accounting, is the production of information about an enterprise and the transmission of that information from people who have it to those who need it.[1] The communication is generally in the form of financial statements that show in money terms the economic resources under the control of management; the art lies in selecting the information that is relevant to the user and is representationally faithful. The principles of accountancy are applied to business entities in three divisions of practical art, named accounting, bookkeeping, and auditing.[2]

Information technology plays a vital role within accounting. Today many tedious accounting practices have been simplified with the help of computer software. Software such as enterprise resource planning (ERP) software systems help to manage value chain of companies. ERP systems provide a comprehensive, centralized, integrated source of information that companies can use to manage all major business processes, from purchasing to manufacturing to human resources. this software can replace up to 200 individual software programs that were previously used. there is also computer integrated manufacturing that allows products to be made and completely untouched by human hands and can increase production by having less errors in manufacturing process. Computers have reduced the cost of accumulating, storing, and reporting managerial accounting information and have made it possible to produce a more detailed account of all data that is entered into any given system. Computers have changed business to business interaction through e-commerce. rather than dealing with multiple companies to purchase products a business can purchase a product at a less expensive price and take out the third party and vastly reduces expenses companies once accrued. Inter-organizational information system enable suppliers and businesses to be connected at all times. When a company is low on a product the supplier will be notified and fulfill an order immediately which eliminates the need for someone to do inventory, fill out the proper documents, send them out and wait for their products. [3]

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.[7]

Today, accounting is called "the language of business"[8] 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. The body of rules that governs financial accounting in a given jurisdiction is called Generally Accepted Accounting Principles, or GAAP. Other rules include International Financial Reporting Standards, or IFRS,[9] or US GAAP.

Main articles: Luca Pacioli and Double-entry bookkeeping system

When medieval Europe moved to a monetary economy in the 13th century, sedentary merchants depended on bookkeeping to oversee multiple simultaneous transactions financed by bank loans. One important breakthrough took place around that time: the introduction of double-entry bookkeeping,[21] which is defined as any bookkeeping system in which there was a debit and credit entry for each transaction, or for which the majority of transactions were intended to be of this form.[22] The historical origin of the use of the words 'debit' and 'credit' in accounting goes back to the days of single-entry bookkeeping in which the chief objective was to keep track of amounts owed by customers (debtors) and amounts owed to creditors. 'Debit,' is Latin for 'he owes' and 'credit' Latin for 'he trusts'.[23]

The earliest extant evidence of full double-entry bookkeeping is the Farolfi ledger of 1299-1300.[21] Giovanno Farolfi & Company were a firm of Florentine merchants whose head office was in Nîmes who also acted as moneylenders to the Archbishop of Arles, their most important customer.[24] The oldest discovered record of a complete double-entry system is the Messari (Italian: Treasurer's) accounts of the city of Genoa in 1340. The Messari accounts contain debits and credits journalised in a bilateral form, and contain balances carried forward from the preceding year, and therefore enjoy general recognition as a double-entry system.[25]

Luca Pacioli's "Summa de Arithmetica, Geometria, Proportioni et Proportionalità" (early Italian: "Review of Arithmetic, Geometry, Ratio and Proportion") was first printed and published in Venice in 1494. It included a 27-page treatise on bookkeeping, "Particularis de Computis et Scripturis" (Latin: "Details of Calculation and Recording"). It was written primarily for, and sold mainly to, merchants who used the book as a reference text, as a source of pleasure from the mathematical puzzles it contained, and to aid the education of their sons. It represents the first known printed treatise on bookkeeping; and it is widely believed to be the forerunner of modern bookkeeping practice. In Summa Arithmetica, Pacioli introduced symbols for plus and minus for the first time in a printed book, symbols that became standard notation in Italian Renaissance mathematics. Summa Arithmetica was also the first known book printed in Italy to contain algebra.

Although Luca Pacioli did not invent double-entry bookkeeping,[27] his 27-page treatise on bookkeeping contained the first known published work on that topic, and is said to have laid the foundation for double-entry bookkeeping as it is practiced today.[28] Even though Pacioli's treatise exhibits almost no originality, it is generally considered as an important work, mainly because of its wide circulation, it was written in the vernacular Italian language, and it was a printed book.[29]According to Pacioli, accounting is an ad hoc ordering system devised by the merchant. Its regular use provides the merchant with continued information about his business, and allows him to evaluate how things are going and to act accordingly. Pacioli recommends the Venetian method of double-entry bookkeeping above all others. Three major books of account are at the direct basis of this system: the memoriale (Italian: memorandum), the giornale (Journal), and the quaderno (ledger). The ledger is considered as the central one and is accompanied by an alphabetical index.

accelerated depreciation

account book

accounting - book-keeping

accounting criteria - accounting standards

accounts payable

accrual

accrued liability - accrued expense

accrued revenue - accrued income

actual cost

added value

adjustment

administrative expenses

advances

affiliated company

allocation of the dividend

amortization - depreciation

to amortize - to depreciate

annual general meeting (AGM)

to approve a balance

articles of association

asset

assets

assets and liabilities

assets side

assets value

associated companies

auditing - audit

auditors' certificate

balance-sheet analysis

balance-sheet consolidation

balance-sheet items

balance-sheet ratios

balance sheet

board of directors

Book Keeping loss

book profit

book value

break-up value

break even point (BEP)

