A. Definition and Explanation of Basis of Accounting - Definition, Meaning, and Usefulness of Accounting Functions
1. Understanding and Definition of Accounting
Accounting is a process of recording, classifying, summarizing, processing and presenting data, transactions and events relating to the finances so that it can be used by people who use it easily understandable for a decision-making and other purposes.
Accounting for accounting derived from foreign words, which means when translated into Indonesian is to calculate or account. Accounting is used in almost all business activities around the world to make a decision so referred to as the language of business.
2. Accounting Functions
The main functions of accounting are as an organization's financial information. From the accounting statements we can see the financial position and its organizational sutu changes that occur in it. Accounting is made qualitatively with the unit of measure of money. Financial information is needed especially by the manager / management to help make decisions of an organization.
3. Basis of Accounting Reports
Basically the accounting process will make the output of the income statement, statement of changes in capital and balance sheet reports on a company or other organization. In an accounting report should include company name, report name, and date of preparation or time period the report to facilitate other people understand it. Reports can be periodic and there is also the nature of a particular time.
B. Party Uses and Information Needs / Accounting Report
1. Internal party
Internal party is the party that is in the organizational structure. Management is the party most in need of proper accounting statements and inaccurate to make good decisions and correct. Examples such as managers who see the company's financial position to decide whether to buy the building for a new branch kanntor or not.
2. Parties Eksteral / External
a. Investor
Investors need financial information to determine whether the company will invest or not. If the predictions of investors will give good profits, then the investor will deposit the capital into the company, and vice versa.
b. Shareholder / owner of the company
The owners of the shares of companies with corporate financial information companies need to be able to determine the extent of progress or setbacks experienced by companies. Shareholders will benefit from the dividends that will be even greater if the company's profit.
c. Government
The amount of taxes to be paid by the company or organization to the government based on the bulk of information on a company's financial statements.
d. Creditors
If the company is being pressed and in need of fresh funds company might borrow money to creditors such as borrowing money in the bank, the supplyer owe goods / suppliers. The lender will provide funds if companies have good financial condition and will not have a great potential for loss.
e. Other Parties
Actually there are many others from outside companies that might use the report / accounting information an organization such as employees, unions, auditors, public accountants, police, student / college students, journalists, and many others.
C. Kinds and Types of Estimates or Accounts in Accounting: Assets / Assets / Assets, Liabilities / Debt / Liabilities and Equity - Accounting
A. Assets / Assets / Assets
Property is a good thing that has a form of false or owned by the company. Claim for tangible property which is not called equity / equities which can bring benefits in the future.
1. Current Assets / Current Assets / Current Assets
Current assets are assets in the form of cash or other assets that can be exchanged for cash within one year.
Example: accounts receivable, costs or expenses paid in advance, securities, cash, gold bars, merchandise inventory, revenues to be received, and so forth.
2. Investment Assets / Assets public investment / Investment Assets
Investment property is property which is invested in investment products for profit.
Example: Mutual funds, stocks, bonds, and others.
3. Intangible Assets / Intangible Assets
Intangible assets are assets that have no form but legally owned company and can generate profits for the company.
Example: trademarks, patents, copyrights, forestry concessions / concessions, franchises, goodwill, and so forth.
4. Fixed Assets / Fixed Assets / Fixed Assets
Fixed assets are assets that support the operations of the company permanent ownership.
Example: Buildings, cars, machinery, equipment and perlengapan office, and others.
5. Other Assets / Other Assets
Another treasure is the estimate or accounts that can not be categorized on the property or assets in excess of either in the form of fixed assets, investment assets, intangible assets and current assets.
Example: The machine is broken, a bond, the property is still in the process of legitimate stewardship, and others.
B. Liabilities / Debt / Liabilities / Liabilities
Debt is an obligation on a third party company to do something that is generally dalah payment of money, delivery of goods or services at certain times.
1. Current Debt / Current Liabilities / Current Liabilities
Current liabilities are obligations that must be repaid within one year.
