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 Table of contents VII

6.6 Depreciation of property, plant and equipment 175

6.7 Bad debts and doubtful receivables 178
6.8 Finalizing the statement of profit or loss and other comprehensive income 180
6.9 Conclusions 185
References 185
Discussion and practice questions 186
Suggested research questions for dissertation students 191

7 The statement of financial position 193

7.1 Introduction 193
7.2 Purpose of the statement of financial position 194
7.3 Preparing a draft statement of financial position 195
7.4 Inventory, accruals and prepayments 206
7.5 Depreciation of property, plant and equipment 207
7.6 Bad debts and doubtful receivables 210
7.7 Finalizing the statement of financial position 211
7.8 Conclusions 216
References 217
Discussion and practice questions 218
Suggested research questions for dissertation students 224

8 The statement of cash flows 226

8.1 Introduction 226
8.2 Purpose of the statement of cash flows 226
8.3 Cash and cash equivalents 229
8.4 Classification of cash flows 229
8.5 Cash flows from operating activities under the direct method 237
8.6 Cash flows from operating activities under the indirect method 242
8.7 Finalizing the statement of cash flows 246
8.8 Conclusions 249
References 250
Discussion and practice questions 251
Suggested research questions for dissertation students 257

9 Consolidated financial statements 258

9.1 Introduction 258
9.2 Purpose of consolidated financial statements 259
9.3 The concept of control 261
9.4 Consolidated statement of financial position at acquisition 265
9.5 Consolidated statement of financial position after acquisition 273
9.6 Consolidated statement of profit or loss and consolidated
statement of changes in equity 275
9.7 Associates 278
9.8 Joint arrangements 283
9.9 Conclusions 290
References 291
Discussion and practice questions 292
Suggested research questions for dissertation students 295
VIII Table of contents

10 Financial statement analysis 296

10.1 Introduction 296
10.2 Ratio analysis 297
10.3 Investment ratios 300
10.4 Profitability ratios 305
10.5 Liquidity and efficiency ratios 310
10.6 Solvency ratios 314
10.7 Trend analysis 316
10.8 Limitations of ratio analysis 317
10.9 Conclusions 319
References 319
Discussion and practice questions 319
Suggested research questions for dissertation students 326

11 Corporate governance, stewardship, social responsibility

and integrated reporting 327
11.1 Introduction 327
11.2 Corporate governance 328
11.3 International corporate governance codes 332
11.4 The UK Corporate Governance Code 334
11.5 The UK Stewardship Code 344
11.6 Corporate social responsibility 346
11.7 Integrated reporting 351
11.8 Conclusions 360
References 360
Discussion and practice questions 363
Suggested research questions for dissertation students 364

Part III Management accounting 367

12 The importance of cost information 368
12.1 Introduction 368
12.2 Need for cost accounting information 369
12.3 Cost accounting 372
12.4 Classifying costs 376
12.5 Elements of total cost 379
12.6 Conclusions 382
References 383
Discussion and practice questions 383
Suggested research questions for dissertation students 386

13 Costing for product direct costs 389

13.1 Introduction 389
13.2 Importance of material control 390
 Table of contents IX

13.3 Costing direct materials 392

13.4 Comparing methods when prices are rising 397
13.5 Advantages and disadvantages of FIFO and WAC 399
13.6 Costing direct labour 401
13.7 Costing direct expenses 404
13.8 Conclusions 404
Discussion and practice questions 405
Suggested research questions for dissertation students 408

14 Costing for indirect costs 410

14.1 Introduction 410
14.2 Absorption costing 411
14.3 Allocating and apportioning production overheads 413
14.4 Calculating the production overhead absorption rate 416
14.5 Calculating the production cost per unit 419
14.6 Apportioning service cost centre overheads 420
14.7 Budgeted overhead absorption rates 424
14.8 Conclusions 424
Discussion and practice questions 426
Suggested research questions for dissertation students 429

15 Activity-based costing 430

15.1 Introduction 430
15.2 Need for an alternative to absorption costing 431
15.3 Main stages in activity-based costing 433
15.4 Activities and cost drivers 434
15.5 Costing for administrative and marketing overheads 437
15.6 Advantages and disadvantages of ABC 439
15.7 Conclusions 441
References 441
Discussion and practice questions 441
Suggested research questions for dissertation students 444

16 Marginal costing 446

16.1 Introduction 446
16.2 Classifying costs by behaviour 447
16.3 Calculating contribution 450
16.4 Breakeven analysis 452
16.5 Cost-volume-profit analysis 454
16.6 Limiting factor analysis 457
16.7 Limitations of marginal costing 463
16.8 Conclusions 464
Discussion and practice questions 465
Suggested research questions for dissertation students 467
X Table of contents

17 Budgetary control 469

17.1 Introduction 469
17.2 Purpose of budgetary control 470
17.3 Main stages in budgetary control 472
17.4 Setting budgets 475
17.5 Fixed and flexible budgets 481
17.6 Variance analysis 483
17.7 Advantages and disadvantages 486
17.8 Conclusions 487
References 488
Discussion and practice questions 488
Suggested research questions for dissertation students 491
18 Standard costing 492
18.1 Introduction 492
18.2 Purpose of standard costing 493
18.3 Variance analysis 494
18.4 Direct materials variance 495
18.5 Direct labour variance 498
18.6 Advantages and disadvantages 500
18.7 Conclusions 501
References 501
Discussion and practice questions 502
Suggested research questions for dissertation students 503
19 Strategic management accounting 504
19.1 Introduction 504
19.2 Need for strategic management accounting 505
19.3 Market-orientated accounting 511
19.4 Target costing 515
19.5 Balanced scorecard 518
19.6 Total quality management 525
19.7 Conclusions 529
References 529
Discussion and practice questions 530
Suggested research questions for dissertation students 534
20 Environmental management accounting 536
20.1 Introduction 536
20.2 Limitations of traditional management accounting 537
20.3 Need for environmental management systems 538
20.4 Development of environmental management accounting 541
20.5 Implementing environmental management accounting 546
20.6 Greenhouse gas accounting 549
20.7 Enterprise resource planning 551
20.8 Conclusions 554
References 554
Discussion and practice questions 556
Suggested research questions for dissertation students 558
 Table of contents XI

Part IV Capital investment appraisal 561

21 Payback period and accounting rate of return 562
21.1 Introduction 562
21.2 Purpose of capital investment appraisal 563
21.3 Simple payback period 565
21.4 Accounting rate of return 568
21.5 Advantages and disadvantages 572
21.6 Investment decisions based on both methods 575
21.7 Conclusions 577
References 577
Discussion and practice questions 578
Suggested research questions for dissertation students 580

22 Discounted cash flow methods 581

22.1 Introduction 581
22.2 Time value of money 582
22.3 Net present value 584
22.4 Internal rate of return 586
22.5 Discounted payback period 588
22.6 Advantages and disadvantages 591
22.7 Incorporating environmental management accounting information
in capital investment decisions 593
22.8 Conclusions 597
References 598
Discussion and practice questions 598
Suggested research questions for dissertation students 601

