Financial Accounting: An International Introduction, Fourth Edition

✍ Scribed by David Alexander, Christopher Nobes

• Publisher: Financial Times Prentice Hall
• Year: 2010
• Tongue: English
• Leaves: 497
• Edition: 4
• Category: Library

✦ Synopsis

Financial Accountingis the ideal introductory book to anyone with little prior knowledge or new to this subject area. Its clear writing style and unique international focus builds on the success of the previous editions. This fully updated text uses the International Financial Reporting Standards (IFRS) as its framework to explain key concepts and practices while linking them with contemporary and real world examples from Europe, US and beyond.

✦ Table of Contents

FINANCIAL ACCOUNTING......Page 2
Supporting resources......Page 13
Part 1 THE CONTEXT OF ACCOUNTING......Page 20
Introduction......Page 22
1.1 Purposes and users of accounting......Page 23
1.2 Accounting regulation and the accountancy profession......Page 26
1.3 Language......Page 28
1.5 The path ahead......Page 29
EXERCISES......Page 30
Some fundamentals......Page 32
2.2 The balance sheet......Page 33
2.3 The income statement......Page 40
2.4 Two simple equations......Page 46
2.5 How cash flows fit......Page 48
EXERCISES......Page 49
Frameworks and concepts......Page 53
3.1 Introduction......Page 54
3.2 Underlying concepts......Page 56
3.3 The IASB’s concepts......Page 57
3.4 A hierarchy of concepts and some inconsistencies......Page 61
Summary......Page 63
EXERCISES......Page 64
The regulation of accounting......Page 66
4.2 Legal systems......Page 67
4.3 Entities......Page 69
4.4 Examples of regulation......Page 72
4.5 The regulation of International Standards......Page 77
Summary......Page 78
EXERCISES......Page 79
International differences and harmonization......Page 80
5.1 Introduction: the international nature of the development of accounting......Page 81
5.2 Classificatio......Page 82
5.3 Influences on diferences......Page 89
5.4 Harmonization in the European Union......Page 99
5.5 The International Accounting Standards Board......Page 104
Summary......Page 108
EXERCISES......Page 110
The contents of financia statements......Page 112
6.1 Introduction......Page 113
6.2 Balance sheets (statements of financial position......Page 114
6.3 Comprehensive income......Page 120
6.5 Cash flow statement......Page 127
6.7 Other general disclosure requirements......Page 129
Summary......Page 132
EXERCISES......Page 133
Financial statement analysis......Page 134
7.2 Ratios and percentages......Page 135
7.3 Profit ratio......Page 138
7.4 Profitability ratio......Page 141
7.5 Liquidity ratios......Page 148
7.6 Interest cover......Page 149
7.7 Funds’ management ratios......Page 150
7.8 Introduction to investment ratios......Page 152
7.9 Some general issues......Page 154
Summary......Page 155
EXERCISES......Page 156
Part 2 FINANCIAL REPORTING ISSUES......Page 162
Recognition and measurement of the elements of financia statements......Page 164
8.2 Primacy of definition......Page 165
8.3 Hierarchy of decisions......Page 167
8.4 Income recognition......Page 176
Summary......Page 179
EXERCISES......Page 180
Tangible and intangible fixed asset......Page 181
9.1 Preamble: a tale of two companies......Page 182
9.2 Introduction......Page 183
9.3 The recognition of assets......Page 184
9.4 Should leased assets be recognized?......Page 186
9.5 Depreciation of cost......Page 189
9.6 Impairment......Page 201
9.7 Measurement based on revaluation......Page 204
9.8 Investment properties......Page 207
Summary......Page 208
EXERCISES......Page 209
Inventories......Page 212
10.1 Introduction......Page 213
10.2 Counting inventory......Page 215
10.3 Valuation of inventory at historical cost......Page 216
10.4 Inventory flo......Page 217
10.5 Other cost methods......Page 222
10.7 Practice......Page 223
10.9 Construction contracts......Page 225
10.10 Construction contracts in practice......Page 228
EXERCISES......Page 230
Financial assets, liabilities and equity......Page 233
11.2 Cash and receivables......Page 234
11.3 Investments......Page 237
11.4 Liabilities......Page 240
11.5 Equity......Page 245
11.6 Reserves and provisions......Page 248
11.7 Comparisons of debt and equity......Page 251
Summary......Page 252
EXERCISES......Page 253
Accounting and taxation......Page 254
12.1 Introduction......Page 255
12.2 International differences in the determination of taxable income......Page 257
12.3 Tax rates and tax expense......Page 259
12.4 Deferred tax......Page 260
Summary......Page 266
EXERCISES......Page 267
Cash flow statement......Page 268
13.1 Introduction......Page 269
13.2 An outline of the IAS 7 approach......Page 270
13.3 Reporting cash flows fom operating activities......Page 272
13.4 The preparation of cash flow statement......Page 273
Summary......Page 279
EXERCISES......Page 281
Group accounting......Page 282
14.1 Introduction: the group......Page 283
14.2 Investments related to the group......Page 286
14.3 Accounting for the group......Page 289
14.4 Uniting of interests......Page 298
14.5 Proportional consolidation......Page 299
14.6 The equity method......Page 300
14.7 Conclusion on group relationships......Page 302
Summary......Page 303
EXERCISES......Page 304
Foreign currency translation......Page 307
15.2 Transactions......Page 308
15.3 Translation of financial statement......Page 311
15.4 A numerical illustration......Page 313
Summary......Page 314
EXERCISES......Page 315
Accounting for price changes......Page 317
16.2 Effects of price changes on accounting......Page 318
16.4 General or specific adjustmen......Page 324
16.5 General price-level adjusted systems......Page 329
16.6 Current value accounting......Page 331
16.7 Mixed values – deprival value......Page 335
16.8 Partial adjustments......Page 338
16.9 Fair values......Page 339
Summary......Page 340
EXERCISES......Page 341
Part 3 ANALYSIS......Page 346
Financial appraisal......Page 348
17.2 More on investment ratios......Page 349
17.3 Interpreting the balance sheet......Page 355
17.4 Valuation through expectations......Page 358
17.5 Valuation through market values......Page 359
17.6 Accounting policies and financial appraisa......Page 360
Summary......Page 368
EXERCISES......Page 369
International analysis......Page 373
18.2 Language......Page 374
18.3 Differences in financial cultue......Page 378
18.4 Accounting differences......Page 379
18.6 Increasing international harmonization......Page 380
Summary......Page 384
EXERCISES......Page 385
ANNEX GlaxoSmithKline plc: Notes on reconciliation from IFRS to US GAAP......Page 386
Appendices......Page 392
Rules of recording......Page 394
Practice questions......Page 399
Composition of financial statement......Page 400
Practice questions......Page 405
Accruals and prepayments......Page 406
Practice questions......Page 407
Practice questions......Page 409
From trial balance to financial statement......Page 411
Practice questions......Page 416
Solution guide to appendix practice questions......Page 420
An outline of the content of International Financial Reporting Standards......Page 439
An outline of the content of the EU’s Fourth Directive on Company Law (as amended in 2001, 2003, etc.)......Page 450
Feedback on exercises......Page 452