Accounting And Finance For Non-Specialists
New to this edition Increased number of activities New and updated real-world cases to help students understand thetheory in practice Up-to-date coverage, including the latest IFRSsEddie McLaney is Visiting Fellow in Accounting and Finance at Plymouth University.MyAccountingLab Limitless opportunities to practice An eText for quick referenceJoin over 10 million students benefitingfrom Pearson MyLabs Case studies to help you apply what you’ve learnedThis title can be supported by MyAccountingLab, an onlinehomework and tutorial system designed to test and build yourunderstanding. MyAccountingLab provides a personalisedapproach, with instant feedback and numerous additionalresources to support your learning. A personalised study plan Usable either following chapter-by-chapter structure or bylearning objective Worked solutions showing you how to solve difficult problems1. Is your lecturer using MyAccountingLab? Ask your lecturer foryour course ID2. Has an access card been included with the book? Check theinside back cover of the book.3. If you have a course ID but no access card, go to: http://www.myaccountinglab.com/ to buy access to this interactivestudy programme.www.pearson-books.comPeter AtrillEddie McLaneyTENTHEDITIONAtrillMcLaneyCVR ATRILL 10 35601 AW.indd 1Use the power of MyAccountingLab to accelerate your learning.You need both an access card and a course ID to accessMyAccountingLab:FOR NON-SPECIALISTSKey features Accessible step-by-step approach helps you master the subject one stepat a time Real-world examples provide opportunities to apply and developtechniques Progress checks, activities and exercises reinforce learning Focus on decision making prepares you for careers in businessACCOUNTINGAND FINANCEThe 10th edition of this market-leading text offers an accessible, effectiveintroduction to key accounting and finance topics. With a focus on decisionmaking, Accounting and Finance for Non-Specialists teaches you how to applyyour learning to real-world business scenarios.Peter Atrill is a freelance academic and author who has worked with leadinginstitutions in the UK, Europe and SE Asia. He was previously Head of Accountingand Law and Head of Business and Management at the Plymouth UniversityBusiness School.Cover image Getty ImagesTENTH EDITION“The best accounting textbook for executives. Comprehensive andcondense. Great pedagogical design. Suitable both for beginners as wellas advanced learners.”Katerina Hellström, Stockholm School of EconomicsACCOUNTING AND FINANCEFOR NON-SPECIALISTSPeter Atrill & Eddie McLaneyFOR NON-SPECIALISTSACCOUNTINGAND FINANCETENTH EDITION11/11/2016 14:06
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At Pearson, we have a simple mission: to help peoplemake more of their lives through learning.We combine innovative learning technology with trustedcontent and educational expertise to provide engagingand effective learning experiences that serve peoplewherever and whenever they are learning.From classroom to boardroom, our curriculum materials, digitallearning tools and testing programmes help to educate millionsof people worldwide – more than any other private enterprise.Every day our work helps learning flourish, andwherever learning flourishes, so do people.To learn more, please visit us at www.pearson.com/ukA01 ATRI5601 10 SE FM.indd 211/11/2016 19:12
for Non-SpecialistsAccountingand FinanceTenth EditionPeter AtrillEddie McLaneyHarlow, England London New York Boston San Francisco Toronto SydneyDubai Singapore Hong Kong Tokyo Seoul Taipei New DelhiCape Town São Paulo Mexico City Madrid Amsterdam Munich Paris MilanA01 ATRI5601 10 SE FM.indd 311/11/2016 19:12
PEARSON EDUCATION LIMITEDEdinburgh GateHarlow CM20 2JEUnited KingdomTel: 44 (0)1279 623623Web: www.pearson.com/ukFirst published 1995 by Prentice Hall Europe (print)Second edition published 1997 (print)Third edition published 2001 by Pearson Education Ltd (print)Fourth edition published 2004 (print)Fifth edition published 2006 (print)Sixth edition published 2008 (print)Seventh edition published 2011 (print)Eighth edition published 2013 (print and electronic)Ninth edition published 2015 (print and electronic)Tenth edition published 2017 (print and electronic) Prentice Hall Europe 1995 (print) Pearson Education Limited 2001 (print) Pearson Education Limited 2013, 2017 (print and electronic)The rights of Peter Atrill and Eddie McLaney to be identified as authors of this work have been asserted by themin accordance