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Accounting and financial reporting

The preparation and presentation of financial statements refers to the Financial Accounting Standards set by the Financial Accounting Standards Board-IAI. Currently, outline Financial Accounting Standards contains 59 PSAK with basic framework Drafting and presentation of financial statements that are melandasinya and 4 IPSAK. Financial accounting standards set by the IAI is an adaptation of the International Accounting Standards.

Adoption of International Accounting Standards into the Financial Accounting Standards Board accounting standards by the Financial Accounting harmonization efforts as one of Indonesia and the international financial accounting practices in an attempt to answer the challenge in the era of globalization.

Accounting is often referred to as “the language of business” because the accounting is an information system that provides reports for the parties concerned (stakeholders) concerning the economic activity and the condition of a company. Accounting can be defined as the process of recording, measurement and delivery of information economy in order to be used as the basis for decision-making or wisdom. The information is presented in the form of accounting reports or better known as the financial statements.

The purpose of financial statements is to provide information about the financial position, performance, and corporate cash flow that will benefit the majority of the users of the report in order to make economic decisions and demonstrate accountability for top management (stewardship) use of the resources entrusted to them.

There are four main types of financial statements, the balance sheet (report of changes in financial position), income statement, report a change of equity and cash flow statement. Financial reporting (financial reporting) include not only financial, but also other media that can be used for communicating information either directly or indirectly related to the accounting process. For example, the annual report to shareholders not only contains the primary financial statements, as noted above, but also other information, such as the ratio-financial ratio is considered important, an overview of the number or account balance-specific account.

The parties related to the financial statements is the IAI, Bapepam, JSE, tax office and public accounting (Auditors) as well as the users of financial statements. In a different way each party has the same goal, namely producing quality financial reports (trustworthy and reliable, relevant, and timely).

BOOK VALUE OF ASSETS OF ZERO BUT STILL WORKING?

“The book value of assets is zero but the reality is still functioning”, that is a common phenomenon, plural happen. Why did it happen that way? What to do? Is the book should be left alone with the blind eye that the assets are still benefits?, On this occasion I will lift my study who experienced his own case (true / not illustrated).

Cases like this bring me memories to 6 years ago, when I recently joined a private company (after several years in & Consultant). As the new chief accounting at the recruit, I put the “Inventory Asset” in the top priority project that I have accomplished in my first week.

When I obtained the “Asset List” of one of the accounting staff (which was already two years before joining the company), with the staff concerned  I immediately verify the list with assets of his physics, ranging from counting to check the condition of the assets to to gauge its economic life (fair or not), and finished before the end of working hours (about 4 PM).

While on the way home from work, it seems there is something uncomfortable about my thoughts about the asset list. But I can not figure out what is wrong with the asset list, what is wrong with the physical counts.

Suddenly I remembered … it seems there is a canvas car (car pick-up behind the closed aluminum roof) which is used for daily-haul transport of goods. Why can I not find the car on the list?

The next day, early in the morning I went to the parking lot to check, I found the driver was washing the car. My brother asked the driver to the car (although I am not an automotive expert, I think more or less I can guess the condition of the car), is still very good and decent roads. A moment later I was to the personnel and the public to borrow the original car papers and I found all the letters are still valid, even just out in the exam (= kind of due diligence and unloading),  Next I check the balance of the ledger assets earlier period, and I found the true book value is zero at the end of the previous period.

MYOB Accounting is a complete business management solutions and automated and is good to apply in your company with ease accounting, inventory and customer contacts list. Flexible and easy to adapt to the business process.

Have Features:

Accounts: a list of accounts, ledgers, journals, multi-job, multi-category, the budget
Banking: bank accounts, cash disbursements, cash receipts, bank reconciliation, cash disbursements print form and cash receipts, cash flow statements
Sales: Quotation, Order, Invoice, print invoice, print a tax invoice, print the letter of the street, sales returns, cash receipts from customers, analyze sales reports based on the seller, the goods (items), customer, and other information sources.
Purchases: Quoatation, Order, Receive Item, Bill, PO print, purchase returns, cash disbursements to pay debts of suppliers, an analysis based on the purchase of goods, suppliers, sources of information other purchases.
Inventory: inventory, stock transfer, adjustment items (price and quantity), auto build (make automatic item), inventory taking.
Card File: list receivable (customer), debt (suppliers), employee and personal. Also holds a list of reports on age of debt and receivables
Single User: can only be used by a user who logs in at the same database
Single Currency: only be used to record the single currency
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Import master data transactions other than TXT, XLS, CSV, etc.
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Adjusting Entries

Adjusting entries are journal entries made at the end of the accounting period to allocate revenue and expenses to the period in which they actually are applicable. Adjusting entries are required because normal journal entries are based on actual transactions, and the date on which these transactions occur may not be the date required to fulfill the matching principle of accrual accounting.

The two major types of adjusting entries are:

Accruals: for revenues and expenses that are matched to dates before the transaction has been recorded.

Deferrals: for revenues and expenses that are matched to dates after the transaction has been recorded.

Accruals

Accrued items are those for which the firm has been realizing revenue or expense without yet observing an actual transaction that would result in a journal entry. For example, consider the case of salaried employees who are paid on the first of the month for the salary they earned over the previous month. Each day of the month, the firm accrues an additional liability in the form of salaries to be paid on the first day of the next month, but the transaction does not actually occur until the paychecks are issued on the first of the month. In order to report the expense in the period in which it was incurred, an adjusting entry is made at the end of the month. For example, in the case of a small company accruing $80,000 in monthly salaries,

Accounting is defined by the American Institute of Certified Public Accountants (AICPA) as “the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof.

Accounting is thousands of years old; the earliest accounting records, which date back more than 7,000 years, were found in Mesopotamia (Assyrians). The people of that time relied on primitive accounting methods to record the growth of crops and herds. Accounting evolved, improving over the years and advancing as business advanced

Early accounts served mainly to assist the memory of the businessperson and the audience for the account was the proprietor or record keeper alone. Cruder forms of accounting were inadequate for the problems created by a business entity involving multiple investors, so double-entry bookkeeping first emerged in northern Italy in the 14th century, where trading ventures began to require more capital than a single individual was able to invest. The development of joint stock companies created wider audiences for accounts, as investors without firsthand knowledge of their operations relied on accounts to provide the requisite information.[6] This development resulted in a split of accounting systems for internal (i.e. management accounting) and external (i.e. financial accounting) purposes, and subsequently also in accounting and disclosure regulations and a growing need for independent attestation of external accounts by auditors.

Today, accounting is called “the language of business” because it is the vehicle for reporting financial information about a business entity to many different groups of people. Accounting that concentrates on reporting to people inside the business entity is called management accounting and is used to provide information to employees, managers, owner-managers and auditors. Management accounting is concerned primarily with providing a basis for making management or operating decisions. Accounting that provides information to people outside the business entity is called financial accounting and provides information to present and potential shareholders, creditors such as banks or vendors, financial analysts, economists, and government agencies. Because these users have different needs, the presentation of financial accounts is very structured and subject to many more rules than management accounting.

One of the biggest obstacles to the growth of small company s is access to working capital. The company s who have access to the financing of the company s, are often better positioned to seize the opportunities – and – in a better position to weather successfully the challenges that those who do not.

But getting working capital is a major challenge for most of the company s, especially small company s new business s. Furthermore, conventional business loans are offered to the company s that have long history of success and hard assets. Few enterprises and small business s meet these criteria.

However, business loans are not the only way to finance a business . There are some alternative ways of financing have begun to gain popularity in recent years. An alternative is called accounts receivable, also known as invoice factoring. Read the rest of this entry »