BOOK REVIEW

DISHA SHETTY S.Y.B.A.F DIV-A 7037

CIMA CERTIFICATE IN BUSINESS ACCOUNTING FUNDAMENTALS OF FINANCIAL ACCOUNTING

ACKNOWLEDGEMENT

The toughest of endeavors in this world is not possible without the support of a helping hand which guides and motivates a person to take on any challenge head on. Inputs from such helping hand are always like very essential because more often or not certain mistakes which go unnoticed from our eyes.
I am indebted to our Prof. Nirav Goda, Thakur College of Science & Commerce, Mumbai for giving such a nice opportunity to express our views & extending his untiring guidance to us, by constantly discussing the project matter and helping us in clarifying our thinking in several pertinent issues and providing a meaning full insight into the subject.

INTRODUCTION OF THE BOOK

The book Fundamentals Of Financial Accounting is a part of certificate level of the professional course CIMA. The book mainly compromises of: A. Conceptual and Regulatory Framework B. Accounting Systems C. Control of Accounting Systems D. Preparation of Accounts for Single Entries The book aims to test students ability to: Explain the conceptual and regulatory framework of accounting Explain the nature of accounting systems and understand the control of such systems Prepare and interpret accounts for a single entry Calculate and interpret simple ratios

AUTHORS DESCRIPTION
The author of the book is HENRY LUNT. HENRY LUNT was previously the CIMA Examiner for fundamentals of financial accounting (C02). He is a Chartered Accountant, with a masters degree in accounting from Liverpool University. He was a professor of accounting and head of the department of accounting and financial services at the university of Central Lancashire. He is currently a director in Henry Lunt unilimited, an accountancy training company.

ABOUT THE PUBLISHER

This book has been authorized by Elsevier for sale and publication in India. Elsevier, a division of Reed Elsevier India Private Limited.

REVIEW OF THE BOOK

The review of the book is briefly explained below chapter wise: Chapter 1: The Accounting Scene This chapter provides an introduction to the accounting framework & introduces the function of accounting systems. The chapter briefly relates to the conceptual and regulatory framework. It covers the objective of accounting, an essential feature of which is a discussion of who uses accounts. The important things discussed in the chapter is the basis of accounts explaining the meaning of accounting, financial statements & how accounting is useful and mandatory for business organizations.

Chapter 2: The Framework of Financial Statements In this chapter, we begin to look at what is contained in financial statements and how the information is complied and presented. It also explains about some of the basic conventions of accounting. In particular, it looks at the accounting equation as the basis on which accounting system are built, and how the equation changes as financial transactions are undertaken. It also considers the concept that an organization must be regarded as an entity completely separate from the people who own it.

Chapter 3: The Accounting System in Action

This chapter introduces us to the system of maintaining ledger accounts, to enable the income statement and the statement of financial position to be prepared. It is known as the system of bookkeeping. Book-keeping is very important to understand the working of the system, especially if adjustments need to be made to the system of its records.

Chapter 4 Summarizing the Ledger Accounts This chapter helps us to learn how the balances on the ledger accounts can be listed on a trial balance, where the total of the debits equals the total of the credits. This does not, however, prove that there are no errors as a trial balance can still balance and yet contain errors. A trial balance is a useful step before a trading account, income statement and statement of financial position are prepared. After these financial statements have been prepared the ledger accounts can be balanced off.

Chapter 5: Further aspects of Ledger Accounting This chapter also emphasizes on ledger accounts. The accounts which are given significance in this chapter are as follows: Carriage costs Sales tax (VAT in UK, VTA in France ) Wages and salaries Accrual & prepayment Bad debts

 Allowance for receivable The exchange of goods and services

Chapter 6: Accounting for Non-current Assets We have already learned that a non-current asset is a resource acquired by an organization with the intention of using it to earn revenue for a long period of time.This chapter distinct between the capital and revenue expenditure, where capital expenditure is defined as a non-current asset. It also looks on the sale of such assets & how such assets are controlled.

Chapter 7: Preparation of financial statements with adjustments This chapter looks at the preparation of financial statement from a trial balance, with various adjustments to be made. These adjustments include: Closing inventories at the end of the period Accruals Prepayments Bad debts & allowance for receivable Depreciation

Chapter 8: Organizing the book keeping system

This chapter helps in different ways to organize the book keeping Samsung for organization with a larger number of transactions, where the ledger account maybe too numerous to keep in one place, and where the number of transactions is too great for one person to handle. It also emphasizes on some of the supporting books and systems that help to maintain accuracy, security and control over the accounting records.

Chapter 9: Controlling the book keeping system No book keeping system can be guaranteed to be entirely free of errors. This chapter gives us a number of ways in which the book keeping system can be checked for accuracy, and ways in which the book keeping system can be checked for accuracy, and ways in which errors and omission can be rectified.

Chapter 10: The Regulatory Framework of Accounting Accountants need some guidance in the way in which they prepare the financial statements. This chapter looks at some of the ways in which accountants take decision on methods of accounting and valuation for certain items. This chapter also looks at the role of auditors, who check the rules on accounting have been followed.

Chapter 11: Incomplete Records; Income & expenditure statements

The ability to prepare financial accounts & statements from incomplete records maybe regarded more difficult than the complete records. This chapter particularly emphasize on preparing statements from complete and incomplete records and their comparison.

Chapter 12: The Manufacturing Account Financial statements of manufacturing business show no difference from the financial statements described before. Its statement of financial position will be identical, though it is worth nothing that the asset of inventories in a manufacturing company maybe made up of 4 different items: bought-in-goods, finished goods, WIP, raw materials The name manufacturing account does not appeal within the income statement but it is nevertheless a very important part of the income statement.

Chapter 13: The financial statements of Limited Companies & the statement of cash flows This chapter looks at two further accounting statements that companies are required to include in their financial statements the statement of changes in equity & the statement of cash flows.

Chapter 14: The Interpretation of financial statement This chapter shows the mechanics of the preparation of financial statement from only the start of the accounting process, the end result

of which is to provide users with information to enable them to make decisions. The mere presentation of the set of financial statements does not necessarily achieve that objective, and this chapter looks at ways of making the information more meaningful.

Positive part of the book:

Comprehensive coverage of most of the topics Step by step coverage for easy understanding Up to date examples and case studies Integrated readings to increase understanding of key theories

Negative part of the book:

Topics covered are basics of financial accounting, keys factors of accounting systems are explained in depth Book is only preferable to CIMA students as it according to their syllabus Quite limited topics.

Suggestions/Comments on the book:

Overall the book is good enough to provide knowledge about the fundamentals of financial accounting, but the book does not provide full coverage on the topics Only the basics are covered in detail.

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