risk. Nelumbo Ltd, The current ratio shows that current assets exceed current liabilities but the liquidity ratio is not so good.

There are more current liabilities than cash and debtors. Material stock turnover appears efficient in that it takes just over two weeks. This could be due to efficient material management or could be indicative of supply problems. The number of days taken to turnover finished goods equates to around seven weeks, which is very high. This could indicate a problem with sales. It is taking the company over 3 months to collect its debts from debtors and as a consequence is taking a long time to pay its creditors.

The company is at risk of losing its credit-worthiness. Extension of credit terms of Nelumbo is not advisable, given the poor performance of the business to date. It can be seen that Eagles is better off selling the business and working as manager unless the largest increase in sales under consideration can be achieved. He must consider whether this is likely. Also, the relief of no longer having the responsibility of both owning and managing the business may be attractive, together with the possession of personal capital in the form of cash.

These considerations may induce him to sell the business even if he considers the higher income from retention can probably be achieved. There has also been a significant increase in stock and debtors, and steps should be taken to see whether these can be reduced, generating further cash available for investment.

Profile Institution. CQ Press Your definitive resource for politics, policy and people. Remember me? Back Institutional Login Please choose from an option shown below. Need help logging in? Click here. Don't have access? View downloading options. Mellett Publication Year: Online ISBN: Online Publication Date: May 31, Print download Options. Copy to Clipboard.

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Chapter 1: The Double Entry System I: Interpretation of Accounts: View Copyright Page [Page iv]. Mellett First published Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act, , this publication may be reproduced, stored or transmitted in any form, or by any means, only with the prior permission in writing of the publishers, or in the case of reprographic reproduction, in accordance with the terms of licences issued by the Copyright Licensing Agency.

Series Editor's Preface. Michael Sherer University of Essex. The major revisions compared with the second edition are as follows: Chapter 10 incorporates the developments in reporting financial performance and the treatment of goodwill and intangible fixed assets and discusses the issue of research and development activities.

Chapter 11 on the cash flow statement now deals with the changes introduced by FRS 1 revised. Solutions to Questions. Question 2. This is a system for recording and reporting business transactions, in financial terms, to interested parties who use this information as the basis for decision-making and performance assessment. Entity concept. It is assumed, for accounting purposes, that the business entity has an existence separate and distinct from owners, managers and other individuals with whom it comes into contact during the course of its trading activities.

Balance sheet. This is a financial statement that shows, on the one hand, the sources from which a business has raised finance and, on the other, the ways in which those monetary resources are employed. The balance sheet sets out the financial position at a particular moment in time and has been colourfully described as an instantaneous financial photograph of a business.

Realization concept. This assumes that profit is earned or realized when the sale takes place. The justification for this treatment is that a sale results in the replacement of stock by either cash or a legally enforceable debt due from the customer.

Trade credit. This is the period of time that elapses between the dates goods are supplied and paid for. Trading cycle, credit transactions. This is a series of transactions that begins with the delivery of stock from suppliers.

The stock is then sold and delivered to customers, resulting in a profit being realized or a loss incurred. Next, cash is collected from customers and the cycle is completed by paying suppliers the amount due. Owner's capital. This is the amount of the initial investment in the concern, to which are added any further injections of capital plus profit earned, and from which are deducted drawings made by the owner for personal use. Money measurement concept. Assets are reported in the balance sheet only if the benefit they provide can be measured or Quantified, in money terms, with a reasonable degree of precision.

Fixed assets. These are downloadd and retained to help carry on the business. Fixed assets are not sold in the normal course of business and their disposal will usually occur only when they are worn out, e. Current assets. These are assets that are held for resale or conversion into cash, e. Current liabilities.

These are debts payable within 12 months of the balance sheet date, e. Gross assets. These are the total assets belonging to a business entity and therefore include both fixed assets and current assets. Historic cost. The cost of an item at the date of download. The remaining difference relates to a period prior to the current bank statement being issued. Possible causes include: It is necessary to prepare a bank reconciliation to identify: Items in the cash book that are not on the bank statement, which should comprise only outstanding lodgements and cheques.

The lodgements should be traced to the [Page ] following bank statement, and any undue delay investigated; outstanding cheques should be monitored and followed up as the date when they expire approaches.

Items on the bank statement that are not in the cash book. Where such items are found to be correct, they should be entered in the cash book. Any that do not relate to the company should be reported to the bank as errors to be corrected. Balances on real accounts are, in normal circumstances, assets, for example, when motor vehicles, furniture or plant and machinery are downloadd, real accounts under those headings are debited.

