Basic Accounting

Basic Accounting

by Nishat Azmat, Andy Lymer

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Overview

Basic Accounting by Nishat Azmat, Andy Lymer

Is this the right book for me?

Basic Accounting is a complete, step-by-step course in elementary accounting. Giving clear and concise explanations of accounting principles and practice including PAYE, cashflow statements, accounting for share capital, accounting standards and non-financial reporting, it is perfect for the newcomer to basic accounting, the first- level accounting student or anybody needing to brush up their accounting skills.

No prior knowledge of bookkeeping or accounting is assumed. Clear explanations, diagrams and worked examples enable you to master the basic principles then apply them to practical examples to consolidate and test your knowledge.

Basic Accounting includes:

Chapter 1: Introduction
Chapter 2: Source documents
Chapter 3: The ledger system
Chapter 4: Balancing the cash book
Chapter 5: Double entry theory and practice
Chapter 6: The trial balance
Chapter 7: Gross profit and stock
Chapter 8: Trading and profit and loss and accounts
Chapter 9: The balance sheet
Chapter 10: Illustrative example
Chapter 11: Cash and bank transactions
Chapter 12: Bank reconciliation
Chapter 13: The petty cash book
Chapter 14: Credit transactions and suppliers' accounts
Chapter 15: The accounts of credit customers
Chapter 16: Purchases and sales returns
Chapter 17: VAT and PAYE
Chapter 18: Classification of ledger accounts
Chapter 19: Final accounts of a sole trader
Chapter 20: Interpretation of accounts
Chapter 21: Cash flow statements
Chapter 22: Capital and revenue expenditure
Chapter 23: The genera; journal
Chapter 24: Depreciation of fixed assets
Chapter 25: Bad debts and provision for bad debts
Chapter 26: Year-end adjustments
Chapter 27: Incomplete records and single entry
Chapter 28: Non-trading concerns and club accounts
Chapter 29: Control Accounts
Chapter 30: Partnership accounts
Chapter 31: Accounting for management
Chapter 32: Costs of production and manufacturing accounts
Chapter 33: Introduction to limited companies
Chapter 34: Accounting for share capital
Chapter 35: The final accounts of a limited company
Chapter 36: Accounting standards
Chapter 37: Non-financial reporting
Chapter 38: Computerized accounting

Learn effortlessly with easy-to-read page design and interactive features:

Not got much time?
One, five and ten-minute introductions to key principles to get you started.

Author insights
Lots of instant help with common problems and quick tips for success, based on the authors' many years of experience.

Test yourself
Tests in the book and online to keep track of your progress.

Extend your knowledge
Extra online articles to give you a richer understanding of accounting.

Try this
Innovative exercises illustrate what you've learnt and how to use it.

Product Details

ISBN-13: 9781473609136
Publisher: Quercus
Publication date: 06/07/2016
Pages: 352
Product dimensions: 5.00(w) x 7.80(h) x 0.80(d)

About the Author

Andy Lymer is Head of Department of Accounting and Finance at University of Birmingham. He also heads up Lymer & Associates, undertaking numerous research, consultancy and publishing projects.

Nishat Azmat is a Certified Accountant teaching at the University of Birmingham.

Table of Contents

Meet the authors xi

1 Introduction 1

The purpose of accounting

Statement of Financial Position: an introduction

2 Source documents 13

Sales documents

Purchase documents

Banking documents

3 The ledger system 19

Ledger accounts

The cash account

4 Balancing the cash book 25

5 Double entry theory and practice 31

First principles of double entry

Capital and net worth

Cash sales or daily takings

Goods bought for re-sale

Trading expenses

Money withdrawn for private use

6 The trial balance 41

Purpose of the trial balance

Revision exercise 1

7 Gross profit and inventory 49

Cost of sales

Valuation of inventory

The inventory account

8 Trading and profit and loss accounts 57

Illustration by arithmetic

Making up the final accounts

Business revenue and expense

Two kinds of carriage

Production wages and office salaries

Credits on the revenue accounts

Bringing closing inventory into the books

9 The Statement of Financial Position 67

Methods of presentation

Net loss on trading

Capital and drawings

Closing of ledger accounts

10 Illustrative example 75

11 Cash and bank transactions 87

The bank account

Cash or cheque?

Primary records

12 Bank reconciliation 95

Checking the bank statement

Procedure for reconciliation

13 The petty cash book 103

Posting of the petty cash expense totals

14 Credit transactions and suppliers' accounts 109

Types of ledger

Daybooks or journals

Trade and cash discounts

Purchases account

Accounts payable

Cash or credit?

The buyer's records

15 The accounts of credit customers 121

Sales day book

Columnar bookkeeping

16 Purchases and sales returns 127

Accounting for returns

17 VAT and PAYE 133

Introduction

Value Added Tax

PAYE

18 Classification of ledger accounts 143

General rules for posting

Common forms of ledger accounts

Revision exercise 2

19 Final accounts of a sole trader 153

The meaning of current assets and current liabilities

The trading and profit and loss account

The Statement of Financial Position

20 Interpretation of accounts 163

Users of financial statements

Gross profit and mark-up percentages

Rate of inventory turnover

Comparison of business profits

Liquidity ratios

Gearing ratios

Revision exercise 3

21 Statement of Cash Flows 175

Introduction

Cash flow

Preparation of a Statement of Cash Flows

22 Capital and revenue expenditure 183

Capital expenditure

Revenue expenditure

23 The general journal 191

Opening entries

Trial balance errors

Revision exercise 4

24 Depreciation of fixed assets 201

Elementary depreciation methods

Scrap value

Provision for depreciation account

25 Bad debts and provision for bad debts 211

Provision for bad debts

26 Year-end adjustments 219

Prepayments or payments in advance

Accrued or outstanding expenses

Examination exercises

27 Incomplete records and single entry 237

Single entry

Where few records are kept

Income Statement

Claims for loss of inventory

28 Non-trading concerns and club accounts 249

Receipts and payments account

Income and expenditure account

29 Control accounts 259

Self-balancing ledgers

The bank cash book

30 Partnership accounts 267

The appropriation account

Separate capital accounts

Interest on capital

Current accounts

Partners' salary

Amalgamation of sole traders

Overdrawn current account

Interest on drawings

Goodwill in accounts

Revision exercise 5

31 Accounting for management 287

32 Costs of production and manufacturing accounts 293

Prime cost and oncost

Inventory and their turnover

Manufacturing accounts

33 Introduction to limited companies 303

Limited liability

Owners and managers

Capital of a limited company

Loan capital

Characteristics of limited company accounts

34 Accounting for share capital 309

Registered and issued share capital

Notes to the accounts

Share issues

Application and allotment

Calls in arrear

Premium on shares

Debentures

35 The final accounts of a limited company 317

The 'published section' of the income Statement

Statement of Financial Position disclosures

36 Accounting standards 323

Accounting standards

International standards

Smaller companies

37 Non-financial reporting 327

Labour relations

Environmental reporting

Other aspects of social accounting

38 Computerized accounting 333

Spreadsheets

Computerized accounting systems

Issues to consider when introducing a computerized accounting system

Internet

Answers to assignments and revision exercises 339

Index 351

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