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Introductory Accounting for Business

Introductory Accounting

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Text of Introductory Accounting

  • Introductory Accounting

    for Business

  • Akuntansi:

    Sebagai sebuah proses

    Suatu proses pengidentifikasian (identify), mengklasifikasikan (classify),pengukuran (measure), mencatat (record and summarize), menginterpretasi(interpret) dan mengkomunikasikan (report) informasi ekonomi yangberguna dalam penilaian & pengambilan keputusan.

    Sebagai sistemSuatu sistem informasi keuangan, yang bertujuan untuk menghasilkan dan melaporkan informasi yang relevan bagi berbagai pihak yang berkepentingan.

    Wiliams, Haka, and Bettner,Financial and Managerial Accounting: the Basis for Business Decision, 14th ed.,McGraw-Hill International Edition, 2008

    Kartikahadi, Sinaga, Syamsul, dan Siregar, Akuntansi Keuangan berdasarkan SAK berbasis IFRS, Buku 1,Salemba Empat, 2012

  • To be good at your business, you have to know the numbersHarold Geneen, former chairman of IT&T

    Accounting and financial statements are the means for communicating the numbersLanguage of Business

    Kimmel, Weygandt, Kieso, Accounting: Tools for Business Decision Making, John Wiley & Sons, 20123

    Sebagai aktivitas jasais a service activity, its function to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions, in making reasoned choices among alternative course of actionAICPA, 1970

    Akuntansi:

  • ACCOUNTING PROCESS & ECONOMIC ACTIVITIES

    The Accounting

    Process

    Accounting Information

    Decision Makers

    EconomicActivities

    Actions(decisions)

    Reported ResultsOf Actions(decisions)

    Wiliams, Haka, and Bettner,Financial and Managerial Accounting: the basis for business decision14th ed.,McGraw-Hill International Edition, 2008

  • Siklus Akuntansi (Accounting Cycle)

    Transaksi

    Pencatatan(recording)

    Pengikhtisaran(summarizing)

    Laporan Keuangan(Financial Statement)

    Pengguna Laporan Keuangan(user)

    Penggolongan(posting)

    Analisa & Interpretasi

    Identifikasi & Pengukuran

    Komunikasi Laporan

    Adapted from:S.R, Soemarso, Akuntansi, suatu pengantar, edisi ke-2, Lembaga Penerbit FEUI, 1986 (dengan penambahan)

    Buku Harian(Journal)

    Buku Besar(Ledger)

    Neraca Percobaan(Trial Balance)

    Informasi Akuntansi(Accounting Information)Proses

    Pengambilan Keputusan(Decision Making)

    Konsekuensi Ekonomi

  • Jenis Informasi Akuntansi

    Akuntansi Keuangan(Financial Accounting)

    Akuntansi Manajerial(Managerial Accounting)

    Describe the financial resources, obligations,and activities of economic entity.

    General purpose accounting information External reporting

    Specifically to assist management in operating the business

    Support managerial decision Internal reporting

    Final Output of Accounting : Decisions

  • Statement of Income(Laporan Laba Rugi)

    Statement of Cash Flows(Laporan Arus Kas)

    Statement of Financial Position (Laporan Posisi Keuangan)

    FINANCIAL

    STATEMENTS

    Statement of Changes in Shareholders Equity(Laporan Perubahan Ekuitas)

    Notes to Financial Statements(Catatan atas Laporan Keuangan)

  • Statement of Income

    For the year ended December 31, 2007

    (In USD)

    SEACLIFF COMPANY

    Income Statement

    Revenue

    Net Sales 900,000

    Expenses

    Cost of Goods Sold 530,000

    Salaries expense 92,500

    Supplies expense 34,000

    Rent expense 47,050

    Insurance expense 14,950

    Depreciation expense 28,500

    Miscellaneous expense 26,000

    Interest expense 24,000

    Income taxes 28,000

    Total expenses 825,000

    Net Income 75,000

    Statement of Income

  • SEACLIFF COMPANYIncome Statement

    For the year ended December 31, 2007(In USD)

