BASIC ACCOUNTING CONCEPT

Presented by: Ady Setyo Putro Nugraha W Ribka Armanda STIESIA SURABAYA 2012

According to Statement of the Accounting Principles Board No. 4, p. 8 Accounting is a service activity. Its function is to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisionsin making reasoned choices among alternative courses of action.

1. Identification 2. Recording 3. Communication

1. Assumptions
2. Principle

3. Constraints/Limitation

PURPOSE OF FINANCIAL REPORT

ASUMPTIONS

PRICIPLE, METHODE, PROCEDURE

ACCOUNTING STANDARD

FINANCIAL REPORT

RELATIONSHIP

 Separate/Economic Entity : a corporation is

considered a living fictional being Going Concern : corporation is assumed to remain in existence for an indefinitely long time Measurement and Unit of Measure : Financial Statement only show economically measureable activity of a company Periodicity : A company continuous life can be divided into measured period of time

 Historical Cost : Financial Statement

report companies resources and obligation at an initial historical cost or usually mean the original cost at the time of a transaction

 Principle 2: Revenue Recognition.

Accrual basis of accounting dictates that revenues

must be recorded when earned and measurable.

Principle 3: Matching Principle.
Under the matching principle, costs associated with

making a product must be recorded (matched to) the revenue generated from that product during the same period. Costs of a product must be recorded during the period as revenue from selling it

4. Full Disclosure Company must reveal all the relevant economic information determined to make the difference to their user

Such disclosure should be accomplished in the following sections of companies reports: Financial statements Notes to financial statements Supplementary information

5.

Consistency For each company, the preparation of financial statements must utilize measurement techniques and assumptions that are consistent from one period to another.

 Estimates & Judgments

Certain measurements cannot be performed completely accurately, and must therefore utilize conservative estimates and judgments
Materiality

Inclusion and disclosure of financial transactions in financial statements hinge on their size and effect on the company performing them.

 Conservatism

Conservative is the stance taken by the accountant in the face of two or more alternatives in the preparation of financial statements. If there was more than one alternative, the accountant should choose the term that will not make overstated assets and revenue.

THANK YOU