Appendix: Present value tables 602

Glossary 604
Index 615
 List of figures

1.1 UK private sector enterprises by legal status 3

1.2 Entries in the Company Register for 1862 8
1.3 The concept of limited liability 9
1.4 Development of incorporated entities in the UK 10
1.5 Types of business entity 11

2.1 The finance gap 32

2.2 Main sources of finance by term and purpose 34
2.3 Main sources of finance by type 40
2.4 Cash flow forecast formulae 48
2.5 Checklist for interpreting cash flow information 50

3.1 Fundamental accounting principles 65

3.2 Overview of the accounting process 68
3.3 Pearls of wisdom 81
3.4 Excel accounting records for Kool Kate Ltd 81
3.5 Excel trial balance for Kool Kate Ltd 89

4.1 Contents page from Ted Baker Plc Annual Report and Accounts 2015/16 98
4.2 Key features of company law for public and private companies 106
4.3 International understanding on rules 110
4.4 Reasons for international differences in GAAP 111
4.5 Members of the European Union (EU-28), 2016 112
4.6 Structure of the IFRS Foundation 114
4.7 The IASB’s standard-setting process 115
4.8 Main arguments in the little GAAP debate 118
4.9 Three tiers with increasing complexity 126

5.1 Primary users of general purpose financial reports 137

5.2 Qualitative characteristics of useful financial information 142

7.1 Classifying assets, equity and liabilities 196

8.1 Consolidated cash flow statement for Rolls-Royce Holdings plc 233
8.2 Group and company cash flow statements for Ted Baker Plc 235
8.3 Indirect method: main adjustments to operating income and expenses 245

9.1 Supermarket PLC’s control over Grocer Ltd 265

9.2 Tiroli PLC’s significant influence over Astio Ltd 279
9.3 Joint arrangements 285

10.1 Examples of main types of ratio 298

10.2 Ted Baker Plc Annual Report and Accounts 2015/16 (abridged extracts) 298
10.3 Ted Baker percentage change in operating profit: 2007–2016 317

XII
 List of figures XIII

11.1 Examples of statements of compliance with the 2014 UK CG Code  339

11.2 Example of Ted Baker’s explanation for non-compliance with the
UK CG Code 340
11.3 Derwent London’s explanation for non-compliance with the 2014
UK CG Code 341
11.4 Example of disclosures about non-executive directors and their
independence342
11.5 Example of disclosure on communications with shareholders 342
11.6 Examples of disclosure about boardroom diversity 343
11.7 Derwent London’s viability statement 344
11.8 Examples of CSR disclosures on (a) greenhouse gas emissions
and (b) diversity 349
11.9 Example of website CSR disclosures 351
11.10 The value creation process within integrated reporting 352
11.11 Example of integrated reporting by Anglo American 356
11.12 Example of integrated reporting by Aegon 358

12.1 Typical characteristics of small and large firms 370

12.2 Typical cost centres in a factory 375
12.3 Behaviour of variable and fixed costs 377
12.4 Classifying revenue expenditure 379

13.1 Main stages in material control 392

13.2 Inventory account formulae 398

14.1 Main stages in absorption costing 413

15.1 Main stages in ABC 433

15.2 Main stages in absorption costing and ABC compared 434

16.1 Breakeven graph for Mementos Ltd 454

17.1 Main stages in budgetary control 475

17.2 Examples of non-financial and financial budgets 476
17.3 Early Crops Ltd Budget Report for May 485

18.1 Total direct costs variance 495

18.2 Total direct materials variance 496
18.3 Total direct labour variance 499

19.1 Four perspectives of the balanced scorecard 519

19.2 Cause-and-effect relationships within the balanced scorecard 520
19.3 Balanced scorecard for Southwest Airlines 521

21.1 Non-discounting methods of investment appraisal 565

21.2 Cheddar Cheese Company Ltd payback period formulae 574

22.1 Main methods of investment appraisal 582

22.2 Keith Hackett: internal rate of return 587
 List of tables

1.1 Worldwide membership of UK and Irish accountancy bodies

(as of end 2015) 12

2.1 Top four alternative finance platforms by volume 38

4.1 Size thresholds for accounting and auditing in the UK 106

5.1 Set of financial statements under IAS 1 145

6.1 Examples of fair value 177

9.1 Accounting methods for different types of investee 284

14.1 Main bases for apportioning production overheads 416

15.1 Analysis of costing systems used in the UK 440

19.1 Characteristics of traditional and strategic management accounting 506

20.1 Benefits of environmental management accounting 542

20.2 Types of physical EMA information provided in the manufacturing sector 546

21.1 Comparison of non-discounting methods of investment appraisal 577

22.1 Present value for £1 at compound interest (extract) 583

22.2 Comparison of discounted cash flow methods used
for investment appraisal 592

XIV
Preface

Accounting information lies at the heart of business, irrespective of the size of the
company and regardless of whether the user of the information is the owner, the
manager or an external party. Therefore, it is not surprising that accounting is a core
subject on programmes that include the study of business.
Now in its third edition, Business Accounting has been developed specifically for
the needs of non-specialist students studying accounting. It provides an introduction
to financial and management accounting in an accessible, non-technical style and is
suitable for undergraduate and postgraduate students. The active-learning approach
seeks to convey an understanding of the subjectivity inherent in accounting and the
ability to evaluate financial information for a range of business purposes.
The book provides clear and concise coverage of financial and management
accounting principles and practice, set in a business context. The chapters are
presented in a logical teaching sequence and each chapter has a clear structure
with learning objectives, key definitions and activities within the text to illustrate
­principles, encourage reflection and introduce the next learning point. There is a
wealth of worked examples, recurring case studies and recent company data to ensure
that learning relates to business reality.
At the end of each chapter there are discussion questions and exam-style practice
questions that test the learning outcomes. Answers to these questions, together with
additional materials, PowerPoint slides and interactive quizzes for use in a virtual
learning environment are available on the companion website (see p. xxiv). A unique
feature of the book is the addition of suggested topics for dissertation students at the
end of each chapter, with potential research questions and preliminary reading.
Part I of the book sets the scene with two chapters that introduce the student to
the world of accounting and finance in a business context, while Parts II and III cover
the key aspects of financial and management accounting respectively. Part IV focuses
on capital investment appraisal techniques. In addition to the traditional syllabus,
there are chapters on contemporary accounting issues such as corporate governance,
stewardship, social responsibility and integrated reporting, as well as strategic man-
agement accounting and environmental accounting.
The wide range of topics offered allows the lecturer to select those that are ­relevant
to the syllabus and the level of study. On some programmes, the two main branches
of accounting are studied at different stages (for example, in consecutive semesters for
Master’s and MBA students, or consecutive years for undergraduate students); on other
­programmes, the topics are drawn from both branches (for example, introduction to
accounting in year 1 and a follow-up module as a core or elective in years 2 or 3). The
use of the book on consecutive modules offers the advantage of continuity as well as
cost ­savings for students.

