CONTENTS
Introduction
CHAPTER 1: FINANCIAL ACCOUNTING
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1.1 BOOK-KEEPING AND ACCOUNTING
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1.1.1 Book-keeping and Accounting in Business
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1.1.2 Abilities of Book-keeping / Accounting System
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1.1.3 Business Transactions
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1.1.4 Some Accounting Terms
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1.2 DOUBLE ENTRY AND ACCOUNTS
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1.3 THE TRANSACTIONS
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1.4 PURCHASES, SALES AND RETURNS
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1.4.1 The Use of Purchases and Sales Accounts
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1.4.2 Purchases for Cash or Check
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1.4.3 Purchases on Credit
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1.4.4 Sales for Cash or Check
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1.4.5 Sales on Credit
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1.4.6 More About Sales and Purchases Accounts
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1.4.7 Returns Accounts
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1.4.8 Returns Outwards Account
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1.4.9 Returns Inwards Account
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1.4.10 Purchases, Sales and Returns Accounts
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1.5 BALANCING-OFF ACCOUNTS
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1.5.1 Why Should We Balance the Accounts?
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1.5.2 The Way to Balance-off the Accounts
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1.5.3 Account Balancing Examples
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1.6 THE TRIAL BALANCE
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1.6.1 Getting to Know the Trial Balance
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1.6.2 The Extraction of a Trial Balance
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1.6.3 Locating the Errors Indicated by a Trial Balance
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1.6.4 Preparing a Trial Balance from a List of Balances
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1.7 EXPENSES AND INCOME; DRAWINGS
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1.7.1 Accounts for Expenses
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1.7.2 Accounts for Income
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1.7.3 The Use of Drawings (Withdrawals) Account
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1.8 TRADING ACCOUNT; PROFIT AND LOSS ACCOUNT 30
1.8.1 The Gross Profit or Loss
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1.8.2 The Trading Account
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1.8.3 The Profit and Loss Account
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1.9 THE BALANCE SHEET
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1.9.1 Definitions of the Balance Sheet
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1.9.2 The Effect of Transactions on a Balance Sheet
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1.9.3 A Business Balance Sheet
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1.9.4 Format of the Balance Sheets
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1.9.5 Goodwill
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1.10 THE ASSET OF STOCK
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1.10.1 Introduction
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1.10.2 Stock Valuation
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1.10.3 The Closing Stock and the Calculation of Gross Profit
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1.10.4 The Opening Stock and the Closing Stock
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1.10.5 Further with Gross Profit or Loss
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a. Return Inwards and Return Outwards
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b. Carriage Expenses
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c. Other Expenses charged to the Profit or Loss Accounts
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d. Goods Taken for Own Use
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1.10.6 An Example
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1.11. ACCRUALS AND PREPAYMENTS OF EXPENSES
AND INCOME; CAPITAL AND REVENUE EXPENDITURES 54
1.11.1 Accruals of Expenses
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1.11.2 Prepayments of Expenses
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1.11.3 Accrual of Income
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1.11.4 Prepayment of Income
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1.11.5 Stocks of Office Supplies
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1.11.6 Finding the Missing Figures
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1.11.7 Private Expenses
1.11.8 Capital and Revenue Expenditures
1.11.9 Preparing Final Accounts from a Trial Balance
1.12 VALUE ADDED TAX (V.A.T.)
1.12.1 Value Added Tax
1.12.2 The Use of a VAT Account
1.12.3 VAT Calculations
1.13 THE LEDGER
1.14 THE JOURNALS
1.14.1 Uses of the General Journal
1.14.2 The Use of a Journal for Opening Entries
1.14.3 Purchase or Sale of Fixed Assets
1.14.4 Other Transfers
1.15 FIXED ASSET DEPRECIATION
1.15.1 Definition of Depreciation
1.15.2 Depreciation Methods
1.15.3 Straight-Line Depreciation
1.15.4 Reducing-Balance (or Diminishing-Balance) Depreciation
