ACCOUNTING AND THE BUSINESS ENVIRONMENT

Evelyne Julirensia, S.E., Ak.

Chapter 1

ACCOUNTING: THE LANGUAGE OF BUSINESS

Accounting is the information system that measures business activity processes the information into reports, and communicates the results to decision makers. A key product of accounting is a set of documents called financial statements.

THE ACCOUNTING SYSTEM: THE FLOW OF INFORMATION

People make decisions

Business transactions occur

Businesses prepare reports to show the results of their operations

DECISIONS MAKERS: THE USERS OF ACCOUNTING INFORMATION

Non Profit Organizations

Individuals Businesses

Taxing Authorities
Government Regulatory Agencies

Investors

Creditors

FINANCIAL ACCOUNTING and MANAGEMENT ACCOUNTING

Financial accounting provides information for people outside the company. Management accounting focuses on information for internal decision makers.

REGULATING ACCOUNTING
Governing Organizations
Financial Accounting Standards Board (FASB) Generally Accepted Accounting Principles (GAAP) Ikatan Akuntan Indonesia (IAI) Pernyataan Standar Akuntansi Keuangan (PSAK) International Financial Reporting Standards (IFRS) starts from 2012 Certified Public Accountants (CPA) Certified Management Accountants (CMA)

Ethics in Accounting and Business

Standards of Professional Conduct

TYPES OF BUSINESS ORGANIZATIONS

Proprietorship
Owned by one person Often small retail stores or professional businesses Owner receives any profits, suffers any losses, and is personally liable for the businesss debts

Owners Equity

Partnership
Owned by two or more people Often retail and professional organizations Generally unlimited personal liability Partnership agreement

Partners Equity

Corporation
Generally many owners Ownership divided into shares of stock Limited liability
Stockholders Equity

TYPES OF BUSINESS BASED ON ITS MAIN ACTIVITY

Service Business Merchandising Business Manufacturing Business

ACCOUNTING CONCEPTS AND PRINCIPLES

1. The Entity Concept
Economic unit needs to be evaluated separately from its owner(s)

2. The Reliability (Objectivity) Concept

Reliable data are verifiable (may be confirmed by any independent observer)

3. The Historical Cost Principle

Acquired assets and services should be recorded at their actual cost

4. The Going-Concern Concept

Assumes that the entity will remain in operation for the foreseeable future

5. The Stable-Monetary-Unit Concept

Assumes that the dollar (or Rupiah)s purchasing power is stable

SUMMARY OF THE ACCOUNTING CYCLE

1. Analyze business transactions

9. Prepare a post-closing trial balance 8. Journalize and post closing entries 7. Prepare financial statements 6. Prepare an adjusted trial balance

2. Journalize the transactions

3. Post to ledger accounts

4. Prepare a trial balance

5. Journalize and post adjusting entries

THE ACCOUNTING EQUATION

Assets

Liabilities

Owners Equity

Measures the resources of the business and the claims of those resources.

ASSETS
(HARTA)

Assets are economic resources that are expected to be of benefit in the future. Example: Cash, Merchandise Inventory, Furniture, Land, etc.

(KEWAJIBAN / UTANG)

LIABILITIES

Liabilities are economic obligations (debts) payable to an individual or an organization outside the business. Example: Accounts Payable, Notes Payable, etc.

OWNERS EQUITY
(MODAL PEMILIK)

Owners Equity is the claim of a business owner to the assets of the business. Owners Equity = total assets - total liabilities. (A - L = O.E.)

INCREASES AND DECREASES IN OWNERS EQUITY

INCREASES
Owner Investments in the Business

DECREASES
Owner Withdrawals from the Business

Owner Equity

Revenues

Expenses

INCREASES IN OWNERS EQUITY

Investments are the assets the owner puts into the business.

Revenues (Pendapatan) are increases in owners equity earned by delivering goods or services to customers.

DECREASES IN OWNERS EQUITY

Owner Withdrawals or Drawings are amounts removed from the business by the owner. Expenses (Beban) are the cost of doing business. Include the cost of:
Office rent Salaries of employees Advertisement Utility payments Interest on loans Insurance Property taxes Supplies used up

BUSINESS TRANSACTIONS
A transaction is any event that affects the financial position of the business and can be recorded reliably. Can be recorded reliably means can be measured in monetary unit (in $ or Rp, etc)

TRANSACTION IDENTIFICATION PROCESS

THE FINANCIAL STATEMENTS

(LAPORAN KEUANGAN)

1. Income Statement (Laporan Laba/Rugi) a summary of an entitys revenues and expenses for specific period of time, such as a month or a year. 2. Statement of Owners Equity (Laporan Perubahan Modal) the changes in owners equity during a specific period of time.