XV
 Suggested teaching syllabus
Example 1. Two branches of accounting are taught separately
Module 1
Financial accounting
Part I The world of accounting and finance
1 Introduction to business accounting
2 The importance of cash
Part II Financial accounting
3 The accounting system
4 The regulatory framework for financial reporting
Example 2. Both branches of accounting are taught together
Module 1
Introduction to accounting
Part I The world of accounting and finance
1 Introduction to accounting
2 The importance of cash
Part II Financial accounting
3 The accounting system
4 The regulatory framework for financial reporting
XVI
5 The conceptual framework for financial reporting
6 The statement of profit or loss and other com-
prehensive income
7 The statement of financial position
8 The statement of cash flows
9 Consolidated financial statements
10 Financial statement analysis
11 Corporate governance, stewardship, social
responsibility and integrated reporting
5 The conceptual framework for financial reporting
6 The statement of profit or loss and other com-
prehensive income
7 The statement of financial position
8 The statement of cash flows
Part III Management accounting
12 The importance of cost information
13 Costing for product direct costs
14 Costing for indirect costs

Module 2
Management accounting
Part III Management accounting
12 The importance of cost information
13 Costing for product direct costs
14 Costing for indirect costs
15 Activity-based costing
16 Marginal costing
Module 2
Advanced accounting
Part II Financial accounting
9 Consolidated financial statements
10 Financial statement analysis
11 Corporate governance, stewardship, social
responsibility and integrated reporting
Suggested teaching syllabus XVII
17 Budgetary planning and control
18 Standard costing
19 Strategic management accounting
20 Environmental accounting
Part IV Capital investment appraisal
21 Payback period and accounting rate of
return
22 Discounted cash flow methods
Part III Management accounting
15 Activity-based costing
16 Marginal costing
17 Budgetary control
18 Standard costing
19 Strategic management accounting
20 Environmental accounting
Part IV Capital investment appraisal
21 Payback period and accounting rate of return
22 Discounted cash flow methods
 Acknowledgements

We would like to acknowledge the invaluable feedback on this book and its associ-
ated learning resources given to us by our students over the years. We are also grateful
to the anonymous reviewers for their thoughtful suggestions and comments.
We are indebted to a number of friends and colleagues, who have given us the
benefit of their experience: Rachel Jones and Bian Tan in relation to the first edition;
Mark Farmer and Geoffrey George in connection with the second edition; and Robin
Jarvis and Lawrence Wu with regard to the third edition. Thanks are also due to our
editorial team at Palgrave and our copy-editor, Ann Edmondson, whose support has
been invaluable.

XVIII
Acronyms

AADB Accountancy and Actuarial Discipline Board

ABC activity-based costing
ACCA Association of Chartered Certified Accountants
AGM annual general meeting
AIA Association of International Accountants
AICPA American Institute of Certified Public Accountants
AIM Alternative Investment Market
APB Auditing Practices Board
ARR accounting rate of return
ASAF Accounting Standards Advisory Forum
ASB Accounting Standards Board
ASC Accounting Standards Committee
BBB British Business Bank
BEP breakeven point
b/f brought forward
BIS (Department for) Business, Innovation and Skills
BSC balanced scorecard
BVCA British Private Equity & Venture Capital Association
CA 2006 Companies Act 2006
CAI Chartered Accountants Ireland
CE capital employed
c/f carried forward
CGMA Chartered Global Management Accountant
CIMA Chartered Institute of Management Accountants
CIPFA Chartered Institute of Public Finance and Accountancy
CSR corporate social responsibility
DCF discounted cash flow
ECB European Central Bank
ECGI European Corporate Governance Institute
EEA European Economic Area
EEC European Economic Community
EFAA European Federation of Accountants and Auditors
EFRAG European Financial Reporting Advisory Group
EMA environmental management accounting
EMS environmental management system

XIX
XX Acronyms

EPS earnings per share

ERP enterprise resource planning
EU European Union
FASB Financial Accounting Standards Board
FCA Financial Conduct Authority
FIFO first in, first out
FRC Financial Reporting Council
FRS Financial Reporting Standard
FRSSE Financial Reporting Standard for Smaller Entities
GAAP generally accepted accounting principles
GHG greenhouse gas
HMRC HM Revenue and Customs
HP hire purchase
IAASB International Auditing and Assurance Standards Board
IAS International Accounting Standard
IASB International Accounting Standards Board
IASC International Accounting Standards Committee
ICAEW Institute of Chartered Accountants in England and Wales
ICAS Institute of Chartered Accountants in Scotland
ICSA Institute of Chartered Secretaries and Administrators
IESBA International Ethics Standards Board for Accountants
IFAC International Federation of Accountants
IFRIC International Financial Reporting Interpretations Committee
IFRS International Financial Reporting Standard
IIRC International Integrated Reporting Council
IoD Institute of Directors
IOSCO International Organization of Securities Commissions
IPO initial public offering
<IR> Integrated Reporting
IRR internal rate of return
ISA International Standard on Auditing
ISD Investment Services Directive
ISO International Organization for Standardization
JIT just-in-time
JO joint operation
LLP limited liability partnership
LSE London Stock Exchange
Ltd Limited
MEP member of the European Parliament
MOA market-orientated accounting
 Acronyms XXI

NCF net cash flow

NCI non-controlling interest
NGO non-governmental organization
NPV net present value
NRV net realizable value
OAR overhead absorption rate
OCI other comprehensive income
OECD Organisation for Economic Co-operation and Development
P2P peer-to-peer
PBIT profit before interest and tax
PCAOB Public Company Accounting Oversight Board
P/E price/earnings or price-earnings
PIR Post-Implementation Review
PLC Public Limited Company
PPE property, plant and equipment
PRC People’s Republic of China
PV present value
QCA Quoted Companies Alliance
ROCE return on capital employed
ROE return on equity
SCI strategic cost index
SEC Securities and Exchange Commission
SIC Standard Interpretations Committee
SMA strategic management accounting
SMEs small and medium-sized entities
SWOT strengths, weaknesses, opportunities, threats
TQM total quality management
UCITS Undertakings for Collective Investment in Transferable Securities
UEAPME European Association of Craft, Small and Medium-sized Enterprises
UK United Kingdom [of Great Britain and Northern Ireland]
UKBAA UK Business Angels Association
UK CG Code UK Corporate Governance Code
UN United Nations
USA United States of America
WAC weighted-average cost
WBCSD World Business Council for Sustainable Development
WIP work-in-progress
WRI World Resources Institute
 Tour of the book
Chapter

2 The importance of cash

• Learning objectives: Each chapter starts by Learning objectives

setting out the main topics you should be able to
master after studying the chapter
When you have studied this chapter, you should be able to:
• Explain the theory of a finance gap for small and medium-sized enterprises
• Describe and classify potential sources of business finance
• Explain the need for cash flow information
• Prepare and interpret a cash flow forecast and a cash flow statement
• Describe the principles for monitoring and controlling cash