with the Copyright, Designs and Patents Act 1988.The print publication is protected by copyright. Prior to any prohibited reproduction, storage in a retrieval system,distribution or transmission in any form or by any means, electronic, mechanical, recording or otherwise,permission should be obtained from the publisher or, where applicable, a licence permitting restricted copying inthe United Kingdom should be obtained from the Copyright Licensing Agency Ltd, Barnard’s Inn, 86 Fetter Lane,London EC4A 1EN.The ePublication is protected by copyright and must not be copied, reproduced, transferred, distributed, leased,licensed or publicly performed or used in any way except as specifically permitted in writing by the publishers, asallowed under the terms and conditions under which it was purchased, or as strictly permitted by applicablecopyright law. Any unauthorised distribution or use of this text may be a direct infringement of the authors’ andthe publisher’s rights and those responsible may be liable in law accordingly.All trademarks used herein are the property of their respective owners. The use of any trademark in this text doesnot vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of suchtrademarks imply any affiliation with or endorsement of this book by such owners.Contains public sector information licensed under the Open Government Licence (OGL) overnment-licence/version/3/.The screenshots in this book are reprinted by permission of Microsoft Corporation.Pearson Education is not responsible for the content of third-party internet sites.The Financial Times. With a worldwide network of highly respected journalists, The Financial Times providesglobal business news, insightful opinion and expert analysis of business, finance and politics. With over 500journalists reporting from 50 countries worldwide, our in-depth coverage of international news is objectivelyreported and analysed from an independent, global perspective. To find out more, visit www.ft.com/pearsonoffer.ISBN: 978-1-292-13560-1 (print)978-1-292-13561-8 (PDF)978-1-292-13565-6 (ePub)British Library Cataloguing-in-Publication DataA catalogue record for the print edition is available from the British LibraryLibrary of Congress Cataloging-in-Publication DataA catalog record for the print edition is available from the Library of Congress10 9 8 7 6 5 4 3 2 120 19 18 17 16Front cover image Getty ImagesPrint edition typeset in 9/12.5 Helvetica Neue LT W1G by Spi GlobalPrinted in Slovakia by NeografiaNOTE THAT ANY PAGE CROSS REFERENCES REFER TO THE PRINT EDITIONA01 ATRI5601 10 SE FM.indd 411/11/2016 19:12
Brief contentsPrefaceAcknowledgements1 Introduction to accounting and financePart One FINANCIAL ACCOUNTING23456Measuring and reporting financial positionMeasuring and reporting financial performanceAccounting for limited companiesMeasuring and reporting cash flowsAnalysing and interpreting financial statementsxvxvii1272871115164195Part Two MANAGEMENT ACCOUNTING2477 The relevance and behaviour of costs8 Full costing9 Budgeting248289329Part Three FINANCE36710 Making capital investment decisions11 Financing a business12 Managing working dixIndex509523538550578580A: Glossary of key termsB: Solutions to self-assessment questionsC: Solutions to review questionsD: Solutions to selected exercisesE: Present value table460Brief contents A01 ATRI5601 10 SE FM.indd 5v11/11/2016 19:12
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ContentsPrefaceAcknowledgements1 Introduction to accounting and financexvxvii1IntroductionWhat are accounting and finance?Who are the users of accounting information?Providing a serviceWeighing up the costs and benefitsAccounting as an information systemManagement accounting and financial accountingScope of this bookThe changing face of accountingWhy do I need to know anything about accounting and finance?The quest for wealth creationMeeting the needs of other stakeholdersBalancing risk and returnNot-for-profit organisations1225791113141516172021SummaryKey termsFurther readingReview questions23242525Part One FINANCIAL ACCOUNTING272 Measuring and reporting financial positionIntroductionThe major financial statements – an overviewThe statement of financial positionThe effect of trading transactionsClassifying assetsClassifying claims28282934414346contents A01 ATRI5601 10 SE FM.indd 7vii11/11/2016 19:12