    Net Sales 900,000

    Cost of goods sold 530,000

    Gross profit 370,000

    Operating expensesSelling expenses 117,000 General and administrative 126,000 243,000

    Operating Income 127,000

    Other Income (expenses)Interest expense 24000

    Income before income tax 103,000

    Income tax expense 28,000

    Net Income 75,000

    2. Multi-step Income Statement

    Statement of Income

  • Statement of Shareholders Equity

    SEACLIFF COMPANY

    Statement of Stockholders' Equity

    For the year ended December 31, 2007

    (In USD)

    Common stock 420,000

    Retained earnings, beginning of year 176,000

    Net Income 75,000

    251,000

    Less dividends 33,000

    Retained earnings, end of year 218,000

    Total stockholders' equity 638,000

    From Statement of Income

    Statement of Changes in Equity

    Total Shareholders Equity

    Share capital

  • Statement of Financial Position(Balance Sheet)

    Current assets Current liabilities

    Cash 38,000 Account payable 25,000

    Account receivable 117,000 Interest payable 24,000

    Inventories 180,000 Unearned revenue 48,000

    Supplies 40,000 Accrued expenses 15,000

    Prepaid insurance 15,000 Total current liabilities 112,000

    Total current assets 390,000

    Long-term liabilities 200,000

    Non-current assets

    Property, plant, and equipment Total liabilities 312,000

    Land 100,000

    Plant building (net) 315,000 Stockholders' equity

    Equipment (net) 145,000 Common stock 420,000

    Total property, plant, and equipment 560,000 Retained earnings 218,000

    Total stockholders' equity 638,000

    Total Assets 950,000 Total liabilities & stockholders' equity 950,000

    Assets Liabilities & Stockholders' Equity

    SEACLIFF COMPANY

    Balance Sheet

    For the Year Ended December 31, 2007

    (In USD)

    From

    Statement of

    Changes in

    Equity

    Shareholders equity

    Total shareholders equity

    Total liabilities and shareholders equity

    Liabilities and Shareholders Equity

    Current portion of long-term debt

    Statement of Financial Position

    Share capital

  • 12

    Statement of Cash Flows

    For the year ended December 31, 2007(In USD)

    SEACLIFF COMPANYStatement of Cash Flows

    Cash flows from operating activitiesCash receipt from operating activities 1,008,500 Cash payment for operating activities (989,500) Net cash provided by operating activities 19,000

    Cash flows from investing activitiesPurchases of plant assets (63,000) Sale of office equipment 45,000 Net cash used by operating activities (18,000)

    Cash flows from financing activitiesIssuance of common stock 80,000 Repayment of long-term liabilities (50,000) Payment of dividend (33,000) Net cash used by financing activities (3,000)

    Net increase (decrease) in cash (2,000) Cash at the beginning of the year 40,000 Cash at the end of year 38,000

    Agrees

    with

    Statement

    of

    Financial

    Position

  • Transactions (1)

    Transactions are a businesss economic events recorded by

    accountants.

    May be external or internal.

    Change the financial position of the business.

    Each transaction has a dual effect on the accounting

    equation.

  • Question: Are the following events recorded in the accounting records?

    EventSupplies are purchased on account.

    Criterion Is the financial position (assets, liabilities, or stockholders equity) of the company changed?

    An employee is hired.

    Dividends are paid to stockholders.

    Record/ Dont Record

    Transactions

  • Stockholders Equity

    Barones Repair Shop was started on May. Prepare a tabular analysis of the following transactions for the month of May.

