FINANCIAL ACCOUNTING (sixth edition)

Review book :

Libby / Libby/ Short

Introduction:

Financial accounting is a necessary and powerful tool in many areas such as banking, business, and commerce.  It helps businessmen control and manage their businesses, their transactions and their purchases, sales, revenues, expenses, assets, liabilities, etc.  From a business’ financial records, we can calculate its net profit/loss to assess its financial health, and from there we can apply a suitable strategy to improve the business.

Moreover, financial accounting, especially, financial statements, are not only useful for businessmen, they are also helpful for banks and investors. When investors want to invest in your company, they may spend a lot of time to researching your financial statement and other financial tools to evaluate your company’s financial situation to decide if your company has development potential.

About this book:

This book is written by a popular and knowledgeable writer. It includes many basic information and also other complicated knowledge. With a clear format, logical and consistent structure and many exercises as well as examples, the book is very readable.  This book has also been recommended to students by facilitators and seniors.

The book comprises 14 chapters. Each chapter explains the concepts clearly.  Here are some pointers:

Basic foundation of financial accounting from the book:
 

Types of financial statements:

1-      Balance sheets: presents the asset (current and non-current asset) and liability (current and long term  liability) at the period of time of the company.  From that, we know about the ability of the company to overcome their obligation and its ability to liquidate.

2-      Income statements: presents the revenues and expenses for the period of time.  It ascertains the net profit or loss during the period. It helps us to know how well the company is run and how successful it is.

3-      Equity statements: the capital of shareholders and retained earnings in a certain periods of time.  This helps us to manage and control the dividends.

4-      Cash flow: presents the liquidity of company.

  • To present investing and financing decisions , how the investors can make a good decision based on all information they receive from the financial statement.
  • The ways to prepare the financial statement – balance sheet.

The operating cycle:

1-      Purchasing the product (inventory). There are two ways to record the inventory : perpetual (record after every transaction) and periodic (record at the end of each period)

2-      Selling the product (calculate the Cost of Goods Sold- there are 4 ways to calculate the Cost of Goods sold based on the nature of the product – first in first out (FIFO), last in first out (LIFO) , weighted average, specific identification.)

3-      Return the product from the customers (for the faulty items within the warranty periods)

4-      Disposal  (throw away , exchange to the new product …)

  • Besides the numbers, the journal entries and transaction, this book also give us some interested information about the company’ structure, how many types of company, and what are the differences among them. By understanding the company’s type, it makes it is easier for us to understand how the company operates and develops as well as administrates its employees.

In conclusion, this book is useful and helpful for students and researchers who are interested in financial accounting and who are taking this module.

 

Where to find the book?

Call number: HF5635 LIB 2009
Location: South

Written by LAM NGUYEN HONG NGAN, Helen

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