Statement layoutsCapturing a moment in timeThe role of accounting conventionsMoney measurementValuing assetsMeeting user needs474950545763SummaryKey termsFurther readingReview questionsExercises65676768683 Measuring and reporting financial performanceviii71IntroductionThe income statementDifferent rolesIncome statement layoutFurther issuesRecognising revenueRecognising expensesDepreciationCosting inventoriesTrade receivables problemsUses and usefulness of the income statement717273747780848999104106SummaryKey termsFurther readingReview questionsExercises1081101101101114 Accounting for limited companies115IntroductionThe main features of limited companiesThe role of the Stock ExchangeManaging a companyThe UK Corporate Governance CodeFinancing limited companiesBorrowingsWithdrawing equityThe main financial statementsDividendsAdditional financial sA01 ATRI5601 10 SE FM.indd 811/11/2016 19:12
The directors’ duty to accountThe need for accounting rulesSources of accounting rulesThe auditors’ roleManagement commentaryCreative accounting147147148149150152SummaryKey termsFurther readingReview questionsExercises1561581591591605 Measuring and reporting cash flows164IntroductionThe statement of cash flowsWhy is cash so important?The main features of the statement of cash flowsA definition of cash and cash equivalentsThe relationship between the main financial statementsThe layout of the statement of cash flowsThe normal direction of cash flowsPreparing the statement of cash flowsWhat does the statement of cash flows tell us?164165166168168170170173175185SummaryKey termsFurther readingReview questionsExercises1881891891891906 Analysing and interpreting financial statementsIntroductionFinancial ratiosFinancial ratio classificationsThe need for comparisonCalculating the ratiosA brief overviewProfitabilityEfficiencyRelationship between profitability and efficiencyLiquidityFinancial gearingInvestment ntsixA01 ATRI5601 10 SE FM.indd 911/11/2016 19:12
Trend analysisUsing ratios to predict financial failureLimitations of ratio analysis234235235SummaryKey termsFurther readingReview questionsExercises239240241241242Part Two MANAGEMENT ACCOUNTING2477 The relevance and behaviour of costsIntroductionWhat is meant by ‘cost’?Relevant costs: opportunity and outlay costsCost behaviourFixed costVariable costSemi-fixed (semi-variable) costFinding the break-even pointContributionMargin of safetyOperating gearingFailing to break evenWeaknesses of break-even analysisUsing contribution to make decisions: marginal SummaryKey termsFurther readingReview questionsExercises2822842842852858 Full costingIntroductionWhat is full costing?Why do managers want to know the full cost?Single-product businessesMulti-product businessesOverheads as service renderersActivity-based costingx248289289290290292293298310contentsA01 ATRI5601 10 SE FM.indd 1011/11/2016 19:12
Using full (absorption) cost information319SummaryKey termsFurther readingReview questionsExercises3223243243243259 Budgeting329IntroductionHow budgets link with strategic plans and objectivesTime horizon of plans and budgetsHow budgets help managersBudgets and forecastsLimiting factorsHow budgets link to one anotherUsing budgets in practicePreparing budgetsNon-financial measures in budgetingBudgeting for controlMeasuring variances from budgetMaking budgetary control effectiveBehavioural issuesThe use of variance 357SummaryKey termsFurther readingReview questionsExercises359361361361362Part Three FINANCE36710 Making capital investment decisionsIntroductionThe nature of investment decisionsInvestment appraisal methodsAccounting rate of return (ARR)Payback period (PP)Net present value (NPV)Why NPV is betterInternal rate of return (IRR)368368369370372377381388389contentsxiA01 ATRI5601 10 SE FM.indd 1111/11/2016 19:12
Some practical pointsInvestment appraisal in practiceInvestment appraisal and strategic planning395399401SummaryKey termsFurther readingReview questionsExercises40240440540540511 Financing a businessxii411IntroductionThe main objective of financing policySources of financeInternal sources of financeInternal sources of long-term financeInternal sources of short-term financeExternal sources of financeExternal sources of long-term financeForms of borrowingExternal sources of short-term financeLong-term versus short-term borrowingGearing and the financing decisionRaising long-term financeThe role of the Stock ExchangeThe Alternative Investment MarketProviding long-term finance for the small businessIslamic 46447449SummaryKey termsReferencesFurther readingReview questionsExercises45145445445545545512 Managing working capital460IntroductionWhat is working capital?The scale of working capitalManaging inventoriesManaging trade receivablesManaging cashManaging trade payables460461463466477487496contentsA01 ATRI5601 10 SE FM.indd 1211/11/2016 19:12