    Transactions (Problem)

    +10,0001. +10,000

    CashAccounts Receivable Equipment

    Accounts Payable

    Common Stock+ + = +

    1. Stockholders invested $10,000 cash to start the repair shop.

    Investment

    Assets Liabilities

  • Transactions (Problem)

    +10,0001. +10,000

    2. Purchased equipment for $5,000 cash.

    -5,0002. +5,000

    Investment

    Stockholders Equity

    CashAccounts Receivable Equipment

    Accounts Payable

    Common Stock+ + = +

    Assets Liabilities

  • Transactions (Problem)

    +10,0001. +10,000

    3. Paid $400 cash for May office rent.

    -5,0002. +5,000

    -4003. -400

    Stockholders Equity

    CashAccounts Receivable Equipment

    Accounts Payable

    Common Stock+ + = +

    Assets Liabilities

    Retained Earnings

    Expense

    +

  • Transactions (Problem)

    +10,0001. +10,000

    -5,0002. +5,000

    -4003. -400

    Stockholders Equity

    CashAccounts Receivable Equipment

    Accounts Payable

    Common Stock+ + = +

    Assets Liabilities

    Retained Earnings

    +5,1004. +5,100

    4. Received $5,100 from customers for repair service.

    Revenue

    +

  • Transactions (Problem)

    +10,0001. +10,000

    -5,0002. +5,000

    -4003. -400

    Stockholders Equity

    CashAccounts Receivable Equipment

    Accounts Payable

    Common Stock+ + = +

    Assets Liabilities

    Retained Earnings

    +5,1004. +5,100

    5. Paid dividends of $1,000 cash.

    -1,0005. -1,000

    +

  • Transactions (Problem)

    +10,0001. +10,000

    -5,0002. +5,000

    -4003. -400

    Stockholders Equity

    CashAccounts Receivable Equipment

    Accounts Payable

    Common Stock+ + = +

    Assets Liabilities

    Retained Earnings

    +5,1004. +5,100

    -1,0005. -1,000

    6. Paid part-time employee salaries of $2,000.

    -2,0006. -2,000

    Expense

    +

  • Transactions (Problem)

    +10,0001. +10,000

    -5,0002. +5,000

    -4003. -400

    Stockholders Equity

    CashAccounts Receivable Equipment

    Accounts Payable

    Common Stock+ + = +

    Assets Liabilities

    Retained Earnings

    +5,1004. +5,100

    -1,0005. -1,000

    -2,0006. -2,000

    Expense

    7. Incurred $250 of advertising costs, on account.

    +250 -2507.

    +

  • Transactions (Problem)

    +10,0001. +10,000

    -5,0002. +5,000

    -4003. -400

    Stockholders Equity

    CashAccounts Receivable Equipment

    Accounts Payable

    Common Stock+ + = +

    Assets Liabilities

    Retained Earnings

    +5,1004. +5,100

    -1,0005. -1,000

    -2,0006. -2,000

    Revenue

    +250 -2507.

    8. Provided repair services on account to customers $750.

    +7508. +750

    +

  • 6,820 + 630 + 5,000 = 250 + 10,000 + 2,200

    Transactions (Problem)

    +10,0001. +10,000

    -5,0002. +5,000

    -4003. -400

    Stockholders Equity

    CashAccounts Receivable Equipment

    Accounts Payable

    Common Stock+ + = +

    Assets Liabilities

    Retained Earnings

    +5,1004. +5,100

    -1,0005. -1,000

    -2,0006. -2,000

    +250 -2507.

    +7508. +750

    9. Collected $120 cash for services previously billed.

    +1209. -120

    +

  • Income Statement

    Financial Statements

    Reports the revenues and expenses for a specific period of time.

    Net income revenues exceed expenses.

    Net loss expenses exceed revenues.

    Revenues:

    Service revenue 5,850$

    Expenses:

    Salary expense 2,000

    Rent expense 400

    Advertising expense 250

    Total expenses 2,650

    Net income 3,200$

    Barones Repair Shop

    Statement of Income

    For the Month Ended May 31, 2007

    48

    6

    3

    7

  • Revenues:

    Service revenue 5,850$

    Expenses:

    Salary expense 2,000

    Rent expense 400

    Advertising expense 250

    Total expenses 2,650

    Net income 3,200$

    Barones Repair Shop

    Statement of Income

    For the Month Ended May 31, 2007

    Income Statement

    Financial Statements

    Net income is needed to determine the ending balance in retained earnings.