2.1 Introduction
In Chapter Your forecast
1 weshould look likethat
explained this: the objective of some business owners is to maxi-
• Worked examples: An abundance of easy-to- mize their wealth, whereas others simply want to make enough money to maintain
a certain lifestyle. Before Candlewick
an owner can Ltd start making money, he or she needs to have
follow worked examples, recurring case studies enough capital toDraft setcash
upfloworforecast
acquire a business,
for January–June 2018 and enough cash to run the business.
and recent company data ensure your learning Irrespective of whether January
it has been
February March
set April
up as May a sole June
company, once the business has started, the cash position must be monitored closely.
proprietorship,
Total
partnership or
£ £ £ £ £ £ £
reflects business reality There are many reasons why businesses close and they are not all associated with
Cash inflows
failure. For example, the owner may have simply decided to sell the business or retire.
Capital
The main reason10,000 for failure 0is that the 0 0
business 0
does not0have 10,000
sufficient cash or credit
Revenue (cash sales) as a 2,000
to continue 2,000
going concern. 2,500
Typically,2,800 the3,000 3,000will
business 15,300
have fallen behind with
Revenue (credit sales) 0 0 6,000 6,000 7,500 8,400
payments for goods or services received, leading to supplies being cut off. In addition, 27,900
it may not be able to pay2,000
12,000 interest on any
8,500 bank
8,800 overdraft
10,500 11,400 or loan, leading to demand
53,200
foroutflows
Cash immediate repayment. Insufficient cash also means that employees cannot be paid
and must be laid off.
Purchases 0 Thus, cash6,000
6,000 is crucial7,500to the
8,400survival
9,000 of the business.
36,900
Because of the importance 0 6,000 of6,000 cash, 7,500
would-be 8,400 entrepreneurs
9,000 36,900 and the owners and
managers
Net cash flow of existing
12,000 businesses
(4,000) need information
2,500 1,300 2,100 about
2,400 the current and future cash
16,300
position. This allows
Cumulative cash b/f 0
them12,000
to check8,000
that
10,500
there will 13,900
11,800
be sufficient0
finance in terms of
Cumulative cash c/f 12,000 8,000 10,500 11,800 13,900 16,300 16,300

30

The accounting system

Activity
• Activities within the text: Illustrate the
principles, encourage reflection and give you During the month of August, a car dealer sold a vehicle for £
bookkeeping
purchased in at
depth,
theitbeginning
is useful to understand something
of the month for about the accountin
only £6,000. He
a chance to apply what you have been shown tem that generates the financial information they are likely to use as the entrepre
before you move on to the next learning point. car, but has not yet received the cash from the buyer. What i
and/or managers of the future.
tion at the end of August?

3.2 Accounting principles

You will remember from Chapter 1 that the purpose of financial accounting
provide financial information to meet the needs of external users.

• Key definitions: Each chapter contains clear
and authoritative definitions of key terms for easy
learning and quick revision
Key definition
Financial accounting is the branch of accounting concerned with classifying,
measuring and recording the economic transactions of an entity in accordance with
established principles, legal requirements and accounting standards. It is primarily
concerned with communicating a true and fair view of the financial performance and
financial position of an entity to external parties at the end of the accounting period.

The term true and fair view implies that the financial statements produced at th
of an accounting period (usually one year) are a faithful representation of the e
economic activities. The financial statements of limited liability entities are draw
within a regulatory framework and are prepared using a number of accounting
ciples which have been established as general principles. It is important to reme
XXII that accounting has its roots in best practice from which a number of accou
principles1 developed. Many of the fundamental accounting principles are still
today and some of them are incorporated in the conceptual framework for fin
reporting, which we examine in Chapter 5.
 Tour of the book XXIII

Consolidated financial statements 285

• Figures and tables: Figures help you visualize Figure 9.3 Joint arrangements
processes and structure, while tables illustrate Shareholders in investor

layouts for presenting financial statements and

other financial information
Investor
Control

Joint
Control
Table 5.1 Set of financial statements under IAS 1

Joint venture Joint operation

IASB terminology Traditional UK terminology (normally structured (typically not structured
through a separate legal through a separate legal
Statement of profit or loss and other Profit and loss account entity) entity)
405
comprehensive income
Statement of financial position Balance sheet As we have described the equity method in the previous section on associates, we
Statement of changes in equity Statement of recognized gains and losses will focus
a wideon accounting
range for jointfor
of information operations. Each party
different purposes. in the joint
Typically, this operation must
includes accounting
The acc
recognize the following
information that is in relation
used to its
for both interestand
financial in the joint operation:
management accounting purposes.
Statement of cash flows Cash flow statement The importance of cash
• its assets and liabilities, including its share of any jointly held assets or liabilities
• its share of the income and expenses from the joint operation.
An entity must present a complete set of financial statements at least annually, with com- Common problems to avoid
The required accounting entries are shown in the investor’s own individual financial
parative information for the previous period. The following items must be identified:statements, References
• Common problems to avoid: Tips and advice Common andmistakes
are included within
students thewhen
make consolidated financial
constructing statementsaccount
an inventory if the inves-
UEAPME (2011) SMEs’ Access to Finance. Available at: http://www.ueapme
tor is part spip.php?rubrique46
of a group.
are:

• The reporting enterprise. IASBthis, (2014)

to includeIAS (Accessed
1, 8 February
Presentation or2016). (a
On 1of
• Forgetting the unit of measurement theFinancial Statements
currency symbol in the
help you improve your grades by avoiding To illustrate
UKBAAheadings
column
we will
(2016) AboutlookUKat an example.
Business Angels January 2018,
Association. Air PLC at:
Available andhttp://
• Whether the statements are for a single entity or a group. Jet PLC each 2014),
agreed toLondon:
contributeIFRS
£2.5mFoundation.
towards the(Accessed
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common mistakes ukbusinessangelsassociation.org.uk/about
• Forgetting to show the date of each receipt or issue of materials 8 February 2016).
• The date or period covered. baggageWilson
handling
IASB
• Failing
equipment.
(2015)
toCommittee
show
The equipment
Exposure
(1979)
the opening
cost £5m
Draft
The Financing
balance of to
of inventory
purchase
Conceptual
Small
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and
Firms: install, and
Framework
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Report
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separate legal Cmnd
• The presentation currency and the level of precision (thousands, millions, etc.). • Treating ED/2015/3,
opening as aFunctioning
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IFRSofFoundation.
receipt materials
entity wasLondon:
not created
HMSO.for the arrangement, but the directors of the companies
• Forgetting the formula
International for calculating(2015)
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business stillthe
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stated thatBaeck,
all operational
P. (2014)decisions would require
Each material class of items must be presented separately in the financial statements Zhang, Z., Collins, L. and Understanding Alternative Fin
unanimous The methods’,
consent of both
UK Alternative International
parties.
Finance Accountant,
Theindustry
agreement specified
Report September/October,
2014that annualAvailable
(Nesta). income at: p.
and dissimilar items may be aggregated only if they are individually immaterial. For
and expenses would be shared equally. Air PLC employs the baggage handling
Nobes, C. and Kellas, J. (1990) Accountancy Explained, Lond
www.nesta.org.uk/publications/understanding-alternative-finance-uk-altern
operatives.finance-industry-report-2014
The following cash flow information is available
(accessed 23 September 2016). about the joint
Discussion questions
operation:
• Discussion questions: Give you an opportunity 1 Discuss the main stages in controlling direct materials.

