Chapter
Who are the users of financial accounting information?
The regulatory and conceptual framework
The qualitative characteristics of useful financial information
The standard-setting process
The annual report and financial statements
The elements of financial statements
The articulation of the financial statements
A brief guide to some key problems and issues with financial statements
Answers to comprehension questions
02 Accounting concepts and systems
What is the purpose of the financial statements?
Statement of comprehensive income (income statement)
The statement of financial position (balance sheet)
The statement of cash flows
Preparing a set of financial statements
The income statement: cost of sales working
Underlying concepts: measurement rules and fundamental accounting concepts
Three further property, plant and equipment issues
Recording accounting information
Answers to comprehension questions
03 Financial analysis: Part I
Financial statement analysis for investment purposes
Other users and their needs
Horizontal analysis and trend analysis
Weaknesses and limitations
Answers to comprehension questions
04 Financial analysis: Part II
The drive for information
Corporate social responsibility reporting
Earnings announcements, conference calls and investor presentations
Media relations: press releases and newspaper coverage
Social media and internet bulletins
Answers to comprehension questions
Business planning and control: the role of budgets
The budget-setting process
The basic steps of preparing a budget
Budgeting in different types of organization
Limitations and problems with budgeting
Improving business planning and budgeting
Answers to comprehension questions
06 Budgets and performance management
The controllability principle
Profit-related performance measurement
Standard costing and variance analysis
Performance management in investment centres
Which is the best measure: ROI or EVA?
Non-financial performance indicators
Performance measurement in not-for-profit organizations
Value for money (VFM) as a public-sector objective
NPO performance measurement: an example
Behavioural aspects of performance management: gaming and creative accounting
External influences on performance
Performance management in modern business systems
Answers to comprehension questions
Why does a business need cash?
How much cash does a business need?
Methods of establishing cash balances
Cash management: strategies for improving cash flow
Cash forecasting: the cash budget
Interpreting and analysing a cash-flow forecast
Answers to comprehension questions
The accountant’s perspective – costing and pricing
Absorption costing and full-cost-plus pricing
Problems with full-cost-plus pricing
Marginal-cost-plus pricing
Activity-based costing (ABC) pricing
Life-cycle costing and pricing
Conclusions: costing for pricing
The economist’s perspective
The marketer’s perspective
Combining the three perspectives: establishing an appropriate pricing strategy
Target pricing and target costing
Answers to comprehension questions
Investment appraisal – the basics
Traditional evaluation techniques
Incorporating real-world complexities into investment appraisal
Investment appraisal within context
Taking a broader strategic view
Answers to comprehension questions
Operational decision making
Cost–volume–profit analysis (CVP)
Answers to comprehension questions
Appendix A: An introduction to double-entry
bookkeeping
Appendix B: International Accounting/Financial Reporting Standards (as at 02.04.2013)
Appendix C: Example earnings announcements
Appendix D: Discount tables
Appendix E: Annuity factors
Accounting and Finance for Managers
：A Decision-Making Approach
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