    5

    Share capital 10,000$

    Add: Retained earnings, May 1 -$

    Net income 3,200

    Less: Dividends (1,000)

    Retained earnings, May 31 2,200$

    Total shareholders' equity 12,200

    Barones Repair Shop

    Statement of Changes in Equity

    For the Month Ended May 31, 2007

    5

    Statement of Changes in Stockholders Equity

  • Financial Statements

    Statement indicates the reasons why retained earnings has increased or decreased during the period.

    Share Capital 10,000$

    Add: Retained earnings, May 1 -$

    Net income 3,200

    Less: Dividends (1,000)

    Retained earnings, May 31 2,200$

    Total shareholders' equity 12,200

    Barones Repair Shop

    Statement of Changes in Equity

    For the Month Ended May 31, 2007

    5

  • Financial Statements

    Assets

    Cash 6,820$

    Accounts receivable 630

    Equipment 5,000

    Total assets 12,450$

    Liabilities

    Accounts payable 250$

    Stockholders' Equity

    Common stock 10,000

    Retained earnings 2,200

    Total liab. & equity 12,450$

    Statement of Financial Position

    Barones Repair Shop

    May 31, 2007

    Balance Sheet Statement of Changes in Stockholders Equity

    The ending balance in retained earnings is needed in preparing the balance sheet.

    Share capital 10,000$

    Add: Retained earnings, May 1 -$

    Net income 3,200

    Less: Dividends (1,000)

    Retained earnings, May 31 2,200$

    Total shareholders' equity 12,200

    Barones Repair Shop

    Statement of Changes in Equity

    For the Month Ended May 31, 2007

    1234569

    8

    2

    7

    1

    5

  • Financial Statements

    Reports the assets, liabilities, and stockholders equity at a

    specific date.

    Assets listed at the top, followed by liabilities and stockholders

    equity.

    Total assets must equal total liabilities and stockholders

    equity.

    Assets

    Cash 6,820$

    Accounts receivable 630

    Equipment 5,000

    Total assets 12,450$

    Liabilities

    Accounts payable 250$

    Shareholders' Equity

    Common stock 10,000

    Retained earnings 2,200

    Total liab. & equity 12,450$

    Statement of Financial Position

    Barones Repair Shop

    May 31, 2007

    Balance Sheet

    9654321

    8

    2

    7

    1

  • Financial Statements

    Cash flow from Operations

    Cash receipts from customers 5,220$

    Cash paid for expenses (2,400)

    Cash provided by operations 2,820

    Cash flow from Investing

    Purchase of equipment (5,000)

    Cash flow from Financing

    Investment by owners 10,000

    Drawings by owners (1,000)

    Cash provided by financing 9,000

    Net increase in cash 6,820

    Cash balance, May 1 -

    Cash balance, May 31 6,820$

    Statement of Cash Flows

    Barones Repair Shop

    For the Month Ended May 31, 2007

    Statement of Cash Flows

    Assets

    Cash 6,820$

    Accounts receivable 630

    Equipment 5,000

    Total assets 12,450$

    Liabilities

    Accounts payable 250$

    Stockholders' Equity

    Common stock 10,000

    Retained earnings 2,200

    Total liab. & equity 12,450$

    Statement of Financial Position

    Barones Repair Shop

    May 31, 2007

    Balance Sheet

    94

    3 6

    2

    1

    5

  • Persamaan Akuntansi (Accounting Equation)Two Views of the Same Business

    Aset = Liabilitas + Ekuitas(Assets) (Liabilities) (Shareholders Equity)

    Luca Pacioli (1445 - 1517)

    - Economic Entity- Accrual Basis- Dual Aspect debit & credit

  • Saldo Normal (Normal Balance)

    Aset = Liabilitas + Ekuitas(Aktiva/Assets) (Kewajiban/Liabilities) (Shareholders Equity)

    Kas (cash) Piutang usaha(account receivables)

    Perlengkapan (supplies) Biaya dibayar dimuka(Prepaid expenses)

