E-Book Overview
This fully revised and updated edition of the best-selling manual provides the perfect introduction to the basics of accounting and business finance. It takes the reader through accounting and financial techniques, concepts and terms in an easy-to-follow, approachable style. Up to date with the latest changes in taxation law, it introduces concepts in a way intended to aid non-financial students as well as managers from organizations of all sizes. The book is organized into three main sections: Annual accounts, Management accounting and Financial management. Throughout the book there are suggestions for further reading and questions to test the reader's understanding of each chapter. "Accounting for Non-Accountants" is already widely used as an introductory text for business and management students on a variety of courses, and it remains essential reading for anyone wishing to truly understand accounting principles and practice.
E-Book Content
Accounting for Non-Accountants i This page intentionally left blank ii Accounting for Non-Accountants A MANUAL FOR MANAGERS AND STUDENTS 6TH EDITION Graham Mott iii To Valerie First published in 1984 by Pan Books Second edition 1990 Third edition published in 1990 by Kogan Page Fourth edition 1993, reprinted with revisions 1994, 1995 Fifth edition 1999, reprinted 2003 Sixth edition 2005 Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licences issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned address: Kogan Page Limited 120 Pentonville Road London N1 9JN www.kogan-page.co.uk © Graham Mott, 1984, 1990, 1993, 1999, 2005 The right of Graham Mott to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. British Library Cataloguing in Publication Data A CIP record for this book is available from the British Library. ISBN 0 7494 4416 9 Typeset by Saxon Graphics Ltd, Derby Printed and bound in Great Britain by Creative Print and Design (Wales), Ebbw Vale iv Contents Preface vii Part 1 The annual accounts 1 Financial reporting 2 Financial recording 3 The profit and loss account 4 The balance sheet 5 Cash flow statement 6 Accounting for different business organizations 7 Accounting for inflation 8 Value added 9 Financial ratios 10 Other performance measures 1 3 18 29 41 57 65 76 85 92 109 Part 2 Management accounting 11 Costing basics 12 Costing and pricing 13 Marginal costing 14 Standard costing 15 Budgetary control 117 119 135 146 166 178 Part 3 Financial management 16 The cost of capital 17 Capital investment appraisal 18 Managing working capital 195 197 207 230 v Contents 19 20 21 22 Share values Mergers, takeovers and buy-outs Company taxation Overseas transactions 247 264 273 283 Appendices 1 Financial reporting standards (FRS) as December 2004 2 List of abbreviations 3 Glossary of terms 4 Compound interest factors of £1 5 Present value factors of £1 6 Cumulative present value factors of £1 per annum 7 Answers to self-check questions 8 Further questions 293 297 299 306 308 310 312 327 Index 337 vi Preface Accounting and finance have a language of their own with a variety of statements and techniques that can mystify non-accounting colleagues. Thi