SummaryKey termsFurther readingReview ppendixAppendixAppendixIndex509523538550578580A: Glossary of key termsB: Solutions to self-assessment questionsC: Solutions to review questionsD: Solutions to selected exercisesE: Present value tableLecturer ResourcesFor password-protected online resources tailored tosupport the use of this textbook in teaching, please visitwww.pearsoned.co.uk/atrillmclaneyON THEWEBSITEconTenTs A01 ATRI5601 10 SE FM.indd 13xiii11/11/2016 19:12
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PrefaceThis book provides an introduction to accounting and finance. It is aimed at: Students who are not majoring in accounting or finance but who are, nevertheless,studying introductory-level accounting and finance as part of their course. The coursemay be in business, economics, hospitality management, tourism, engineering, orsome other area. For these students, the book provides an overview of the role andusefulness of accounting and finance within a business.Students who are majoring in either accounting or finance. These students should findthe book a helpful introduction to the main principles, which can serve as a foundationfor further study.The book does not focus on the technical aspects, but rather considers principles andunderlying concepts. It also examines the ways in which financial statements and otherfinancial information may improve the quality of decision making. To reinforce the practicalemphasis of the book, there are illustrative extracts from company reports, survey dataand other sources throughout.In this tenth edition, we have made improvements suggested by students and lecturerswho used the previous edition. We have also increased the number of diagrams in orderto aid learning. Examples from real life have been updated and their number has beenincreased. Finally, we have improved the range and quality of self-assessment material.The book is written in an ‘open-learning’ style. This means that there are numerousintegrated activities, worked examples and questions throughout the book to help you tounderstand the subject fully. You are encouraged to interact with the material and to checkyour progress continually. Irrespective of whether you are using the book as part of ataught course or for personal study, we have found that this approach is more ‘userfriendly’ and makes it easier for you to learn.We recognise that most of you will not have studied accounting or finance before, andwe have therefore tried to write in a concise and accessible style, minimising the use oftechnical jargon. We have also tried to introduce topics gradually, explaining everythingas we go. Where technical terminology is unavoidable we try to provide clear explanations. You will find all of the key terms highlighted in the book, and then listed at the endof each chapter with a page reference. All of these key terms are also listed alphabetically, with a concise definition, in the glossary towards the end of the book. This shouldprovide a convenient point of reference from which to revise.PrefaceA01 ATRI5601 10 SE FM.indd 15xv11/11/2016 19:12
A further important consideration in helping you to understand and absorb the topicscovered is the design of the book itself. The page layout and colour scheme have beencarefully considered to allow for the easy navigation and digestion of material. The layoutfeatures a large page format, an open design, and clear signposting of the various featuresand assessment material.We hope that you find the book both readable and helpful.Peter AtrillEddie McLaneyxviPrefaceA01 ATRI5601 10 SE FM.indd 1611/11/2016 19:12
AcknowledgementsWe are grateful to the following for permission to reproduce copyright material:FiguresFigure 3.9 from European Payment Index 2014, www.intrum.com, Intrum Justitia;Figure 4.8 from Guidance on the strategic report p20, ic-Report.pdf,Financial Reporting Council, Financial Reporting Council (FRC). All rights reserved. Forfurther information, please visit www.frc.org.uk or call 44 (0)20 7492 2300; Figure 5.6from BP plc Annual Report 2014 P.18 www.bp.com BP plc; Figure 6.2 adapted from Officeof National Statistics, ‘Profitability of UK companies Q1 2015, www.statistics.gov.uk 8 July2015, Crown copyright, Crown copyright. Contains public sector information licensedunder the Open Government Licence (OGL) v3.0. ment-licence/version/3/; Figure 