to debate in class or write essays on key issues Discussion questions

2 Compare and contrast the advantages and disadvantages of the FIFO and WAC
Discussion questions
methods.
covered in the chapter 1 Discuss the reasons why students studying business or management should l
about cash flow management.
Practice questions
1 Discuss the two underlying assumptions that underpin finan
2 Discuss the obstacles that start-up and early stage companies face in obtainin
accrual
access principle and the going concern principle.
to finance.
3 Janet’s wages are based on piecework and she is paid £10 per piecework hour. Cal-
408 Management
culate
2 her
3 Define pay foraccounting
Discuss
finance aand
36-hour
the week
advantages
discuss inextent
the which she
of ato produces
double-entry
which the following units:
bookkeeping
alternative finance syste
bridges the
finance gap for small companies.
of a trial balance.
Number of units Time allowance per unit

Practice Product
questions
A 12 0.8 hours

Practice
Product Bquestions
whothewas able
30
to deliver2460
0.6 hours
4 Explain theory
Product C of the finance gap.litres of honey at a cost of £4.00 p
0.5 hours
cient for
5 Compare and the store
contrast the manager
potential to issue
sources 120 litres of honey
of long-term to pro
3 Rex Wellworth started Wellworth Fencingfinance Ltd withavailable
£50,00to a
4 Using the next batch
unincorporated
the following of honey
business such ascakes.
a sole proprietorship or traditional partnersh
his uncle.cost Oncodes,
1 June classify
he the costs
opened incurred by Hazelwood
a bank account Products for theLtd. bus
• Practice questions: Allow you to test your 6 Francesca Diva is planning to start a shoe shop called Dudes & Divas Ltd on 1
capital he has invested in the business. Cost code On the same day h
Required
2018 with £25,000 she has inherited. She is going to be a sole proprietor and p
skills and knowledge as you work through cheques
to open a smallto buy
shop
Directamaterials
in thelorry
town for £16,000,
centre. She hasto
1 pay £1,400 to insure
found suitable premises and
progressively challenging exam-style questions (a)
£4,500
arranged for for
Record three
the
Direct
professional months’
entries
labour in the
shop fitters rent on premises
tohoney
refurbish inventory
2them. The inaccount
advance.
new On
using
fixtures and
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business
method. Direct
cost £30,000,
cheques: expenses
but will not have
£5,400 to befor
to pay 3equipment;
paid for until September.
£850 In toadd
p
tion, she estimates the following transactions
Production overheads will4 take place during the first t
als from
(b)
months Record Timber
of trading.
Supplies;
the entries in theand honey£420 to pay for
inventory advertising
account using
Distribution costs 5
the business bought a further £120 of fencing materials on
(c) Discuss the advantages
Administrative expensesand disadvantages
6 of the two m
Supplies
Revenue Ltd. £10,000 per month
(cash sales)
recommending which method the company should adopt
Revenue (credit sales) £2,000 per month (customers will have one month’s credit)
Required
Purchases £5,000 per month (suppliers will give two months’ credit)
Overheads £5,000 per month
Write up the ledger accounts for Wellworth Fencing Ltd.
Suggested
Salaries research questions for disserta
£1,500 per month

Students interested in costing for product direct costs may wish

• Suggested research topics: Ideal for disserta- more of the following research questions:
tion students and those undertaking a research
• What are the factors that affect the choice of costing systems
project, these offer potential research questions country]?
on accounting topics, together with helpful • Are the cost accounting tools based on a large company temp
pointers to preliminary reading SMEs?
• Is underperformance in SMEs due to their failure to utilize ap
costing tools?

Preliminary reading
Al-Omiri, M. and Drury, M. (2007) ‘A survey of factors infl
product costing systems in UK organizations’, Management
18, pp. 300–424.
CIMA (2009) Management Accounting Tools for Today and
Chartered Institute of Management Accountants. Available
aglobal.com/Documents/Thought_leadership_docs/CIMA%
Techniques%2030-11-09%20PDF.pdf (Accessed 11 June 20
Johnson, H.T. and Kaplan, R.S. (1987) Relevance Lost: T
Management Accounting, Boston: Harvard Business School
 Digital support for lecturers
and students

A companion website for this edition (www.palgravehighered.com/collis-ba3e)

­features the following resources.

For lecturers:
• PowerPoint presentation for each chapter in the book
• A new digital test bank of questions and problems developed chapter by chapter,
perfect for creating quizzes to assess your students’ progress with quick spot-check
tests or mid-term assignments
• All of the materials above can be readily integrated into your existing VLE in a
seamless way to support your course design and delivery. Contact your Palgrave
representative to obtain access to the website resources and find out how you can
integrate them into your VLE
• Lecturer’s Answer Book with answers to the end-of-chapter practice questions

For students:
• Student’s Workbook to support the exercises in the PowerPoint presentations
• Progress tests give you the opportunity to test your progress at your own pace.
Now with automated grading, each chapter offers a range of questions with feed-
back supplied when you answer incorrectly, helping you to navigate back to the
book to improve your mastery of key skills and knowledge
• Ted Baker Annual Report – the full annual report and accounts referred to in the
book is provided for ease of reference

XXIV
Another random document with
no related content on Scribd:
series of operations or accidents that should deprive the earth
entirely of its forests would leave the atmosphere without a source
for its regeneration.
The use of the foliage of trees in renovating the atmosphere is not,
I believe, denied by any man of science. This theory has been proved
to be true by experiments in vital chemistry. The same chemical
appropriation of gases and transpiration of oxygen is performed by
all classes of vegetables; but any work in the economy of nature
assigned to vegetation is the most effectually accomplished by trees.
The property of foliage that requires carbonic-acid gas for its
breathing purposes, and causes it to give out oxygen, is of vital
importance; and it is hardly to be doubted that a close room well
lighted by the sun would sustain its healthful atmosphere a longer
time, if it were filled with plants in leaf, but not in flower, and
occupied by breathing animals, than if the animals occupied it
without the plants.
But there is another function performed by the foliage of trees and
herbs in which no chemical process is involved,—that of exhaling
moisture into the atmosphere after it has been absorbed by the roots.
Hence the humidity of this element is greatly dependent on foliage. A
few simple experiments will show how much more rapidly and
abundantly this evaporation takes place when the soil is covered with
growing plants than when the surface is bare. Take two teacups of
equal size and fill them with water. Place them on a table, and insert
into one of them cuttings of growing plants with their leaves, and let
the other stand with water only. In a few hours the water will
disappear from the cup containing the plants, while that in the other
cup will not be sensibly diminished. Indeed, there is reason to believe
that gallons of water might be evaporated into the air by keeping the
cup containing the cuttings always full, before the single gill
contained in the other cup would disappear. If a few cuttings will
evaporate a half-pint of water in twelve hours, we can imagine the
vast quantity constantly exhaled into the atmosphere by a single tree.
The largest steam-boiler in use, kept constantly boiling, would not
probably evaporate more water than one large elm in the same time.
We may judge, from our experiment with the cuttings, that a vastly
greater proportion of moisture would be exhaled into the atmosphere
from any given surface of ground when covered with vegetation, than
from the same amount of uncovered surface, or even of standing
water. Plants are indeed the most important existing agents of nature
for conveying the moisture of the earth into the air. The quantity of
transpiring foliage from a dense assemblage of trees must be
immense. The evaporation of water from the vast ocean itself is
probably small compared with that from the land which it surrounds.
And there is reason to believe that the water evaporated from the
ocean would not produce rain enough to sustain vegetation, if by any
accident every continent and island were deprived of its trees. The
whole earth would soon become a desert. I would remark, in this
place, that trees are the agents by which the superfluous waters of
the ocean, as they are supplied by rivers emptying into it, are
restored to the atmosphere and thence again to the surface of the
earth. Trees pump up from great depths the waters as they ooze into
the soil from millions of subterranean ducts ramifying in all
directions from the bed of the ocean.
LEAF OF HOLLY.
 THE HOLLY.

