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Accounting for Business: Practicalities and Strategies PDF

164 Pages·2021·3.561 MB·English
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H u ACCOUNTING FOR BUSINESS s s e y a n PRACTICALITIES AND STRATEGIES d O ROGER HUSSEY AND AUDRA ONG n g As an owner of a business or a manager, you will deal with numbers of various types. Th is book is written for those who may be responsible for, or are generally interested in, the activities of organizations but do not have the knowledge to interpret the fi nancial information that is available. Th e book identifi es the types of organizations that generate fi nancial information and explains how you can use it for your benefi t. Th e early chapters focus on the information that is publicly available for large companies and demonstrate how to select and analyze the fi gures for decision making. Th e later chapters concentrate on the detailed management accounting information that is available internally for managers so that they can make decisions, investigate problems, and set performance targets. Th e fi nal chapter, explores emerging and very pertinent issues such as “Can the organization obtain the basic resources to stay in business?” and “Are its activities harmful to the environment?” A C Roger Hussey received his PhD in fi nancial communications from the University C O U of Bath. He worked in industry before becoming a researcher at the Industrial NT IN Relations Unit, St Edmund Hall, Oxford University for six years. He then G F O accepted a position at the University of the West of England as professor of R B fi nancial reporting. Roger is professor emeritus at the University of the West of US IN England and the University of Windsor, Canada. E S S Audra Ong is a professor of accounting at the University of Windsor, Canada. She received her PhD in accounting from the University of the West of England, her MBA from the University of Wales, Cardiff , and her BSc in accounting from Queen’s University, Belfast (UK). Audra has published in both professional and academic journals and presented papers at numerous national and international conferences. Financial Accounting, Auditing, and Taxation Collection Mark Bettner and Michael Coyne, Editors ISBN: 978-1-95334-992-7 Accounting for Business Accounting for Business Practicalities and Strategies Roger Hussey and Audra Ong Accounting for Business: Practicalities and Strategies Copyright © Business Expert Press, LLC, 2021. Cover design by Charlene Kronstedt Interior design by Exeter Premedia Services Private Ltd., Chennai, India All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means—electronic, mechanical, photocopy, recording, or any other except for brief quotations, not to exceed 400 words, without the prior permission of the publisher. First published in 2021 by Business Expert Press, LLC 222 East 46th Street, New York, NY 10017 www.businessexpertpress.com ISBN-13: 978-1-95334-992-7 (paperback) ISBN-13: 978-1-95334-993-4 (e-book) Business Expert Press Financial Accounting, Auditing, and Taxation Collection Collection ISSN: 2151-2795 (print) Collection ISSN: 2151-2817 (electronic) First edition: 2021 10 9 8 7 6 5 4 3 2 1 Description As an owner of a business or a manager, you will deal with numbers of various types. This book is written for those who may be responsible for, or are generally interested in, the activities of organizations but do not have the knowledge to i nterpret the financial information that is available. The book identifies the types of organizations that generate finan- cial information and explains how you can use it for your benefit. The early chapters focus on the information that is publicly avail- able for large companies and demonstrate how to select and analyze the figures for decision making. The later chapters concentrate on the detailed management accounting information that is available internally for managers so that they can make decisions, investigate problems, and set performance targets. The final chapter, explores emerging and very pertinent issues such as “Can the organization obtain the basic resources to stay in business?” and “Are its activities harmful to the environment?” Keywords accounting equation; activity based management; balance sheet; bud- getary control; cash flow statement; comparative analysis; data analytics; income statement; investment ratios; kaizen costing; key performance indicators; profit or loss account; same size analysis; standard costing; sustainability accounting; target costing; trend analysis; total quality management; vertical analysis; working capital Contents Chapter 1 Providers and Users of Financial Information ...................1 Chapter 2 E xamining Financial Statements .....................................31 Chapter 3 Financial Statement Analysis ...........................................55 Chapter 4 Management Decision Making .......................................83 Chapter 5 Applying Your Knowledge ............................................105 Chapter 6 Accounting and Business Developments .......................125 References �������������������������������������������������������������������������������������������143 About the Authors �������������������������������������������������������������������������������147 Index �������������������������������������������������������������������������������������������������149 CHAPTER 1 Providers and Users of Financial Information About This Chapter Accounting is concerned with money in all its forms. Every day we have economic transactions. You buy gas, go out for lunch, get your iPad repaired, and worry about the strength of the dollar or pound against other currencies. Accounting recognizes these transactions and events, measures them, records them, and provides the information to those who want it and, more importantly, know how to use it. The purpose of early forms of accounting was to provide business owners with financial information on the success of their business. The growth of different forms of business over the centuries has resulted in various types of accounting and there are also different types of providers and users. Businesses have grown both in the nature of their activities and also in the various groups interested in financial data. The poten- tial users are tax authorities, banks and lenders, investors, managers, and the general public. As well as following their own pursuits, they can all have an interest in the financial performance and financial position of an organization. Whether the organization is large or small, a profit or not-for-profit organization, it has to be managed efficiently. To be able to carry out their responsibilities, managers need financial information. The nature of that information will depend on the type of organization and the role of the manager. There are others who are also interested in information ranging from investors in the organization, competitor companies, and the gen- eral public who rely on these organizations for their pay or the services and the products they provide.

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