Principles of Financial Accounting
3rd Edition

By Ian Gillespie, et al.
Prentice Hall / Financial Times
August 2004
ISBN: 027367630X
411 Pages, 7 " x 9 "
$87.50 Paper Original


This easy-to-read text will give students the grounding they need to understand the principles of financial accounting. Whilst it provides a sound theoretical foundation of the subject area this new edition also emphasizes the preparation, analysis and application of accounting statements in the context of the modern business organization.

Key Features include:
End-of-chapter review questions and exercises with answers.
Checkpoint questions throughout, solutions also included.
Definitions of all key terms and easy-reference glossary.
New! greater prominence given to the limitations of the accounting model.
New! chapter on the accounts of charities.
New! Chapter summarizing the preparation of financial statements.
New! chapter on computerized accounting.
New! expanded coverage of auditing.
New! updated section on the recognition of profit.
New! Companion Website with excellent resources for both students and lecturers e. g. multiple choice questions, comments on recent press reports and downloadable instructor's manual.

Principles of Financial Accounting is ideal for students taking an introductory course or module in financial accounting. Ian Gillespie was formerly Academic Director of Vali. The breadth and depth of coverage means Principles of Financial Accounting is suitable for undergraduate, postgraduate and HND/C students taking an introductory course or module in financial accounting. Principles of Financial Accounting provides a comprehensive grounding in the main techniques and underlying concepts involved in the preparation and analysis of accounting statements and their application to various forms of business organization.

Reorganized into a new structure which reflects modern accounting thinking, the new edition of Principles of Financial Accounting encourages students to interact with the material presented and places an even greater emphasis on interpreting and analyzing accounting statements. Written for students with the aim of helping them understand the principles of financial accounting, this book develops ideas progressively, step by step, in an exceptionally clear style, and is extensively illustrated through comprehensive worked examples and self check questions.

Table of Contents

How to use this text

1 THE NATURE OF ACCOUNTING
Introduction Learning objectives
1.1 Purposes of accounting
1.2 Users of accounts
1.3 Planning and control
1.4 Financial and management accounting
1.5 Financial accounting for past activities
1.6 A brief history of accounting
1.7 Conventions
1.8 Rules and laws
Summary
Review questions
Exercises

2 THE ACCOUNTING EQUATION- BALANCE SHEETS & PROFIT & LOSS ACCOUNTS
Introduction Learning objectives
2.1 The accounting equation
2.2 The balance sheet
2.3 The profit and loss account
Summary
Review questions
Exercises

3 THE EXTENDED ACCOUNTING EQUATION- DEBITS & CREDITS
Introduction Learning objectives
3.1 The extended accounting equation
3.2 Debit and credit
3.3 The ledger and T accounts
Summary
Review questions
Exercises

4 ACCOUNTING SYSTEMS & FINANCIAL STATEMENTS- THE BASICS
Introduction Learning objectives
4.1 Accounting systems
4.2 The trial balance
4.3 The preparation of financial statements from a trial balance
Summary
Review questions
Exercises

5 ACCRUAL ACCOUNTING
Introduction Learning objectives
5.1 The accruals basis of accounting
5.2 Accrual accounting
5.3 -Preparation of financial statements including accrual accounting adjustments
Summary
Review questions
Exercises

6 FIXED ASSETS & DEPRECIATION
Introduction Learning objectives
6.1 Nature of depreciation and methods of calculation
6.2 Bases of calculation
6.3 Recording depreciation in the books
6.4 What depreciation is not
6.5 Preparation of financial statements including depreciation
Summary
Review questions
Exercises

7 BAD AND DOUBTFUL DEBTS & CONTROL ACCOUNTS
Introduction Learning objectives
7.1 Background, including a note on credit control
7.2 Treatment of bad and doubtful debts
7.3 Preparation of financial statements including bad and doubtful debts
7.4 Control accounts
7.5 Bank reconciliations
Summary
Review questions
Exercises

8 COST OF GOODS SOLD
Introduction Learning objectives
8.1 Conventional methods
8.2 The replacement cost basis
8.3 Preparation of financial statements including stock
Summary
Review questions
Exercises