As the hawthorn is consecrated to vernal festivities, the Holly is

sacred to those of winter, and the yew to those attending the burial of
the dead. In Europe, from the earliest ages, the Holly has been
employed for the decoration of churches during Christmas. The poets
have made it a symbol of forethought, because its leaves are saved
from the browsing of animals by the thorns that surround them; and
the berries, concealed by its prickly foliage, are preserved for the use
of the winter birds. The Holly is found only in the southern parts of
New England. In Connecticut it is common, and in the Middle and
Southern States it is a tree of third magnitude. The leaves of the
Holly are slightly sinuate or scalloped, and furnished at each point
with short spines. It not only retains its foliage in the winter, but it
loses none of that brilliancy of verdure that distinguishes it at other
seasons.
There seems to be no very notable difference between the
American and European Holly. Selby says of the latter: “The size
which the Holly frequently attains in a state of nature, as well as
when under cultivation, its beauty and importance in forest and
woodland scenery, either as a secondary tree or merely as an
underwood shrub, justify our placing it among the British forest trees
of the second rank.” He adds: “As an ornamental evergreen, whether
in the form of a tree or as an undergrowth, the Holly is one of the
most beautiful we possess. The deep green glittering foliage contrasts
admirably with the rich coral hue of its berries.”
 THE SPIRÆA.

In the month of July the wooded pastures are variegated with little
groups of shrubbery full of delicate white blossoms in compound
pyramidal clusters, attracting more attention from a certain downy
softness in their appearance than from their beauty. These plants
have received the name of Spiræa from the spiry arrangement of
their flowers. The larger species among our wild plants, commonly
known as the Meadow-Sweet, in some places as Bridewort, is very
frequent on little tussocks and elevations rising out of wet soil. It is a
slender branching shrub, bearing a profusion of small, finely serrate
and elegant leaves, extending down almost to the roots, and a
compound panicle of white impurpled flowers at the ends of the
branches. It is well known to all who are familiar with the wood-
scenery of New England, and is seen growing abundantly in
whortleberry pastures, in company with the small kalmia and the
swamp rose. It is a very free bloomer, lasting from June till
September, often blending a few solitary spikes of delicate flowers
with the tinted foliage of autumn.
 THE HARDHACK.
The flowers of the purple Spiræa, or Hardhack, are conspicuous by
roadsides, especially where they pass over wet grounds. It delights in
the borders of rustic wood-paths, in lanes that conduct from the
enclosures of some farm cottage to the pasture, growing all along
under the loose stone-wall, where its crimson spikes may be seen
waving in the wind with the nodding plumes of the golden-rod and
the blue spikes of the vervain, well known as the “Simpler’s Joy.” The
Hardhack affords no less pleasure to the simpler, who has used its
flowers from immemorial time as an astringent anodyne. There is no
beauty in any part of this plant, except its pale crimson flowers,
which are always partially faded at the extremity or unopened at the
base, so that a perfect cluster cannot be found. The leaves are of a
pale imperfect green on the upper surface and almost white beneath,
and without any beauty. The uprightness of this plant, and the spiry
form of its floral clusters, has gained it the name of “Steeplebush,”
from our church-going ancestors.
 THE HAWTHORN.

Few trees have received a greater tribute of praise from poets and
poetical writers than the Hawthorn, which in England especially is
consecrated to the pastoral muse and to all lovers of rural life. The
Hawthorn is also a tree of classical celebrity. Its flowers and
branches were used by the ancient Greeks at wedding festivities, and
laid upon the altar of Hymen in the floral games of May, with which
from the earliest times it has been associated. In England it is almost
as celebrated as the rose, and constitutes the most admired hedge
plant of that country. It is, indeed, the beauty of this shrub that
forms the chief attraction of the English hedge-rows, which are not
generally clipped, but allowed to run up and bear flowers. These are
the principal beauties of the plant; for its leaves are neither luxuriant
nor flowing.
The Hawthorn in this country is not associated with hedge-rows,
which with us are only matters of pride and fancy, not of necessity,
and their formal clipping causes them to resemble nature only as a
wooden post resembles a tree. Our admiration of the Hawthorn,
therefore, comes from a pleasant tradition derived from England,
through the literature of that country, where it is known by the name
of May-bush, from its connection with the floral festivities of May.
The May-pole of the south of England is always garlanded with its
flowers, as crosses are with holly at Christmas. The Hawthorn is well
known in this country, though unassociated with any of our rural
customs. Many of its species are indigenous in America, and surpass
those of Europe in the beauty of their flowers and fruit. They are
considered the most ornamental of the small trees in English
gardens.
The flowers of the Hawthorn are mostly white, varying in different
species through all the shades of pink, from a delicate blush-color to
a pale crimson. The fruit varies from yellow to scarlet. The leaves are
slightly cleft, like those of the oak and the holly. The flowers are
produced in great abundance, and emit an agreeable odor, which is
supposed by the peasants of Europe to be an antidote to poison.
 SUMMER WOOD-SCENERY.