Example: accounts payable, expenses payable, accounts payable, taxes payable, unearned revenue, and so forth.
2. Long-term Debt / Long-Term Liabilities
Long-term liabilities are obligations that must be repaid within a period of more than a year.
Example: The mortgage debt, bonds maturing more than a year, long-term loan debt, and so forth.
3. Other payables / Other Payable
Estimates or account is used to record other debts that are not included in current debt and long-term debt.
Example: a bond, payable to shareholders, and so forth.
C. Capital / Capital
Capital is the property of the wealth and property company in the form of an infinite debt of a company to the owners of capital to an unlimited period of time. The formula is the property or capital assets reduced by liabilities or debt.
Examples of capital: capital paid up, privately, limited partnership capital, retained earnings, additional paid-in shares, common & preferred stock, savings, windfall profits or shu, and so forth.
Supplement:
- The formula Assets ---> Assets = Liabilities + Equity
D. Clarification, Recording, Summarizing, Interpretation and Reporting - Knowledge of Basic Accounting
Accounting has a process that consists of the stages to be able to generate the desired reports and performed by accountants.
1. Clarify Process Transactions
This initial stage is where the division carried out a transaction of an organization or company in certain types of predefined.
Examples such as split transactions into sales, purchasing, cash disbursements, cash receipts and so forth into each piece. As for the transaction that the numbers are small and rarely can be equally incorporated into the same kind of category is miscellaneous transactions.
2. Process Recording and Summarizing
After conducting further data clarifying is taking notes. Enter the existing transaction into the appropriate journals in order of transaction occurred or what happened. resources that can be used as evidence of a transaction that is like a kind of business paper receipts, bills, notes, receipts, certificates, and so forth.
Journal of the generally exist in the accounting journals such as the sales journal, purchases journal, cash receipts journal, cash disbursements journal and general journal.
Once the transaction is entered into the journals that exist, then the next is put the journal into the ledger on a regular basis. The results of the transfer into the general ledger will be seen from the summary trial balance.
3. Interpreting and Reporting Process
After both the above process is executed, then the latter process is to manufacture the conclusion of the activities or financial statements of previous work. All matters relating to finance the company disclosed in these financial statements.
Of financial statement information in the form of income statement, equity statement and balance sheet one can know what is happening at a company, whether it is in accordance with company objectives and the information can be a reference or guidelines for the management to take policy decisions on corporate organization in order to achieve desired condition.
E. Understanding the Accounting Equation (Simple Case Daily)
In a study of accounting is essential to know the accounting equation, accounting equation is very useful in the preparation of financial statements. To study the accounting equation is you try to see the Debit and Credit Learning Accounting in Blog http://kalmet.blogspot.com
By using daily transactions and simple as described in the Debit and Credit Learning Accounting, then we can learn how to record transactions on the debit side and credit side. Based on the records that have been studied in the Debit and Credit Learning Accounting then can we form the accounting equation in the following way:
1. Look at the positive position on each of the elements of accounting as described in the Debit and Credit Learning Accounting, namely:
- Assets increased in the position of debit
- Obligations of credit increases are in a position
- Equities / Capital increases are in a position of credit
- Revenue increases are in a position of credit
- Cost / Expense increases are in debit position
2. By looking at the positive signs we may form the accounting equation, debits sides ie accounting elements similar to the accounting elements of the credit side, with the following equation:
ASSETS = LIABILITIES + + FEE REVENUE + CAPITAL
3. In accounting; Assets, Liabilities and Capital is a component of the Balance Sheet, Income and Expenses while a group of Income (Loss), above this, the accounting equation can be simplified into
- Group Balance Sheet, the accounting equation as follows:
ASSETS = LIABILITIES + CAPITAL
In this equation it can be concluded that the assets we have acquired from the loan and or from capital
- Group Profit (Loss) to the accounting equation as follows:
EARNINGS (LOSS) = REVENUE - COST
In this equation it can be concluded that if the income is greater than costs, the difference is recognized as income, if income is smaller than the costs, the difference will be recognized as a Loss
4. Relationship with the Balance Sheet Profit (Loss)
The income (loss) is a transaction made for a certain period and the results of the profit (loss) will affect the capital owned.