9 PREPARATION OF FINANCIAL STATEMENTS
Introduction Learning objectives
Adjustments Exercise

10 PARTNERSHIP ACCOUNTS
Introduction Learning objectives
10.1 Capital, current and drawings accounts
10.2 The appropriation of profit
10.3 Partners' loan accounts
10.4 Lack of a partnership agreement
10.5 The peculiar problems of partnerships
10.6 Goodwill
10.7 Change in the profit-sharing ratio
10.8 The death or retirement of a partner
10.9 The Partnership Act 1890
10.10 -Absence of accounts at the date of change in partnership arrangements
10.11 Dissolution of partnerships
10.12 Joint ventures
Summary
Review questions
Exercises
Appendix- an extended example of partnership accounts

11 LIMITED COMPANY ACCOUNTS
Introduction Learning objectives
11.1 Structural and legal aspects- the nature of limited liability companies
11.2 Dividends
11.3 Share capital
11.4 Public and private companies
11.5 Limited companies- financial statements
11.6 Preparation of financial statements
11.7 Taxation in company accounts
Summary
Review questions
Exercises

12 CONSOLIDATED ACCOUNTS- AN INTRODUCTION
Introduction Learning objectives
12.1 The advantages of a group structure
12.2 Why consolidate?
12.3 Consolidated accounts
12.4 Goodwill on consolidation
12.5 Goodwill - what to do with it
12.6 Partly owned subsidiaries
12.7 Consolidated balance sheets
12.8 The consolidated profit and loss account
12.9 Preference shares in subsidiary companies
12.10 Associated companies
Summary
Review questions
Exercises

13 INCOMPLETE RECORDS
Introduction
Learning objectives
13.1 Dealing with incomplete records
Summary
Review questions
Exercises

14 PREPARING THE ACCOUNTS OF CLUBS, SOCIETIES & ASSOCIATIONS
Introduction
Learning objectives
14.1 Unincorporated clubs and societies
14.2 The accounts of charities
Summary
Review questions
Exercises

15 BRANCH ACCOUNTS
Introduction
Learning objectives
15.1 Purposes and methods of accounting for branches
15.2 Branch accounting where the branch maintains full accounting records
15.3 -Branch accounting where all transactions are recorded in the head office books
Summary
Review questions
Exercises

16 COMPUTERISED ACCOUNTING
Introduction
Learning objectives
16.1 Computers for accounting
16.2 Benefits and risks
16.3 Important practical issues
16.4 The disappearing audit trail
Summary
Review questions

17 AUDITING- AN INTRODUCTION
Introduction
Learning objectives
17.1 What is auditing? Private and statutory audits
17.2 Audit reports 17.3 Notes on other audit roles
Summary
Review questions

18 LIMITATIONS OF THE CONVENTIONAL ACCOUNTING MODEL
Introduction
Learning objectives
18.1 The limitations of the model
18.2 Income measurement and valuation
18.3 Creative accounting
18.4 Current value accounting
18.5 Replacement cost accounting
Summary
Review questions
Exercises

19 FINANCIAL REPORTING IN COUNTRIES OTHER THAN THE UK
Introduction Learning objectives
19.1 Major differences and their causes
19.2 Country studies
19.3 Harmonisation
Summary

20 CASH FLOW STATEMENTS
Introduction
Learning objectives
20.1 The importance of cash
20.2 -Reasons for the difference between profit and changes in cash balances
20.3 Sources and applications other than from operations
20.4 The preparation of cash flow statements
20.5 The uses and limitations of cash flow statements
20.6 Improvements to cash flow statements
Summary
Review questions
Exercises

21 ANALYSIS OF FINANCIAL STATEMENTS 1
Introduction
Learning objectives
21.1 Cross-sectional and time series analysis
21.2 Profitability ratios
21.3 Asset turnover rates
21.4 Liquidity and solvency ratios
21.5 Using the ratios
21.6 Limitations
21.7 Worked examples
Summary
Review questions

22 ANALYSIS OF FINANCIAL STATEMENTS 2
Introduction
Learning objectives
22.1 Medium- and long-term measures of solvency
22.2 Earnings per share
22.3 Return on capital employed
22.4 Further comments on limitations
Summary
Review questions
Exercises

Appendices
Further reading
Glossary
Solutions to checkpoint questions
Solutions to selected exercises Index


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