Personal accounts are those which show the relationship of the business with other persons or firms. A debit balance on a personal account is an asset and represents the right to receive money in the future. A credit balance is a liability. Nominal accounts are used to record items of income and expense. Debit balances are expenses and credit balances are income.

There are two main tests: Capital expenditure is incurred on the download of assets that are expected to possess a useful life that extends over a number of accounting periods; moreover, it is not intended to sell these assets in the normal course of business.

Revenue expenditure is incurred in acquiring goods and services that are consumed in a short space of time. A correct allocation is important, because otherwise profit and asset values are wrongly reported. For example, the misallocation of capital to revenue causes both profit and gross assets to be understated.

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Capital This is part of the cost of acquiring the new asset. Capital This increases the firm's productive capacity.

Capital This expenditure is needed to make the plant ready for use. The basic rule is that stock should be valued at the lower of cost and net realizable value. This rule is designed to ensure compliance with the prudence concept which requires that: Insurance premiums received before the period covered by the insurance; rents received before the rental period.

Cash sales of goods; sale of goods on credit where the cash is collected in the same accounting period. Collection of customers' accounts in the period following the sale; receipt of interest after the period to which it relates. Payments for office salaries and telephone charges in the period in which they are used debit entry is to an expense account. Payment of suppliers' accounts outstanding at the year end; payment for rent accrued at the year end.

This means the financial effect of each transaction undertaken by a business must be entered in the books twice: The consistency concept requires businesses to use the same valuation methods each year when preparing accounting statements.

The need for the consistency concept arises because there is available a variety of different ways of valuing particular assets and liabilities.

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The prudence concept sometimes also called the concept of conservatism requires the accountant to make full provision for all expected losses and not to anticipate revenues until they are realized. The justification for the accruals concept is that the risks inherent in overstatement for example, overstating profit are much greater than result from an understatement.

For this purpose, revenue is assumed to be realized when a sale takes place, while costs are matched against revenue when the benefit of the expenditure is received rather than when the cash payment is made.

Going concern. This assumes that the business is a permanent venture and will not be wound up in the foreseeable future. This means that the accountant can assume that the business will remain in existence long enough to enable the recovery of the initial investment, and that liquidation values can be ignored.

Once the method of stock valuation has been selected, it should be adopted in subsequent years. A company may have made a sale on credit which is recognized in the manner indicated under i. If it becomes apparent that the debtor is unlikely to repay the amount owing, provision has to be made for this foreseeable loss. The text covers all of the topics normally found in an introductory financial accounting principles of accounting I text. The table of contents essentially mirrors the table of contents found in the leading texts in this field.

I like that I like that this text also covers the classified balance sheet, financial disclosures and partnerships. The content is up-to-date. Introductory accounting does not change often so future updates should be minimal. The authors used the year in most of the problem and examples. This might make the text "seem" out-of-date in a few years. The book is clear and concise. The topics are clearly explained and the technical terminology is appropriate for an introductory level. The text is divided into topical chapters, which is appropriate considering that the concepts build on each other.

The chapters are further subdivided into sub-topics. This makes it easy for an instructor to pick which sub-topics to cover. Excellent organization and flow. The concepts logically build upon each other and the material is presented in a clear fashion.

The HTML interface is excellent. The book has good graphics, end of chapter content, and even video examples. Excellent book that is comparable to any of the leading financial accounting titles. The authors even provide end of chapter problems, videos, and interactive Excel problems for students. Overall, a great resource! I commend the authors for making something of this caliber freely available. The content of this textbook matches the content and organization of most introductory financial accounting textbooks.

It is written by Canadian authors, but is relevant to US students. The text begins by explaining the role of financial The text begins by explaining the role of financial accounting in society, and then describes the underlying structure of double entry accounting systems and the process of recording economic events that impact the value of the organization through the journals and the ledger.

The records of these events are then summarized into the primary financial statements. The numeric subtotals and totals on these statements are used to calculate standard financial measures and ratios used to evaluate the organization's performance. The text's organization then proceeds sequentially through the balance sheet accounts, explaining in more detail how the accounting for each category of economic value is recorded and reported. The author's decision to move the most complex content to the end of the book matches how most faculty choose to organize their coverage of these topics.

My reviewed resulted in highest marks regarding accuracy. The only possible concern I would mention here is that the authors use a commonly used technique in chapter two which sometimes leads to students misunderstanding that revenues and expenses are not part of owners' equity until the revenues and expenses are closed at year end to retained earnings. It is my preference to teach introductory students that revenues and expenses are distinct and separate from equity, and then explain that revenues and expenses ultimately get closed to equity.

So, this is not an inaccuracy by the authors, just a point that some instructors may want to know before adopting the textbook. It is my opinion that the content of this textbook will be relevant and current for at least a decade.