    Tanah (land) Bangunan (building) Mesin (equipment) Kendaraan (equipment)

    - Akumulasi penyusutan(accumulated depreciation)

    Hutang usaha (account payable) Porsi lancar dari hutang jangka panjang(Current portion of long-term debt)

    Pendapatan diterima dimuka(unearned revenue)

    Biaya yang masih harus dibayar(accrued expenses)

    Hutang bank (bank loan)

    Modal disetor (share capital)Laba ditahan (retained Earnings)

    - Penarikan (withdrawal)

    DEBIT (Dr) CREDIT (Cr)

    (Net Income selaluMeningkatkanOwners Equity)

  • KERANGKA DASAR AKUNTANSI

    Objective : Financial information for decision

    Elements: Assets Liabilities Equities Expenses Income

    Qualitative Characteristics: Understandability Relevance (materiality) Reliability Comparability

    Assumptions EntityGoing concernPeriodicityMonetary unitAccrual basis

    Principles: Measurement Revenue recognition Matching Capital maintenance

    Constraints: Timeliness Cost vs. Benefit Balance between qualitative characteristics

    Orientation: User Needs

    Wiecek and Young, IFRS Primer, John Wiley & Sons, 2010

    Adapted from: Kartikahadi, Sinaga, Syamsul, dan Siregar, Akuntansi Keuangan berdasarkan SAK berbasis IFRS, Buku 1,Salemba Empat, 2012

  • Accounting Concept Description

    Economic entity Pemisahan entitas dalam pelaporan keuangan

    Going-concern Perusahaan memiliki umur yang tidak terbatas (indefinite

    life), tidak dilikuidasi.

    Periodicity Umur/kinerja perusahaan diklasifikasikan secara periodik

    Monetary unit Satuan mata uang sebagai alat ukur.

    Accrual basis Pencatatan atas kejadian yang berdampak pada

    sumberdaya/kewajiban perusahaan, tidak semata-mata

    karena penerimaan/pemasukan kas.

    Measurement Historical cost, fair value

    Revenue Recognition Pendapatan diakui apabila manfaat ekonomi telah terjadi

    dan dapat diukur dengan andal.

    Matching Principle Biaya diakui dengan pendapatan yang dihasilkan pada

    periode yang sama.

    Capital maintenance Laba diperoleh jika nilai uang/kapasitas produksi fisik pada

    akhir periode melebihi awal periode.

    Timeliness Tepat waktu, tidak terlambat.

    Cost - Benefit Biaya menghasilkan informasi tidak lebih besar dari manfaat

    yang diperoleh.

    Balance between qualitative

    characteristics

    Pertimbangan yang objektif dan bijak dalam menghasilkan

    informasi yang wajar dan tidak memihak.

    Assumptions

    Principles

    Constraints

    Adapted from: Kartikahadi, Sinaga, Syamsul, dan Siregar, Akuntansi Keuangan berdasarkan SAK berbasis IFRS, Buku 1,Salemba Empat, 2012

    Wiecek and Young, IFRS Primer, John Wiley & Sons, 2010

  • Qualities of Accounting Information

    No. Quality Description

    1. Understandability(dapat dipahami)

    Pembaca memahami isi laporan.

    2. Relevance (relevan) Informasi mempengaruhi pengambilan keputusan. Predictive value: membantu memprediksi masa depan Confirmatory value: menegaskan peristiwa masa lalu dan masa kini.

    3. Reliability (keandalan) Faithful representation: penyajian yang jujurSubstance over form: mengutamakan substansiNeutrality: tidak memihakPrudence: pertimbangan sehat, kehati-hatian.Completeness: lengkap, dapat dipertanggungjawabkan

    4. Comparability(dapat dibandingkan)

    Antar periode; antar entitas

    Adapted from: Kartikahadi, Sinaga, Syamsul, dan Siregar, Akuntansi Keuangan berdasarkan SAK berbasis IFRS, Buku 1,Salemba Empat, 2012

    Wiecek and Young, IFRS Primer, John Wiley & Sons, 2010