8.11 adapted from Activity BasedCosting: A Review with Case Studies CIMA Publishing (Innes J. and Mitchell F. 1990) CIMAReproduced with permission of The Chartered Institute of Management Accountants;Figure 8.12 from A survey of factors influencing the choice of product costing systems inUK organisations Management Accounting Research December (Al-Omiri, M. andDrury, C. 2007), Reproduced with permission of The Chartered Institute of ManagementAccounts; Figure 8.13 adapted from Management accounting tools for today and tomorrow, CIMA (2009) 12, Reproduced with permission of The Chartered Institute ofManagement Accounts; Figure 9.9 adapted from Management Accounting Tools for Todayand Tomorrow CIMA CIMA (2009) 12, Reproduced with permission of The CharteredInstitute of Management Accountants; Figure 11.10 from Office for National Statistics(2015), Ownership of quoted shares for UK domiciled companies 2014, 2 September,Contains public sector information licensed under the Open Government Licence vernment-licence/version/3/; Figure 12.9adapted from Table 2 p6 in All Tied Up: Working Capital Management Report 2014, Ernstand Young, p. 7, www.ey.com., Ernst and YoungTextReal World 1.1 from K. Inagaki Sony seeks delay in releasing full results in wake of cyberattack, 23 January 2015, ft.com, Financial Times, The Financial Times Limited 2015. AllRights Reserved; Real World 1.2 from www.standardlife.com, accessed 24 October 2015,Standard Life Employee Services Ltd, 2015 Standard Life reproduced with permissionof Standard Life; Real World 1.3 from adapted from Waters, R. Apple has incentive toworry about worker’ rights 25 February 2012, ft.com, Financial Times, The FinancialAcknowledgementsxviiA01 ATRI5601 10 SE FM.indd 1711/11/2016 19:12
Times Limited 2012. All Rights Reserved.; Real World 1.4 from Goyder, M. (2009) Howwe’ve poisoned the well of wealth, Financial Times, 15 February., ft.com, Financial Times, The Financial Times Limited 2009. All Rights Reserved; Real World 2.4 from J.KayPlaying dice with your money 4 September 2015, ft.com, Financial Times, The FinancialTimes Limited 2015. All Rights Reserved; Real World 2.5 from J. Wilson Anglo Americanto write down value of mining assets by up to 4bn July 16, 2015 ft.com, Financial Times, The Financial Times Limited 2015. All Rights Reserved; Real World 2.7 adapted fromBalance sheets: the basics accessed 14 April 2010 www.businesslink.gov.uk, CrownCopyright, Crown copyright. Contains public sector information licensed under theOpen Government Licence (OGL) v3.0. ent-licence/version/3/; Real World 3.5 from British Airways Annual Report andAccounts 2008/09 Note 15, www.britishairways.com, British Airways; Real World 4.1 fromUrquhart, Lisa (2003) Monotub Industries in a spin as founder gets Titan for 1, FinancialTimes, 23 January, The Financial Times Limited 2003. All Rights Reserved; RealWorld 4.4 adapted from UK Corporate Governance Code, Financial Reporting Council,September 2014, pages 5 and 6, www.frc.org.uk, Financial Reporting Council, FinancialReporting Council (FRC). All rights reserved. For further information, please visit www.frc.org.uk or call 44 (0)20 7492 2300; Real World 4.5 from Ryanair Holdings plc, AnnualReport 2015, p. 156, Ryanair; Real World 4.7 from H. Mance, Betfair admits to 80m payouts mistake, 3 August 2014, ft.com, Financial Times, The Financial Times Limited 2014.All Rights Reserved; Real World 4.8 from Powley T., WS Atkins signals confidence byproposing 8.1% dividend rise, 11 June 2015, ft.com, Financial Times, The FinancialTimes Limited 2015. All Rights Reserved; Real World 5.1 from Johnson L., The most dangerous unforced errors 9 July 2013, ft.com, Financial Times, The Financial TimesLimited 2013. All Rights Reserved; Real World 5.2 from John Timpson, The managementcolumn, The Daily Telegraph Business, 14 June 2010. copyright Telegraph Media GroupLimited; Real World 5.3 adapted from Tesco plc, Annual Report and Financial Statements2015, P.87 www.tescoplc.com, Tesco plc; Real World 5.5 from Ryanair Holdings plcAnnual Report 2015 Pages 161, 108 and 109; Real World 6.4 adapted from Wild, J.‘Ryanair sees sharp fall in profits due to higher fuel costs’, 29 July 2013., ft.com, FinancialTimes, The Financial Times Limited 2013. All Rights Reserved; Real World 6.5 fromS. Gordon UK small businesses spend 11bn chasing payments 16 July 2015, ft.com,Financial Times, The Financial Times Limited 2015. All Rights Reserved; Real World 6.6from Smith,. T (2014) ‘How investors ignored the warning signs at Tesco’ 5 September, ft.com, Financial Times; Real World 7.1 adapted from Foley, S. Is a university degree a goodinvestment? 