This means if you have income that we have the capital would increase by profits, whereas if you have a capital loss then automatically we have to be reduced by losses. Thus the accounting equation for capital is as follows
+ = CAPITAL PAID-IN CAPITAL INCOME (LOSS)
Conclusion:
Accounting equation Income (Loss) is as follows:
EARNINGS (LOSS) = REVENUE - COST
Equation accounting for the capital is as follows:
+ = CAPITAL PAID-IN CAPITAL INCOME (LOSS)
Equation accounting for the balance sheet are as follows:
ASSETS = LIABILITIES + CAPITAL
F. Debit and Credit Learning Accounting (Understand Concept With Illustrations)
Often we learn accounting starts from debit and credit transactions without knowing what was going on debit and credit, To understand the concept of debit and credit transactions should be started from the illustrations of everyday self.
To understand the concept of debit and credit, we have to do is:
1. First we must know that the transactions of accounting involves only 5 (five) elements of the transaction, the assets (assets), liabilities (debts), Equity / Capital (capital), Income and Cost / Expense.
In understanding the meaning or definition of the five elements of the transaction, try to use its own definition if the definition or the opinions expressed from the experts in accounting theory is quite confusing. For definitions of the five elements, I try to define in a simple definition of the five elements of accounting as follows:
Assets are all the wealth we have, good in themselves as well as bills on the other hand, we have assets that can be derived from their own business or loans from other parties do not include assets of the lease
The obligation is a commitment to pay the other party as a result we have received loans
Capital is the inclusion or giving of oneself or others to start a business or in order to increase business.
Revenue is revenue on delivery of services or goods
Cost / Expense is an asset or asset expenditure to be incurred in connection with the services we receive or expenditure on business activities that we do
2. Instill in us that in accounting, every debit transaction must be followed by a credit transaction as an opponent
3. With a simple transaction that make the concept of debits and credits associated with 5 (five) elements of accounting, in the following manner:
a. Example 1: Suppose there is a receipt of money wages in January 2010 amounted to Rp 5.000.000, -
On the transaction, we try to think of what we receive? and why do we receive?
What we receive is money (cash) of Rp 5.000.000, -
Then determine what part of the money among the five elements of the above accounting
By using the definition of the five elements of accounting above, we can conclude that money is part of the Asset or Assets.
After that we must know why we receive the money?
The answer is: We accept cash, because we have been providing services so that we earn, By using the accounting definition of the five elements above, we can conclude that the income in the transaction is entered into the element of revenue.
In the example above transaction, we can state that the "assets" have additional money, on the other hand "Income" is also increased because there are services that we provide.
Once we know the elements of accounting Now we try to determine the Debit and Credit for the above transaction.
In the transaction above, we already know there are two elements involved ie Assets and Revenue, of the two elements we try to decide which one debit and credit which ones?
In this note I will determine to debit is ASSET, as such a credit is recorded as REVENUES
On the transaction we can conclude the following:
o Assets grow and grow revenue
o If the asset increases then it will be noted next to the DEBIT
o If income increases then it will be noted next to the CREDIT
With the above conclusion; from now on if you want to learn the concept of debits and credits in accounting, try to instill in us that if the Assets Grow it will be noted next to debit and when reduced will be noted next to the credits. To income; if Revenue Increase will be recorded next to the credit and if reduced will be recorded next to Debit.
b. Example 2: Suppose we want to buy a vehicle valued at Rp 100,000,000, -, on credit.
Of the transaction can we imagine what we receive? and by what means we receive?
What we receive is the vehicle, and based on the five elements of the above accounting we can conclude that the vehicle is part of the Asset
To have a vehicle that we buy on credit, this means that we have debts to pay. Debt in the fifth element of the above accounting entry in the Liabilities
In the example of this transaction, we can state that the "Assets" has the addition of a vehicle, on the other hand "obligation" is also increased because there are debts to be paid as a result of vehicle loans.