3. Balance Sheet (Neraca) all entitys assets, liabilities, and owners equity as of a specific date, usually the end of a month or a year.
4. Statement of Cash Flows (Laporan Arus Kas) the cash coming in (cash receipts) and cash going out (cash payments) 5. Notes to Financial Statement (Catatan atas Laporan Keuangan)

(Proprietorship Service Business)

Name of Company Income Statement For the year ended ...

Revenues: Fees earned xxx Operating expenses: Expenses xxx Expenses xxx Etc xxx + Total operating expenses (xxx) Net income (loss) xxx

(Proprietorship Service Business)

Name of Company Owners Equity Statement For the year ended ...

Beginning balance xxx Add: Investment xxx Net income* xxx + xxx + xxx Less: Drawings xxx Net loss* xxx + (xxx) Ending balance xxx

(Proprietorship)

Name of Company Balance Sheet as at ...

Assets: .............................. .............................. .............................. .............................. .............................. Total assets xxx xxx xxx xxx xxx ___ + Owners equity xxx + xxx Total liabilites and OE xxx Liabilities: ........................... xxx ........................... xxx ........................... xxx + Total liabilities xxx

Contoh soal
Orchard Salon adalah bisnis perseorangan yang dimiliki oleh Morita. Berikut ini transaksi selama bulan Januari 2008: 1 Memulai bisnis dengan menginvestasikan uang kas Rp 15jt dan peralatan Rp 10jt. 3 Menerima pendapatan jasa senilai Rp 10jt secara tunai. 5 Menginvestasikan modal tambahan berupa peralatan sebesar Rp 1,5jt. 6 Menerima pendapatan jasa senilai Rp 2,3jt secara kredit. 10 Membeli peralatan dari Tony&Guy Supplier Rp 1,8jt secara tunai. 15 Mengambil uang kas perusahaan Rp 1jt untuk keperluan pribadi. 17 Menerima pelunasan dari debitur senilai Rp 1jt. 22 Membeli perlengkapan salon (shampo dan conditioner) senilai Rp 1,5jt secara kredit. 25 Membayar gaji karyawan secara tunai Rp 2,5jt.

Contoh soal (contd)

26 Meminjam uang dari Bank Mandiri senilai Rp 3jt sebagai tambahan modal kerja. 27 Membayar utang kepada kreditur sebesar Rp 1,4jt. Keterangan pada tanggal 31 Januari 2008: Perlengkapan yang tersisa senilai Rp 400ribu. Beban gaji stylist yang belum dibayar sebesar Rp 1,2jt. Diminta: 1. Catat transaksi tersebut di atas dalam persamaan dasar akuntansi. 2. Buatlah Income Statement untuk bulan yang berakhir 31 Januari 2008. 3. Buatlah Owners Equity Statement untuk bulan yang berakhir 31 Januari 2008. 4. Buatlah Balance Sheet per 31 January 2008.

Latihan
Leo mendirikan usaha konsultan keuangan bernama Leo Consultant. Selama bulan September 2008, terjadi transaksi sebagai berikut: 1 Menginvestasikan uang tunai Rp 8.000.000 ke perusahaan. 3 Membeli perlengkapan Rp 500.000 secara tunai. 7 Membeli peralatan Rp 4.000.000 secara kredit. 12 Menerima pendapatan jasa Rp 3.000.000 secara tunai. 25 Membayar gaji pegawai Rp 800.000 secara tunai. 27 Membayar sebagian utang ke kreditur Rp 1.000.000. 28 Mengambil untuk pribadi uang tunai Rp 1.500.000. 30 Akun perlengkapan menunjukkan bahwa Rp 200.000 telah terpakai. Diminta: 1. Catat transaksi di atas dalam persamaan dasar akuntansi. 2. Buatlah Income Statement untuk bulan yang berakhir 30 September 2008. 3. Buatlah Owners Equity Statement untuk bulan yang berakhir 30 September 2008. 4. Buatlah Balance Sheet per 30 September 2008.