7 September 2014, ft.com, Financial Times, The Financial Times Limited2014. All Rights Reserved; Real World 8.2 from A survey of factors influencing the choiceof product costing systems in UK organisations, Management Accounting Research,December, 399–424 (Al-Omiri, M. and Drury, C. 2007), Reprinted with permission ofElsevier; General Displayed Text on page 329 from 2015 annual report, BSkyB Group plc,Sky News; Real World 9.1 from Greene King plc Annual Report 2015, page 40; RealWorld 10.3 from RECKONING WITH RISK: LEARNING TO LIVE WITH UNCERTAINTY(Penguin Press 2003) (Gigerenzer G. 2002) Copyright Gerd Gigerenzer, 2003.Reproduced by permission of Penguin Books Ltd and CALCULATED RISKS: How to knowwhen numbers Deceive by Gerd Gigerenzer. Copyright 2002 by Gerd Gigerenzer.xviiiAcknowledgementsA01 ATRI5601 10 SE FM.indd 1811/11/2016 19:12
Reprinted with permission of Simon & Schuster, Inc. All rights reserved; Real World 10.6from Murray S. It pays for companies to be part of the scenery, 2 June 2015, ft.com,Financial Times, The Financial Times Limited 2015. All Rights Reserved; Real World 10.8from A multinational survey of corporate financial policies, Exhibit 3, Journal of AppliedFinance 17(1), 62 (Cohen G. and Yagil J. 2007), Financial Management Association; RealWorld 11.2 from Wembridge, M. and Felsted, A. HMV plunges 40% on covenant warning,3 December 2012 and information contained in both Felstead, A. and Sakoui, A. Hilcostrikes deal to rescue HMV, 5 April 2013 and Masters, B. HMV proves that down does notmean out 16 January 2015, ft.com, Financial Times, The Financial Times Limited 2012.All Rights Reserved. Pearson Education Ltd. is responsible for providing this adaptation ofthe original article; Real World 11.3 from McLannahan, B. Manchester United is calling theshots 4 June 2015 ft.com, Financial Times, The Financial Times Limited 2015. All RightsReserved; Real World 11.4 from Lex column Sony – group bonding, 15 November 2012,ft.com, Financial Times, The Financial Times Limited 2012. All Rights Reserved; RealWorld 11.6 from Thomas, D. Orange looks to offload Spanish mobile masts to cut costs14 August 2014, ft.com, Financial Times, The Financial Times Limited 2014. All RightsReserved; Real World 11.8 from Moules, J. RBS has driven us to wall, says bricks business, 25 November 2013, ft.com, Financial Times, The Financial Times Limited 2013. AllRights Reserved.; Real World 12.5 from www.atradius.us/news/press-releases, 13 August2008. Atradius Trade Credit Insurance, Inc; Real World 12.9 from Daeshkhu, S. Diageobacks down on extended payment terms, 13 March 2015, ft.com, Financial Times, TheFinancial Times Limited 2015. All Rights Reserved; Real World 12.10 from Davies, R. andMerin, D. Uncovering cash and insights from working capital McKinsey and Company,July 2014, www.mckinsey.com, McKinseyAcknowledgementsxixA01 ATRI5601 10 SE FM.indd 1911/11/2016 19:12
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Chapter 1Introduction toAccounting andFinanceIntroductionWelcome to the world of accounting and finance! In this openingchapter, we provide a broad outline of these subjects. We begin byconsidering the roles of accounting and finance and then go on toidentify the main users of financial information. We shall see how bothaccounting and finance can be valuable tools in helping users improvethe quality of their decisions. In subsequent chapters, we developthis decision-making theme by examining in some detail the kinds offinancial reports and methods used to aid decision making.For many of you, accounting and finance are not the main focus ofyour studies and you may well be asking, ‘Why do I need to studythese subjects?’ So, after we have considered the key featuresof accounting and finance, we shall go on to discuss why someunderstanding of them is likely to be important to you.Learning outcomesWhen you have completed this chapter, you should be able to:M01 ATRI5601 10 SE C01.indd 1 explain the nature and roles of accounting and finance; identify the main users of financial information and discuss theirneeds; distinguish between financial accounting and managementaccounting; explain why an understanding of accounting and finance is likely to berelevant to your needs.10/11/2016 15:28
