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Accounting is a means of communication between the business and different stakeholders

 Introduction

Accounting is a means of communication between the business and different stakeholders. The users of the financial statements would like to understand the business decisions taken by the managers of a company. The book integrates the business decisions with the financial accounting. Author successfully combines the conventional rules of debits and credits with the accounting equation to explain the process of converting the business decisions into financial statements. The book explains the impact of the important decisions on the financial statements through the accounting equation. The book follows the following framework:

  • Business decisions can be divided into three categories: Financing Decisions, Investment Decisions, and Operating Decisions;

  • Business decisions affect the financial items;

  • Financial items find a place in the financial statements;

  • Financial statements can be prepared using the accounting equation;

  • Financial statement analysis helps in understanding the business decisions

Accounting has been explained by bringing in the relevant real life examples. Financial statements of well known Indian companies were used extensively in each chapter. Author carefully explained the concepts of accounting using the accounting equation.

Each business decision has been analyzed in detail with the relevant real life data. Impact of each decision on the financial statements and the accounting equation has been explained in detail.

Financial statement analysis has been treated very exhaustively. Each component (liquidity solvency, profitability) of the analysis has been treated as a separate chapter without ignoring the interrelationship. Financial statements of some of the well known companies have been used in the analysis chapter. The concept of Dupont analysis has been given its due importance as an important tool of financial statement analysis.

The financial items were explained using the accounting standards wherever necessary. Accounting policies of the some of the well known Indian companies have been used to explain the treatment of the financial items.

Each chapter contains large number of numerical and theory questions using the financial statements of the Indian companies.

Key Features

  • Comprehensive discussion on the business decisions

  • Extensive use of the accounting equation

  • Impact of each financial item on the financial statement has explained

  • Interrelationship between the balance sheet, income statement and the cash flow statement stressed

  • Each section has been supplemented with large number of real life examples.

  • Detailed financial statement analysis

  • Detailed discussion on Dupont Analysis, EVA, and Z score using the real life financial information

  • Large number of multiple answer questions.

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