1 What is accounting? 1
Introduction 1
Purposes of accounting 1
A brief history 3
Types of accounting 3
Who cares anyway? The users 10
The future of
... [Show More] financial accounting 11
Summary 13
Self-assessment questions 14
2 The statement of financial position 17
Introduction 17
The sources and applications of funds 17
The format of the statement of financial position 20
A few words about non-commercial organisations 23
What the statement of financial position tells the user 23
The alternative valuation methods 25
Statement of changes in equity 26
Summary 29
Self-assessment questions 30
3 The statement of comprehensive income 33
Introduction 33
Structure of the statement 34
The income statement part 34
Operating costs 37
The appropriation account 38
Statement of changes in equity 39
Other comprehensive income 41
Inventory valuation 42
Non-commercial organisations 46
Limited companies 48
Information technology and accounting 48
Summary 49
Self-assessment questions 50
Contents vii
4 Concepts and characteristics 53
Introduction 53
Concepts and policies 55
Accounting estimation and measurement bases 62
Revenue recognition 62
A true and fair view 63
The ‘Framework’ 64
Summary 69
Self-assessment questions 69
5 The double entry system 71
Introduction 71
The need for a double entry system 71
Double entry system – duality 73
Double entry system – account 73
Credit transactions 78
Worked example of double entry 79
Balancing off accounts 80
Trial balance 84
Statement of comprehensive income 86
Format of the statement of comprehensive income 88
Balance remaining in the books 89
Summary 92
Self-assessment questions 92
6 Adjustments, including entries in ledger accounts 96
Introduction 96
Accruals and prepayments 96
Adjustment to ledger accounts 98
Adjustments for bad and doubtful debts 103
Bad debts 103
Provision for bad debts 105
Provision for bad debts after the first year 106
Depreciation 108
Sale of non-current assets 113
Summary 115
Self-assessment questions 116
7 Preparation of statement of comprehensive income and
statement of financial position from trial balance and
adjustments 120
Introduction 120
Extended example 121
Summary 133
Self-assessment questions 133
8 Accounts of limited companies and other organisations 138
The need for companies 138
The company 139 [Show Less]