Financial Accounting for Decision Makers

Join over 10 million students benefi ting from Pearson 
MyLabs
This title can be supported by MyLab Accounting
™
, an 
online homework and tutorial system designed to test and 
build your understanding. 
MyLab Accounting
provides 
a personalised approach, with instant feedback and 
numerous additional resources to support your learning.
• A personalised study plan
• Usable either following chapter-by-chapter structure or 
by learning objective
• Worked solutions showing you how to solve diffi cult 
problems
• Limitless opportunities to practise
Use the power of MyLab Accounting to accelerate your 
learning. You need both an access card and a course ID 
to access MyLab Accounting: 
1. Is your lecturer using MyLab Accounting? 
Ask your 
lecturer
for your course ID.
2. Has an access card been included with the book? 
Check the inside back cover of the book
.
3. If you have a course ID but no access card, go to 
http://www.pearson.com/mylab/accounting
 
to buy access.
FINANCIAL 
AC
COUNTING
NINTH EDITION
FOR DECISION MAKERS
Atril
l McLaney
CVR_ATRIL_ 09_51257.indd 1
3/14/19 12:43 PM

---

Document Outline

• Front Cover
• Half Title Page
• Title Page
• Copyright Page
• Brief contents
• Contents
• Preface
• How to use this book
• Acknowledgements
• 1 Introduction to accounting
  • Introduction
  • Learning outcomes
  • What is accounting?
  • Who are the users of accounting information?
  • The conflicting interests of users
  • How useful is accounting information?
  • Providing a service
  • Weighing up the costs and benefits
  • Accounting as an information system
  • Management accounting and financial accounting
  • Scope of this book
  • The changing face of accounting
  • Accounting for business
  • What is the purpose of a business?
  • What kinds of business ownership exist?
  • How are businesses organised?
  • The quest for wealth creation
  • Meeting the needs of other stakeholders
  • Balancing risk and return
  • Reasons to be ethical
  • Not-for-profit organisations
  • Summary
  • Key terms
  • References
  • Further reading
  • Critical review questions
• 2 Measuring and reporting financial position
  • Introduction
  • Learning outcomes
  • The major financial statements – an overview
  • The statement of financial position
  • The effect of trading transactions
  • Classifying assets
  • Classifying claims
  • Statement layouts
  • Capturing a moment in time
  • The role of accounting conventions
  • Money measurement
  • Valuing assets
  • Meeting user needs
  • Self-assessment question
  • Summary
  • Key terms
  • Reference
  • Further reading
  • Critical review questions
  • Exercises
• 3 Measuring and reporting financial performance
  • Introduction
  • Learning outcomes
  • The income statement
  • Different roles
  • Income statement layout
  • Further issues
  • Recognising revenue
  • Recognising expenses
  • Profit, cash and accruals accounting
  • Depreciation
  • Costing inventories
  • Trade receivables problems
  • Uses and usefulness of the income statement
  • Self-assessment question
  • Summary
  • Key terms
  • Further reading
  • Critical review questions
  • Exercises
• 4 Accounting for limited companies (1)
  • Introduction
  • Learning outcomes
  • The main features of limited companies
  • Legal safeguards
  • Public and private companies
  • Taxation
  • The role of the Stock Exchange
  • Capital market efficiency
  • Managing a company
  • Financing limited companies
  • Share capital
  • Reserves
  • Bonus shares
  • Share capital jargon
  • Borrowings
  • Raising share capital
  • Withdrawing equity
  • The main financial statements
  • Dividends
  • Self-assessment question
  • Summary
  • Key terms
  • References
  • Further reading
  • Critical review questions
  • Exercises
• 5 Accounting for limited companies (2)
  • Introduction
  • Learning outcomes
  • The directors’ duty to account
  • The need for accounting rules
  • Sources of accounting rules
  • Problems with standards
  • Accounting rules or accounting choice?
  • The need for a conceptual framework
  • The IASB framework
  • The auditors’ role
  • The framework of annual financial reports
  • Presenting the financial statements
  • Management commentary
  • Directors’ report
  • Strategic report
  • Accounting standards and accounting policies
  • Creative accounting
  • Self-assessment question
  • Summary
  • Key terms
