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An Introduction to Business Accounting for Managers - 3rd Edition - ISBN: 9780080240626, 9781483136646

An Introduction to Business Accounting for Managers

3rd Edition

Author: W. C. F. Hartley
eBook ISBN: 9781483136646
Imprint: Pergamon
Published Date: 1st January 1980
Page Count: 236
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An Introduction to Business Accounting for Managers, Third Edition reviews developments in the business accounting arena, including the crystallization of accounting thought on how to deal with escalating rates of inflation, culminating in the proposals for Current Cost Accounting; the acute cash crisis, itself an offshoot of inflation, faced by many companies in the mid-1970s leading to a greater need for awareness and control of cash flow; the specter of several major company collapses and scandals leading to a growing demand for accounting standards; and the growing use of value added within accounting and reporting systems. This book is comprised of 17 chapters and begins with a discussion on the use and abuse of accounting, with emphasis on financial accounting and cost accounting, management's use of accounting, and the reliability of accounting service. The reader is then introduced to the principles of bookkeeping, marginal costing, and corporate taxation; accounting concepts and accounting standards; preparation of balance sheet and ascertainment of a company's profit or loss and financial position; and annual accounts of a limited company. A comparison of profit and cash flow is also presented, and the use of accounting as an aid to management planning and control is explained.
This monograph will be a valuable resource for accountants and business and financial managers.

Table of Contents

Preface to the Third Edition

Preface to the Second Edition

Preface to the First Edition

1 Use and Abuse of Accounting

The Profit Motive

Twin Fields of Accounting

Financial Accounting

Cost Accounting

Management's Use of Accounting

Accounting: A Service with Limitations

The Reliability of the Accounting Service

2 Development and Principles of Book-Keeping

Brief History of Accounting

Double-Entry Book-Keeping

The Account

Cash and Credit Transactions

Classification of Accounts

Books of Account

Balance on an Account

Balancing the Books

3 Ascertainment of Profit or Loss and Financial Position

Cost of Goods Sold

Relevance of Income and Expenditure

Profit and Loss Account

Capital Account

Profit Belongs to the Owner

Balance Sheet

Preparation of Balance Sheet

Balance Sheet Grouping

Fundamental Observations on the Balance Sheet

Relationship of Balance Sheet with Profit and Loss Account

Accounting Period

4 Accounting Concepts and Accounting Standards

What is Profit?

Accounting Concepts

Accounting Conventions

Capital and Revenue Expenditure

Depreciation of Fixed Assets

Methods of Depreciation

Valuation of Current Assets


Valuation of Goodwill

Balance Sheet Story

Scope for Opinion

Accounting Standards

5 the Limited Company

Legal Status

Memorandum and Articles of Association

Public and Private Companies

Share Capital

Classes of Share

Preference Shares

Ordinary Shares


Board of Directors

6 Annual Accounts of a Limited Company

Treatment of Capital

Treatment of Profit

Appropriation to Reserve


Tax Appropriation

Specimen Annual Accounts

Vertical Presentation

7 Value Added

What is Value Added?

Significance for National Economy

Significance for Productivity Measurement

Use within Incentive Schemes

Significance in Financial Reporting

Practical Problems

8 Profit vs. Cash Flow

Profit is an Opinion...

...But Cash Flow is a Fact

Profit vs. Cash

Measurement of Cash Flow

Cash Flow from Operations

Statement of Source and Application of Funds

9 Impact of Inflation on Accounting Information

Impact of Inflation on Profit

Impact of Inflation on Cash Flow

Rate of Inflation

Inflation and Financial Performance

Monetary Items

History of Accounting for Inflation

Current Cost Accounting (CCA)

Where are We Now?

10 Published Financial Information

Legal Requirements

Other Pressures

The Corporate Report

The Published Report and Accounts Booklet

Consolidated Accounts

Consolidated Accounts with Minority Interests

Presentation of Financial Information to Employees

11 Interpretation of Annual Accounts

First Principles

Points of View

Non-Financial Considerations

What to Look for

Principles of Profitability Analysis

Profitability Ratios

Liquidity Ratios


Sources and Uses of Funds

Capital Structure

Dividend Ratios

Share Valuation

Bonus Shares (Scrip Issue)

Desirable Ratios

Typical Products Ltd. Review

12 Structured Use of Financial Ratios

Interrelationship between Ratios

Pyramid Presentation

Variations on the Theme

Shareholder Satisfaction

Diagnosis; Planning; Control

13 Principles of Absorption Cost Accounting

Deficiency of Annual Accounts

Profit on a Job

Direct Expense

Indirect Expense

Analysis of Overhead

Absorption of Production Overhead

Cost Rates

Production Overhead Allocation

Cost of Production

Absorption of Administration Overhead

Absorption Of Selling Overhead

Absorption of Distribution Overhead

Total Absorbed Cost

14 Principles of Marginal Costing

Accurate Cost?

Accurate Profit?

Under-Absorption of Overhead

Reconciliation of Profit

Fixed and Variable Expenses

Significance of Volume

The Argument for Marginal Costing

Use of Marginal Costing

Dangers of Marginal Costing

Benefits of Costing

15 Accounting as an Aid to Management Planning and Control

Need for Planning and Control


Co-ordination of Budgets

Sequence of Short-term Budgets

The Master Budget

Budgetary Control

Effective Control

Project Planning

Break-Even Analysis

The Break-Even Chart

Some Other Techniques

Exclusiveness of Accounting Information

16 Data Processing

History of Data Processing Machines

Adding-Calculating Machines

Keyboard Accounting Machines

Receipt Analysis Machines

Punched-Card Equipment


What to Mechanize

Related Developments

Why Mechanize?

Dangers of Mechanization

17 Principles of Corporate Taxation

Tax Legislation


Corporation Tax

Assessable Profits

Capital Allowances

Stock Appreciation Relief

Tax Losses

Payment of Corporation Tax

Advance Corporation Tax (ACT)

Deferred Taxation

Taxation and Management Decisions


Appendix A Summary of Provisions of Companies Acts 1948 and 1981 re Disclosure in Published Accounts of Limited Companies

Appendix B Extracts from the Published Accounts Booklet of Typical Products Ltd

Appendix C Extracts from the Published Accounts Booklet of John Waddington Ltd. for the Year Ended 2nd April 1978



No. of pages:
© Pergamon 1980
1st January 1980
eBook ISBN:

About the Author

W. C. F. Hartley

Affiliations and Expertise

Financial Training Consultant, Ilkley, UK

Ratings and Reviews