What are accounting and finance?Let us begin by trying to understand the purpose of each. Accounting is concerned withcollecting, analysing and communicating financial information. The ultimate aim is to helpthose using this information to make more informed decisions. Unless the financial information being communicated can lead to better decisions being made, there really is no pointin producing it.Sometimes the impression is given that the purpose of accounting is simply to preparefinancial (accounting) reports on a regular basis. While it is true that accountants undertakethis kind of work, it does not represent an end in itself. As already mentioned, the ultimateaim of the accountant’s work is to give users financial information to improve the qualityof their decisions. This decision-making perspective of accounting provides the theme forthis book and shapes the way in which we deal with each topic.Finance (or financial management), like accounting, exists to help decision makers.It is concerned with the ways in which funds for a business are raised and invested. Thislies at the very heart of what business is about. In essence, a business exists to raise fundsfrom investors (owners and lenders) and then to use those funds to make investments (inequipment, premises, inventories and so on) in order to create wealth. As businesses oftenraise and invest large amounts over long periods, the quality of the financing and investmentdecisions can have a profound impact on their fortunes.Funds raised may take various forms and the particular forms chosen should fit with theneeds of the business. An understanding of finance should help in identifying: the main forms of finance available;the costs and benefits of each form of finance;the risks associated with each form of finance; andthe role of financial markets in supplying finance.Once funds have been raised, they must be invested in a suitable way. When decidingbetween the investment opportunities available, an understanding of finance can help inevaluating the risks
Management accounting and financial accounting 11 Scope of this book 13 The changing face of accounting 14 Why do I need to know anything about accounting and finance? 15 The quest for wealth creation 16 Meeting the needs of other stakeholders 17 Balancing risk and return 20 Not-for-profit organisations 21 Summary 23 Key terms 24 Further reading 25
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FINANCIAL ACCOUNTING : MEANING, NATURE AND ROLE OF ACCOUNTING STRUCTURE 1.0 Objective 1.1 Introduction 1.2 Origin and Growth of Accounting 1.3 Meaning of Accounting 1.4 Distinction between Book-Keeping and Accounting 1.5 Distinction between Accounting and Accountancy 1.6 Nature of Accounting 1.7 Objectives of Accounting 1.8 Users of Accounting Information 1.9 Branches of Accounting 1.10 Role .
10 tips och tricks för att lyckas med ert sap-projekt 20 SAPSANYTT 2/2015 De flesta projektledare känner säkert till Cobb’s paradox. Martin Cobb verkade som CIO för sekretariatet för Treasury Board of Canada 1995 då han ställde frågan
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Hotell För hotell anges de tre klasserna A/B, C och D. Det betyder att den "normala" standarden C är acceptabel men att motiven för en högre standard är starka. Ljudklass C motsvarar de tidigare normkraven för hotell, ljudklass A/B motsvarar kraven för moderna hotell med hög standard och ljudklass D kan användas vid
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The roles of the finance function in organisations 4. The role of ethics in the role of the finance function Ethics is the system of moral principles that examines the concept of right and wrong. Ethics underpins an organisation’s sustained value creation. The roles that the finance function performs should be carried out in an .File Size: 888KBPage Count: 10Explore furtherRole of the Finance Function in the Financial Management .www.managementstudyguide.c Roles and Responsibilities of a Finance Department in a .www.pharmapproach.comRoles and Responsibilities of a Finance Department .www.smythecpa.comTop 10 – Functions of Business Finance in an Organizationwikifinancepedia.com23 Functions and Duties of Accounting and Finance .accountantnextdoor.comRecommended to you b
of Managerial Finance page 2 Introduction to Managerial Finance 1 Starbucks—A Taste for Growth page 3 1.1 Finance and Business What Is Finance? 4 Major Areas and Opportunities in Finance 4 Legal Forms of Business Organization 5 Why Study Managerial Finance? Review Questions 9 1.2 The Managerial Finance Function 9 Organization of the Finance