I have alluded to a beneficent law of Nature, that causes her to

waste no displays of sublimity or beauty by making them either
lasting or common. Before the light of morn is sufficient to make any
objects distinctly visible, it displays a beauty of its own, beginning
with a faint violet, and melting through a succession of hues into the
splendor of meridian day. It remains through the day mere white
transparent light, disclosing the infinite forms and colors of the
landscape, being itself only the cause that renders everything visible.
When at the decline of day it fades, just in the same ratio as
substantial objects grow dim and undiscernible, this unsubstantial
light once more becomes beautiful, painting itself in soft, tender, and
glowing tints upon the clouds and the atmosphere. Similar
phenomena attend both the opening and the decline of the year.
Morning is the spring, with its pale and delicate tints that gradually
change into the universal green that marks the landscape in summer,
when the characterless brilliancy of noonday is represented on the
face of the land. Autumn is emblemized by the departing tints of
sunset; and thus the day and the year equally display the beneficence
of Nature in the gradual approach and decline of the beauty and the
splendor that distinguish them.
The flowering of the forest is the conclusion of the beautiful
phenomena of spring, and summer cannot be said to begin until we
witness the full expansion of its foliage. In the early part of the
season each tree displays modifications of verdure peculiar, not only
to the species, but to the individual and the situation, and hardly two
trees in the wood are shaded alike. As the foliage ripens, the different
shades of green become more thoroughly blended into one universal
hue; and this uniformity, when perfected, distinguishes the true
summer phase of vegetation. As summer advances, this monotony
increases until near its close. The only trees that variegate the
prospect are the evergreens, by their darker and more imperfect
verdure, and one or two rare species, like the catalpa and ailantus,
which display a lighter and more lively green, resembling the verdure
of early summer.
It may be said, however, in behalf of summer, that no other season
affords so good an opportunity to note the different effects of sun
and shade in the foliage of the woods and fields. The leaves of the
trees and grass are never so beautiful in their summer dress as they
appear during the hour preceding sunset, when we view them with
the sun shining obliquely toward us. All foliage is more or less
transparent, and the rays of the sun, made slightly golden by the
refraction of the atmosphere, communicate a brilliant yellow tinge to
the leaves, as they shine through them. The same effects are not
produced by reflection; for if we look away from the sun, the foliage
and grass present a much less attractive appearance. A few hours
after noonday, before the sunlight is yellowed by refraction, we may
study these phenomena more minutely. When we look in the
direction of the light, as I have just remarked, we see the least variety
of light and shade; for as every leaf is an imperfect mirror, the
surface of the forest presents a glitter that throws a glazed and
whitish appearance over the green of the foliage. The whole is a mere
glare, so that the landscape is almost without expression when
viewed in this manner, and all the tiresome uniformity of summer
verdure is aggravated. The only relief for the eye comes from the
shadows of isolated trees and small forest groups as they are cast
upon the ground.
Now let us turn our eyes in an opposite direction. To obtain the
best view, we should look obliquely toward the sun. Then do we
behold a magnificent blending of light and shade; for every mass of
foliage has a dark shadow beneath it, forming a more appreciable
contrast on account of the intense brilliancy, without glitter, caused
by the illumination of every leaf by the sunlight shining through it.
Under these circumstances we can once more distinguish species, to
some extent, by their colors. We shall soon discover that trees which
have a thin corrugated leaf, without gloss, make the most brilliant
spectacle when viewed in this manner. Nothing can surpass the
foliage of the elm, the lime, the maple, and the birch in this peculiar
splendor. But trees like the poplar, the tulip-tree, the oak, and the
willow, having a leaf of a firmer texture and less diaphanous, look
comparatively dull under the same circumstances.
I would repeat that the true summer phase of wood-scenery is that
which succeeds the flowering of the forest, when all the different
greens have faded into one dark shade of verdure. There is no longer
that marked and beautiful variety which is displayed before the
maturity of the leaves. Summer is not, therefore, the painter’s
season. It is dull and tame compared even with winter, when
regarded as a subject for the brush or the pencil, and especially when
compared with spring and autumn. Summer is the time for the
observations of the botanist, not for those of the picturesque
rambler; for beneath this sylvan mass of monotonous verdure the
sods are covered with an endless variety of herbs and flowers,
surpassing in beauty those of any other season.

CATKIN OF OAK.
OAK LEAVES.
 THE OAK.

If the willow be the most poetical of trees, the Oak is certainly the
most useful; though, indeed, it is far from being unattended with
poetic interest, since the ancient superstitions associated with it have
given it an important place in legendary lore. It is not surprising,
when we remember the numerous benefits conferred on mankind by
the Oak, that this tree has always been regarded with veneration,
that the ancients held it sacred to Jupiter, and that divine honors
were paid to it by our Celtic ancestors. The Romans, who crowned
their heroes with green Oak leaves, entitled the “Civic Crown,” and
the Druids, who offered sacrifice under this tree, were actuated by
the same estimation of its pre-eminent utility to the human race.
When we consider the sturdy form of the Oak, the wide spread of its
lower branches, that symbolize protection; the value of its fruit for
the sustenance of certain animals; and the many purposes to which
the bark, the wood, and even the excrescences of this tree may be
applied,—we can easily understand why it is called the emblem of
hospitality. The ancient Romans planted it to overshadow the temple
of Jupiter; and in the adjoining grove of oaks,—the sacred grove of
Dodona,—they sought those oracular responses which were
prophetic of the result of any important adventure.
To American eyes, the Oak is far less familiar than the elm as a
wayside tree; but in England, where many
“... a cottage chimney smokes
From betwixt two aged oaks,”

this tree, formerly associated with the principal religious ceremonies

of that country, is now hardly less sacred in the eyes of the
inhabitants from their experience of its shelter and its shade, and
their ideas of its usefulness in all the arts. The history of the British
Isles is closely interwoven with incidents connected with it, and the
poetry of Great Britain has derived from it many a theme of
inspiration.
The Oak surpasses all other trees, not only in actual strength, but
also in that outward appearance by which this quality is manifested.
This expression is owing to the general horizontal tendency of its
principal boughs, the great angularity of the unions of its smaller
branches, the want of flexibility in its spray, and its great size
compared with its height, all manifesting power to resist the wind
and the storm. Hence it is called the monarch of trees, surpassing all
in the qualities of nobleness and capacity. It is the embodiment of
strength, dignity, and grandeur. The severest hurricane cannot
overthrow it, and, by destroying some of its principal branches,
leaves it only with more wonderful proof of its resistance. Like a rock
in mid-ocean, it becomes in old age a just symbol of fortitude,
parting with its limbs one by one, as they are withered by decay or
broken by the gale, but still retaining its many-centuried existence,
when, like an old patriarch, it has seen all its early companions
removed.
A remarkable habit of the Oak is that of putting forth its lower
branches at a wide angle from the central shaft, which rapidly
diminishes in size, but does not entirely disappear above the lower
junction. No other tree displays more irregularities in its
ramification. The beauty of its spray depends on a certain crinkling
of the small branches; yet the Oak, which, on account of these
angularities, is especially adapted to rude situations, is equally
attractive in an open cultivated plain. It forms a singularly noble and
majestic standard; and though surpassed by the elm in grace, beauty,
and variety of form, an Oak of full size and just proportions would
attract more admiration.
The foliage of the Oak may be readily distinguished at all seasons.
It comes out in spring in neatly plaited folds, displaying a variety of
hues, combined with a general cinereous tint. Hence it is very
beautiful when only half developed, having a silvery lustre,
intershaded with purple, crimson, and lilac. The leaves, when fully
expanded in all the typical oaks, are deeply scalloped in a way which
is peculiar to this genus of trees; their verdure is of more than
ordinary purity; they are of a firm texture, and glossy upon their
upper surface, like evergreen leaves. In midsummer few forest trees
surpass the Oak in the beauty of their foliage, or in its persistence
after the arrival of frost.
Oak woods possess characters almost as strongly marked as those
of a pine wood. They emit a fragrance which is agreeable, though not
sweet, and unlike that of other trees. They seldom grow as densely as
pines, poplars, and other trees that scatter a multitude of small
seeds, and, being soft-wooded, increase with greater rapidity. The
Oak is slow in its perpendicular growth, having an obstinate
inclination to spread. It has also a more abundant undergrowth than
many other woods, because it sends its roots downward into the soil,
instead of monopolizing the surface, like the beech. One thing that is
apparent on entering an Oak wood is the absence of that uniformity
which we observe in other woods. The irregular and contorted
growth of individual trees, twisting in many directions, and the want
of precision in their forms, are apparent at once. We do not see in a
forest of Oaks whole acres of tall slender trees sending upward a
smooth perpendicular shaft, as we observe in a wood of beech and
poplar. Every tree has more or less of a gnarled growth, and is
seldom entirely clear of branches. If the branch of an Oak in a dense
assemblage meets an obstruction, it bends itself around and upward
until it obtains light and space, or else ceases to grow without
decaying, while that of any soft-wooded tree would perish, leaving
the trunk smooth, or but slightly defaced.
 TREES IN ASSEMBLAGES.