1.15.5 Straight-Line and Reducing-Balance Methods Compared
1.15.6 Depreciation and Double-Entry Book-Keeping
a. Direct Method
b. Indirect Method
1.16 DISPOSALS OF FIXED ASSETS
1.17 BAD CREDITS AND PROVISION FOR BAD AND
DOUBTFUL CREDITS
1.17.1 Introduction
1.17.2 Written Off and Provision for Bad and Doubtful Credits
1.18 ERRORS NOT SHOWN BY A TRIAL BALANCE
1.18.1 Errors not indicated by a Trial Balance
1.18.2 Correcting Errors not indicated by a Trial Balance
1.19 ERRORS INDICATED BY A TRIAL BALANCE
1.20 STOCK RECORDS
1.20.1 Storekeeping Procedures
1.20.2 Manual Stock Record Cards
1.20.3 Stock Losses
1.20.4 Computerized (Electronic) Stock Records
1.20.5 Stock Valuations
a. Average Cost Methods
b. FIFO and LIFO Methods
1.20.6 Journal Entries of Stock Valuation
a. Valuation of the Stock with Average Cost Method at
the end of the period
b. Valuation of the Stock with Weighted Average Cost
Method
c. Valuation of the Stock with FIFO Method
d. Valuation of the Stock with LIFO Method
e. Entries of the Journal
1.21 WAGES BOOKS AND RECORDS
1.21.1 Wages and Salaries
1.21.2 Time Basis
1.21.3 Piecework Basis
1.21.4 Deductions from the Wages
1.21.5 Income Tax
1.21.6 National Insurance Contributions
1.21.7 Superannuation / Pension Contributions
1.21.8 The Entry of the Journal
1.22 MANUFACTURING ACCOUNT
1.22.1 The Process of Manufacturing
1.22.2 The Manufacturing Account
1.22.3 Accounts of Manufacturing
1.23 FINANCIAL STATEMENT ANALYSIS
1.23.1 The Objectives of Financial Statement Analysis
1.23.2 Horizontal Analysis
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1.23.3 Vertical Analysis
1.23.4 Benchmarking
1.24 ACCOUNTING RATIOS
1.24.1 Introduction
1.24.2 Cost of Goods Sold & Profit and Loss Accounta
1.24.3 Ratios and Calculations of the Balance Sheet
1.25 CASHFLOW STATEMENTS
1.25.1 The Advantages and Importance of Cashflow Statements
1.25.2 Cashflows
CHAPTER 2 : COST ACCOUNTING
2.1 CLASSIFICATION OF COSTS
2.1.1 Cost Classification of Costs for Cost Accounting
2.1.2 General Classification of Costs for a Manufacturer
2.1.3 Cost Classification of Costs for Decision Making
a. Absorbed and Variable Costs
b. Sunk and Committed Costs
c. Opportunity and Incremental Costs
d. Avoidable and Unavoidable (or Incurred) Costs
e. Fixed and Variable Costs
f. Controllable and Non- Controllable Costs
g. Standard Costs
h. Post-Manufacturing Costs
i. Life-Cycle Costing
2.1.4 Estimating Cost Behavior
a. Mathematical Conventions
b. Definition and Description of Cost Behavior
d. Numeric Illustration of Cost Behavior
e. Scatter Graphs
f. Analysis of Accounts Technique for Cost Behavior
Prediction
2.1.5 Arithmetical Prediction of Cost Behavior
a. The High-Low Technique
b. Arithmetical Prediction with the High-Low Technique
2.2 ABSORPTION COSTING
2.2.1 Definition of Absorption Costing
2.2.2 Choosing the best Overhead Absorption Rate (OAR)
2.2.3 The predetermined aspects of OARs
2.2.4 Consequences of using predetermined
OARs: under-absorption and over-absorption of overheads
2.2.5 Departmental overhead rates
a. Cost allocation and Cost Apportionment
b. Overhead apportionment calculations
c. Allocation of the service departments'
overheads to the production departments
d. The direct method
e. The Step Method (sequential method)
f. Reciprocal Method of Allocation
2.3 JOB AND BATCH COSTING
2.3.1 Introduction
2.3.2 Basic product costing systems
2.3.3 Job costing
2.3.4 Batch Costing
2.4 PROCESS COSTING
2.4.1 The nature of processing industries
2.4.2 Cost accumulation
2.4.3 Process cost accounts
2.4.4 Normal loss
2.4.5 Normal losses with a scrap value
2.4.6 Abnormal losses
2.4.7 Abnormal gains
2.4.8 Work in progress
2.4.9 Equivalent units
2.4.10 Calculation of equivalent units
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2.4.11 Opening stocks of work in progress
2.4.12 The weighted average method of valuation
2.4.13 Losses in proces
CHAPTER 3: MANAGERIAL ACCOUNTING
3.1 COST- VOLUME PROFIT ANALYSIS
3.1.1 Breakeven analysis
3.1.2 Graphical analysis of the breakeven point
3.1.3 The influence of fixed costs on the breakeven point
3.1.4 Contribution and contribution ratio
3.1.5 Contribution amount
3.1.6 The margin of safety (contribution rate)
3.1.7 The unit breakeven point
3.1.8 The profit/volume (P/V) table
3.1.9 The multiproduct p/v table
3.2 BUDGETING AND BUDGETARY CONTROL
3.2.1 Definitions
3.2.2 Budgetary control
3.2.3 The benefits of budgeting
3.2.4 Applicability of budgeting and budgetary control
3.2.5 The budgeting process
3.2.6 Budgetary control
3.2.7 Interrelationship of budgets
3.2.8 Cash budgeting
3.2.9 Budgetary control: an introduction to variance analysis
3.3 FLEXIBLE BUDGETING
3.3.1 Flexible Budgeting
3.3.2 Flexible budgeting and variable costing
3.3.3 Flexible budgeting only explains volume effects
3.4 STANDARD COSTING
3.4.1 Standards and standard costing
3.4.2 Standards and flexible budgeting
3.4.3 Fixed overhead variances
a. Fixed overhead total variance
b. Fixed overhead expenditure variance
c. Fixed overhead volume variance
3.4.4 Defition of variances
3.4.5 Reconciliation of budgeted and actual profit
3.4.6 Setting standards
a. Setting standards for direct materials
b. Setting standards for direct labor
c. Setting standards for overheads
d. Activity levels and fixed overhead rates
3.5 ACTIVITY-BASED COSTING
3.5.1 Introduction to ABC
3.5.2 The benefits of ABC: diversity and complexity
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CHAPTER:4 PROBLEMS
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4.1 COST ACCOUNTING PROBLEMS
4.2 MANAGERIAL ACCOUNTING PROBLEMS
APPENDIX
Appendix 1: Chart of Accounts
Appendix 2: Detailed Balance Sheet
Appendix 3: Detailed Statement of Income
Appendix 4: Statement of Cost of Sales
Appendix 5: Cash Flow Statement
Appendix 6: Fund Flow Statement
REFERENCES
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