  • References
  • Further reading
  • Critical review questions
  • Exercises
• 6 Measuring and reporting cash flows
  • Introduction
  • Learning outcomes
  • The statement of cash flows
  • Why is cash so important?
  • The main features of the statement of cash flows
  • A definition of cash and cash equivalents
  • The relationship between the main financial statements
  • The layout of the statement of cash flows
  • The normal direction of cash flows
  • Preparing the statement of cash flows
  • Reconciliation of liabilities from financing activities
  • What does the statement of cash flows tell us?
  • Problems with IAS 7
  • Self-assessment question
  • Summary
  • Key terms
  • Reference
  • Further reading
  • Critical review questions
  • Exercises
• 7 Recognising and reporting assets and liabilities
  • Introduction
  • Learning outcomes
  • Provisions, contingent liabilities and contingent assets
  • Provisions
  • Contingent liabilities
  • Contingent assets
  • Internally-generated intangible assets
  • Leases
  • Borrowing costs
  • Self-assessment question
  • Summary
  • Key terms
  • Further reading
  • Critical review questions
  • Exercises
  • Appendix: Time value of money
• 8 Analysing and interpreting financial statements (1)
  • Introduction
  • Learning outcomes
  • Financial ratios
  • Financial ratio classifications
  • The need for comparison
  • Calculating the ratios
  • A brief overview
  • Profitability
  • Efficiency
  • Relationship between profitability and efficiency
  • Liquidity
  • Operating cash cycle
  • Financial gearing
  • Self-assessment question
  • Summary
  • Key terms
  • Further reading
  • Critical review questions
  • Exercises
• 9 Analysing and interpreting financial statements (2)
  • Introduction
  • Learning outcomes
  • Investment ratios
  • Financial ratios and the problem of overtrading
  • Key performance indicators
  • Common-size financial statements
  • Trend analysis
  • Using ratios to predict financial failure
  • Limitations of ratio analysis
  • Self-assessment question
  • Summary
  • Key terms
  • References
  • Further reading
  • Critical review questions
  • Exercises
• 10 Reporting the financial results of groups of companies
  • Introduction
  • Learning outcomes
  • What is a group of companies?
  • How do groups arise?
  • Types of group relationship
  • Preparing a group statement of financial position
  • Inter-company assets and claims
  • Goodwill arising on consolidation and asset carrying amounts
  • Preparing a group income statement
  • The statement of comprehensive income
  • Inter-company trading
  • Group statement of cash flows
  • Accounting for less than a controlling interest – associate companies
  • The argument against consolidation
  • Self-assessment question
  • Summary
  • Key terms
  • Further reading
  • Critical review questions
  • Exercises
• 11 Increasing the scope of financial reporting
  • Introduction
  • Learning outcomes
  • The development of financial reporting
  • From stewardship to decision making
  • Segmental financial reports
  • Summary financial statements
  • Interim financial statements
  • The value added statement
  • Inflation accounting and reporting
  • Self-assessment question
  • Summary
  • Key terms
  • References
  • Further reading
  • Critical review questions
  • Exercises
• 12 Governing a company
  • Introduction
  • Learning outcomes
  • Corporate governance
  • The board of directors
  • The UK Corporate Governance Code
  • Tasks of the board
  • Chairing the board
  • The role of non-executive directors
  • The audit process
  • Remunerating directors
  • Performance measures
  • Assessing board performance
  • The rise of shareholder activism
  • Self-assessment question
  • Summary
  • Key terms
  • References
  • Further reading
  • Critical review questions
  • Exercises
• Appendix A Recording financial transactions
  • Introduction
  • Learning outcomes
  • The basics of double-entry bookkeeping
  • Recording trading transactions
  • Balancing accounts and the trial balance
  • Preparing the financial statements (final accounts)
  • The ledger and its division
  • Summary
  • Key terms
  • Further reading
  • Exercises
• Appendix B Glossary of key terms
• Appendix C Solutions to self-assessment questions
• Appendix D Solutions to critical review questions
• Appendix E Solutions to selected exercises
• Index
• Back Cover