Once we know the elements of accounting Now we try to determine the Debit and Credit for the above transaction.
In the transaction above, we already know there are two elements involved ie Assets and Liabilities, of the two elements we try to decide which one debit and credit which ones?
As already determined in Example 1 above, that if the increase will be noted ASSETS next DEBIT, thus we must agree that if increased LIABILITIES should be noted next to the CREDIT
On this transaction we can conclude the following:
o Assets and Liabilities increased increased
o If the asset increases then it will be noted next to the DEBIT
o If the obligation to grow it will be noted next to the CREDIT
With the above conclusion; from now when we've mengetahuai Increased Obligations will be recorded next to the credit and if reduced will be recorded next to Debit.
c. Example 3: for example, we will open a business in the field of computer rental, capital that we have only a single computer unit for Rp 10.000.000, -
Of the transaction can we imagine what we have to open a computer rental business?
Here can we explain that we have to run a computer rental business is a computer and accounting based on the five elements above we can conclude that the computer is part of the Asset
As already stated above that the computer used for business is owned by someone who opened a business, in other words the computer is in the form of capital
In the example of this transaction, we can state that the "Assets" has the addition of a computer, on the other hand "Capital" is also increased because there are additional capital from the owner of a computer.
Once we know the elements of accounting Now we try to determine the Debit and Credit for the above transaction.
In the transaction above, we already know there are two elements involved and Capital Assets, of the two elements we try to decide which one debit and credit which ones?
As already determined in Example 1 and Example 2 above, that if the increase will be noted ASSETS next DEBIT, thus we must agree that if increased CAPITAL should be noted next to the CREDIT
On this transaction we can conclude the following:
o Asset Capital increases and increases
o If the asset increases then it will be noted next to the DEBIT
o If the capital increase will be recorded next to the CREDIT
With the above conclusion; from now when we've mengetahuai Capital Increase will be recorded next to the credit and if reduced will be recorded next to Debit.
d. Example 4: for example, to go to work we need the fare for public transport, say of Rp 5.000, - per day
From this transaction we can conclude that to go to work we need to spend money on public transportation fare is Rp 5,000, - this means if we use public transport then there is an additional burden / costs
Respect to any charges / fees should we spend on public transport, then there is a cash / money must be spent Rp 5,000, -
From this transaction we can state that the expenses / costs would increase by Rp 5,000, - as a result of the use of public transport services, on the other hand cash / money would be reduced by Rp 5,000, - used for the payment of public transport services
Expenses / Cost of public transport services into groups of expenses / costs, while the cash / money coming into the Asset
Once we know the elements of accounting Now we try to determine the Debit and Credit for the above transaction.
In the transaction above, we already know there are two elements involved are Assets and Expenses / Cost, of the two elements we try to decide which one debit and credit which ones?
As is well known in example 1, example 2 and example 3 above, that if the reduced ASSET will be recorded next to CREDIT, thus we must agree that EXPENSE / COST if the increase should be noted next to the DEBIT
On this transaction we can conclude the following:
o Assets and Expenses decreased / increased costs
o If the asset is reduced then it will be noted next to the CREDIT
o If the Load / Fee increases will be recorded next to the DEBIT
With the above conclusion; from now when we've mengetahuai Charges / Fees Increase will be recorded next to the DEBIT and when reduced will be noted next to the CREDIT.
Of the four examples above accounting transactions can be concluded in general as follows:
- ASSET if the increase will be noted next to Debit and when reduced will be noted next to the credit
- INCOME when increases will be recorded next to the Credit and if reduced will be noted next to Debit
- LIABILITY if the increase will be noted next to the Credit and if reduced will be noted next to Debit
- Capital increase will be recorded next if and when reduced credit will be recorded next to Debit
- EXPENSE / COST when increases will be recorded next to Debit dasn if reduced will be noted next to the Credit
