From the Author
I wrote Financial Accounting from both a students and a teachers perspective. When I first studied this subject, I like most of my classmates had little idea of what the tutor was talking about. My father, a trained accountant, couldnt explain why we were doing what we were doing: it was simply the rules of Accounting. My first teaching job was as a lecturer in Financial Accounting, and I was determined not to teach in the way that I was taught. As a result, I really learnt the subject from teaching it, and started to learn good ways of teaching it.
I have used this experience, and included the various tricks of the trade, in this book. You will find many illustrations, ideas about how to learn certain topics, and ways to remember the rules that we have. The Study Guide contains a range of questions, worked examples and tips that illustrate the points made in the text.
The Study Guide isnt aimed at one specific course. Any student who is studying financial accounting at a reasonably high level will need to know and understand various principles. The Guide identifies these, and highlights the key concepts we all need to know. It is structured as follows:
* The nature and users of accounting information an introduction to financial accounting and its users;
* Double entry basics what accounts are, how they are organised, and how we work out whether to debit or credit them;
* Preparing for final accounts the trial balance, errors and control accounts, and reconciling bank statements;
* Final accounts of a sole trader the profit & loss account and the balance sheet;
* Partnership accounts how one net profit is split between two or more partners;
* Limited company accounts share capital and other company-specific issues;
* Cash flow statements how we construct them;
* Ratio analysis using the information in the accounts that weve constructed;
* Exam questions and answers.
What this Guide therefore gives you is a comprehensive but straightforward introduction to Financial Accounting, explaining why we do what we do.