Open groves, fragments of forest, and inferior groups alone are

particularly interesting in landscape. An extensive and unbroken
wilderness of wood affords but a dreary prospect and an unattractive
journey. Its gloomy uniformity tires and saddens the spectator, after
some hours’ confinement to it. The primitive state of any densely
wooded continent, unmodified by the operations of civilized man, is
sadly wanting in those cheerful scenes which are now so common in
New England. Nature must be combined with art, or rather with the
works of man’s labor, and associated with human life, to be deeply
interesting. It is not necessary, however, that the artificial objects in
a landscape should possess a grand historical character to awaken
our sympathies. Humble objects, indeed, are the most consonant
with nature’s aspects, because they manifest no ludicrous endeavor
to rival them. A woodman’s hut in a clearing, a farmer’s cottage on
some half-cultivated slope, a saw-mill, or even a mere sheepfold,
awakens a sympathetic interest, and enlivens the scene with pastoral
and romantic images.
A great part of the territory of North America is still a wilderness;
but the forests have been so extensively invaded that we see the
original wood only in fragments, seldom forming unique
assemblages. Especially in the Western States, the woods are chiefly
sections of the forest, scattered in and around the spacious clearings,
without many natural groups of trees to please the eye with their
spontaneous beauty. They surround the clearing with palisades of
naked pillars, unrelieved by any foliage below their summits. They
remind me of city houses which have been cut asunder to widen an
avenue, leaving their interior walls exposed to sight. These fragments
of forest, and the acres of stumps in the recent clearings, are the
grand picturesque deformity of the newly settled parts of the
country. But when a wall of these forest palisades, a hundred feet in
height, bounds the plain for miles of prospect, it forms a scene of
unexceptionable grandeur.
It is chiefly in the old States that we see anything like a picturesque
grouping of trees. There the wood assumes the character of both
forest and grove, displaying a beautiful intermixture of them,
combined with groups of coppice and shrubbery. Thickets generally
occupy the low grounds, and coppice the elevations. The New
England system of farming has been more favorable to the
picturesque grouping of wood, and other objects, than that of any
other part of the country. At the South, where agriculture is carried
on in large plantations, we see spacious fields of tillage, and forest
groups of corresponding size. But the small, independent farming of
New England has produced a charming variety of wood, pasture, and
tillage, so agreeably intermixed that we are never weary of looking
upon it. The varied surface of the land has increased these
advantages, producing an endless succession of those limited views
which we call picturesque.
When a considerable space is covered with a dense growth of tall
trees, the assemblage represents overhead an immense canopy of
verdure, supported by innumerable pillars. No man could enter one
of these dark solitudes without a deep impression of sublimity,
especially during a general stillness of the winds. The voices of
solitary birds, and other sounds peculiar to the woods, exalt this
impression. Indeed, the grandeur and solemnity of a magnificent
wood are hardly surpassed by anything else in nature. A very slight
sound, during a calm, in one of these deep woods, has a distinctness
almost startling, like the ticking of a clock in a vast hall. These feeble
sounds afford us a more vivid sense of the magnitude of the place,
and of its deep solemnity, than louder sounds, which are attended
with a confused reverberation. The foliage, spread out in a
continuous mass over our heads, produces the effect of a ceiling, and
represents the roof of a vast temple.
In an open grove we experience different sensations. Here
pleasantness and cheerfulness are combined, though a sense of
grandeur may be excited by some noble trees. In a grove, the trees in
general are well developed, having room enough to expand to their
normal proportions. We often see their shadows cast separately upon
the ground, which is green beneath them as in an orchard. If we look
upon this assemblage from an adjoining eminence, we observe a
variety of outlines by which we may identify the different species. A
wild wood is sometimes converted into a grove by clearing it of its
undergrowth and removing the smaller trees. Such an assemblage
displays but few of the charms of a natural grove. A cleared wild
wood yields shade and coolness; but the individual trees always
retain their gaunt and imperfect shapes.
Artificial plantations display the characters of a grove; but all
spontaneous growths are bordered and more or less interspersed
with underwood. Hence a limited growth of forest, like a wooded
island, surrounded by water or by a meadow, surpasses any artificial
plantation as a picturesque and beautiful feature of landscape. The
painter finds in these spontaneous collections of wood an endless
variety of grouping and outline for the exercise of his art; and the
botanist discovers, in their glens and hollows, hundreds of species
that would perish in an open grove. Some woods are distinguished by
a superfluity, others, like fir and beech woods, by a deficiency of
undergrowth, and this differs in botanical characters as well as in
quantity, according to the predominant species in the wood. In all
woods, however, shrubbery is more abundant on the borders than in
the interior. This border-growth contributes more than anything else
to harmonize wood and field. It is the outside finish and native
embellishment of every spontaneous assemblage of trees.
A wood in a valley between two open hills does not darken the
prospect as if it covered the hills, though, if it be continuous, it hides
the form of the ground. But when it has come up in scattered groups
on a wide plain, without the interference of art, it surpasses every
other description of wood-scenery. An assemblage of trees on a
hillside is called a “hanging wood,” because it seems to overhang the
valley beneath it. Thus situated it forms oppositions of a very striking
sort, by lifting its summits into the sunshine while it deepens the
shadows that rest upon the valley. Wood on steep declivities is an
interesting sight, especially if an occasional opening reveals to us the
precipitous character of the ground, and shows the difficulties which
the trees have overcome in their struggle for life. Some of our
pleasure comes from the evident utility of such a wood. We see at
once that a rocky steep could not be occupied by any other
vegetation, except under the protection of the trees, and that trees
alone could resist the force of occasional torrents; that without them
the ground would be barren, ugly, and profitless, and difficult and
dangerous to those who should attempt to climb it.