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This revised and updated third edition of Accounting for Managers builds on the success of the previous two editions in explaining how non-financial managers use accounting information. Accounting for Managers emphasises the interpretation rather than the construction of accounting information and encourages a critical, rather than unthinking acceptance of the underlying assumptions behind accounting. It links theory with practical examples and case studies drawn from real life business situations across a range of industries.
Preface to the 3rd Edition.
Preface to the 2nd Edition.
PART I: CONTEXT OF ACCOUNTING.
1. Introduction to Accounting.
Accounting, accountability and the account.
A short history of accounting.
The role of management accounting.
Recent developments in management accounting.
A critical perspective.
2. Accounting and its Relationship to Shareholder Value and Corporate Governance.
Capital and product markets.
Shareholder value, strategy and accounting.
Company regulation and corporate governance.
Risk, internal control and management accounting.
A critical perspective.
3. Recording Financial Transactions and the Principles of Accounting.
Business events, transactions and the accounting system.
The double entry: recording transactions.
Extracting financial information from the accounting system.
Basic principles of accounting.
Cost terms and concepts: the limitations of financial accounting.
4. Management Control, Management Accounting and its Rational-Economic Assumptions.
Management control systems.
Management planning and control systems and management accounting.
Non-financial performance measurement.
A theoretical framework for management accounting.
5. Interpretive and Critical Perspectives on Accounting and Decision-Making.
Research and theory in management accounting and control.
The interpretive paradigm and the social construction perspective.
Culture, control and accounting.
The radical paradigm and critical accounting.
Power and accounting.
Case study 6.1: easyJet.
Ethics and accounting.
Case study 6.2: Enron.
Case study 6.3: WorldCom.
PART II: THE USE OF FINANCIAL REPORTS FOR DECISION-MAKING.
6. Constructing Financial Reports: IFRS and the Framework of Accounting.
True and fair view.
International Financial Reporting Standards (IFRSs) - an overview.
Framework for the Preparation and Presentation of Financial Statements.
Reporting profitability: the Income Statement.
Reporting financial position: the Balance Sheet.
Specific IFRS accounting treatments.
Reporting cash flow: the Cash Flow Statement.
A theoretical perspective on financial reports.
Appendix to chapter 6: IFRS as at 1st January 2008.
Questions for chapter 6.
7. Interpreting Financial Reports and Alternative Perspectives.
Operating and Financial Review.
Interpreting financial information using ratios.
Case study 7.1: HMV Group - interpreting financial reports.
Limitations of financial reports and ratio analysis.
Case study 7.2: Carrington printers - an accounting critique.
Alternative theoretical perspectives on financial reports.
Corporate social and environmental reporting.
Applying different perspectives to financial reports.
Questions for chapter 7.
8. Accounting for Inventory.
Introduction to Inventory.
Methods of costing inventory in manufacturing.
Job costing illustration.
Process costing illustration.
Long term contract costing.
Management accounting statements.
Questions for chapter 8.
PART III: USING ACCOUNTING INFORMATION FOR DECISION-MAKING, PLANNING AND CONTROL.
9. Accounting and Information Systems.
Introduction to accounting and information systems.
Methods of data collection.
Types of information system.
Internal controls for information systems.
Developing information systems.
10. Marketing Decisions.
Alternative approaches to pricing.
Target rate of return pricing.
Optimum selling price.
Special pricing decisions.
Case study 10.1: Retail Stores PLC - the loss-making division.
Case study 10.2: SuperTech - using accounting information to win sales.
Questions for chapter 10.
11. Operating Decisions.
The operations function.
Managing operations - manufacturing.
Managing operations - services.
Accounting for the cost of spare capacity.
Capacity utilization and product mix.
Theory of Constraints.
Operating decisions: relevant costs.
Total quality management.
Environmental cost management.
Case study 11.1: Quality Printing Company - pricing for capacity utilization.
Case study 11.2: Vehicle Parts Co. - the effect of equipment replacement on costs and prices.
Questions for chapter 11.
12. Human Resource Decisions.
Human resources and accounting.
The cost of labour.
Relevant cost of labour.
Case study 12.1: The Database Management Company - labour costs and unused capacity.
Case study 12.2: Trojan Sales - the cost of losing a customer.
Questions for chapter 12.
13. Accounting Decisions.
Calculating product/service costs.
Shifts in management accounting thinking.
Alternative methods of overhead allocation.
Behavioural implications of management accounting.
Case study 13.1: Tektronix.
Case study 13.2: Quality Bank - the overhead allocation problem.
Applying different perspectives to management accounting: costs.
Questions for chapter 13.
14. Strategic Investment Decisions.
Accounting rate of return.
Discounted cash flow.
Comparison of techniques.
Case study 14.1: Goliath Co. - investment evaluation.
Conclusion: a critical perspective.
Appendix to chapter 14: Present value factors.
Questions for chapter 14.
15. Performance Evaluation of Business Units.
Structure of business organizations.
The decentralized organization and divisional performance measurement.
Return on investment.
Case study 15.1: Majestic Services - divisional performance measurement.
Transaction cost economics.
Conclusion: a critical perspective.
Questions for chapter 15.
What is budgeting?
The budgeting process.
Retail budget example: Sports Stores Co-operative Ltd.
Manufacturing budget example: Telcon Manufacturing.
Cash forecasting example: Retail News Group.
Theoretical perspectives on budgeting.
A critical perspective: Beyond Budgeting?
Case study 16.1: Svenska Handelsbanken - is budgeting necessary?
Questions for chapter 16.
17. Budgetary Control.
What is budgetary control?
Variance analysis example: Wood’s Furniture Co.
Reconciling the variances.
Criticism of variance analysis.
Applying different perspectives to management accounting.
Questions for chapter 17.
18. Strategic Management Accounting.
Strategic management accounting.
Accounting techniques to support strategic management accounting.
Case study 18.1: ANT and strategic management accounting.
Other costing approaches.
PART IV: SUPPORTING INFORMATION.
Introduction to the Readings.