Accounting for Non-Accountants
Format: PDF / Kindle (mobi) / ePub
Now in its tenth edition, Accounting for Non Accountants provides the perfect introduction to the basics of accounting and finance.
Designed for non-specialists with little or no background in accounting, it guides readers through the maze of financial terms and accounting concepts and techniques in a meaningful and easy-to-follow style. By building up knowledge of the basics from the perspective of a sole-trader it then goes on to cover more advanced topics and different types of business organizations including manufacturing organizations and not-for profits. In addition to all the major accounting topics such as accounting standards, income statements, the balance sheet, cash flows, business costing, and working capital management, it explains how to prepare fit for purpose financial statements, describes the most common forms of budgets in action, and demonstrates the value of marginal costing in decision making.
With brand new coverage of the techniques used for the management and financial accounting, such as the wider issues associated with bookkeeping, Accounting for Non Accountants is the classic text for anyone who wants to improve their understanding of company accounts and use financial terms and concepts to make better, more informed decisions.
to meet trade payables, we can see that the actual level of cash balances is small relative to the size of trade receivables. This should not pose a problem if the firm can reliably collect the balances owed to it from the trade receivables. If the firm takes a relatively long time to collect what it is owed, or the industry has a higher than average incidence of bad debts, the firm may run into trouble. In this case it might be worth looking at the results of the trade receivables collection
liquid is the inventory, especially in ‘off peak’ selling periods? – Are bad debts an issue? 3 A small audio equipment retailer has just completed the second year of trading. Profits are up, but the manager is slightly concerned. She feels that the firm could face liquidity problems in the near future. The data for this claim are as follows: (a) Calculate the current ratio and liquidity ratio based on the above data. (b) Should the manager be concerned with the liquidity position? Give
accounts to see the reason for the profit increase – is it an improvement in business performance or is it that the new depreciation policy charges a lower amount to the income statement? Changes in accounting policies are allowable, but should be avoided unless necessary. In fact, it is a requirement of the international accounting standards that if a business changes its accounting policies between one period and the next, it should provide a restatement of the previous period’s income
might represent a trivial amount of expenditure. In this case the amount spent may be considered immaterial and will be treated as an item of revenue expenditure. However, for a smaller business this amount will be more significant and the amount spent may well be treated as capital expenditure and will therefore appear on the balance sheet; that is, the purchase of furniture is of a material amount for the smaller firm. This concept can also be applied to items which may appear as current
Operating profit is profit before interest and taxation. The profit before interest and tax is the preferred measure of profit as the ROCE ratio is aiming to analyse the profit made by the firm’s operations. A firm that has financed more of its capital through debt rather than equity would, all other things being equal, have a lower ROCE owing to interest charges being a deduction made against profit, whereas the dividends paid on any equity capital would only be subtracted after the profit has