budget

industrial and commercial equipment

intangible assets

interests earned

interests paid

inventories - stock

inventory

inventory accounting - stock accounting

inventory book

inventory records - stock records

inventory turnover index

inventory value

investment

invoicing - billing

land and buildings

legal reserve

liabilities

liabilities side

limited liability company

limited partner - sleeping partner

limited partnership

liquid assets

liquidity

long-term financing

loss

loss on credits

major shareholder

majority interest

majority shareholder

to make a list of inventory

to manage a company

management buy-out

memorandum of association

minority interest

minutes of a meeting

net assets

net margin

net profit

non-taxable income

on first call

one-man business

buildings tax

business consultant - expert in commercial law

to call a general meeting

capital

capital goods

capital increase

capital loss

to capitalize

cash cow product

cash flow

chairman of the board of directors

chart of accounts

clean factoring

closing balance

closing stock

company - firm

company merger

company profitability

consolidated statement

controlling company

corporate books

corporate purpose

corporate tax

cost centre

cost of goods sold

costs and revenues

credit

to credit an amount

credit column - credit side

credit note

current assets - floating assets

day book - journal book

debit and credit

debit column - debit side

debit note

debt

debtor

deed of association - company statute

deferred expense - deferred charge

deferred income - deferred revenue

opening balance sheet

opening stock - opening inventory

operating loss

operating profit

ordinary partnership

outstanding credits

overhead costs - overheads

owner's equity

owner

partner - shareholder

patent

periodical report

personnel costs

plant and equipment

plant and machinery

post a contra-entry

pre-tax profit

production costs

production value

professional accountant

profit and loss account (GB) - income statement (US)

profit distribution

provision

provision for doubtful accounts

proxy vote

to put into liquidation

quorum

to quote a company

raw materials inventories

real estate

records

registered office

reserve fund - reserve

return on investment (ROI)

revenue - earnings - incomes

revenue tax

revenues and expenses

rounding down

rounding up

running costs - operating costs

deferred tax

depreciable assets

depreciation

depreciation allowance - capital allowance

depreciation fund - amortization fund

double entry

entry

entry date

equity tax

expenditure - outflow - expense

expense centre

expense receipt

extraordinary meeting

false accounting

false factoring

fee

to fill in a VAT return

final balance

finance

financial leasing

financial management

financial resources

financial statement

financing - funds

finished products inventories

fiscal year - financial year

fixed assets (GB) - capital assets (US)

fixed costs

fully paid-up capital

general accounting

general partner

general partnership - ordinary partnership

goodwill expenses - start-up costs

gross margin

gross operating margin

gross operating profit

gross profit

in the black

income tax

industrial accounting cost

semifinished goods inventories

to set up a company

share capital (GB) - capital stock (US)

shareholders' calling

shareholders' meeting

shareholders register

stamp duty

state-controlled enterprise

statement of account - account statement

statutory balance

stocks and work in progress (GB) - inventories (US)

subscribed capital - underwritten capital

subsidiary

subsidiary company - controlled company

substitutive tax

take-over

tax

tax accounting

tax assessment

tax audit - tax inspection

tax base

tax credit

tax exemption - tax allowance

tax payer

tax rate

tax register

tax return - income tax return

tax revenue

taxable value - assessment

taxation

taxes and dues

temporary balance

total current assets

trial balance

value added tax (VAT)

variable costs

VAT return - VAT declaration

to veto withholding tax

year-end inventory

penyusutan dipercepat
buku rekening
akuntansi - pembukuan
kriteria akuntansi - standar akuntansi
hutang
akrual
masih harus dibayar kewajiban - Beban yang masih harus dibayar
masih harus dibayar pendapatan - pendapatan yang masih harus dibayar
biaya yang sebenarnya
nilai tambah
penyetelan
biaya administrasi
kemajuan
perusahaan afiliasi
alokasi dividen
amortisasi - penyusutan
melakukan amortisasi - terdepresiasi
rapat umum tahunan (AGM)
untuk menyetujui keseimbangan
anggaran dasar
aset
aktiva
aktiva dan kewajiban
sisi aktiva
Nilai aktiva
perusahaan asosiasi
audit - Audit
sertifikat auditor
analisis neraca
neraca konsolidasi
item neraca
rasio neraca
neraca keuangan
direksi
Buku Menjaga kerugian
Laba buku
nilai buku
nilai break-up
break even point (BEP)
anggaran belanja
peralatan industri dan komersial
aktiva tidak berwujud
kepentingan yang diterima
kepentingan dibayar
persediaan - saham
inventarisasi
akuntansi persediaan - akuntansi saham
buku inventaris
catatan persediaan - catatan saham
Indeks perputaran persediaan
nilai persediaan
investasi
faktur - penagihan
tanah dan bangunan
cadangan hukum
Kewajiban
sisi kewajiban
perseroan terbatas
mitra terbatas - sleeping partner
komanditer
alat likuida
likuiditas
pembiayaan jangka panjang
kerugian
kerugian kredit
pemegang saham utama
saham mayoritas
pemegang saham mayoritas
untuk membuat daftar inventarisasi
untuk mengelola perusahaan
manajemen buy-out
anggaran dasar
minoritas
risalah rapat
aktiva bersih
margin bersih
laba bersih
Penghasilan tidak kena pajak
pada panggilan pertama
bisnis satu orang
pajak bangunan
konsultan bisnis - ahli dalam hukum dagang
untuk memanggil rapat umum
modal
barang modal
peningkatan modal
kehilangan modal
untuk memanfaatkan
produk sapi kas
arus kas
ketua dewan direksi
bagan akun
anjak bersih
menutup saldo
penutupan saham
Perusahaan - perusahaan
merger perusahaan
profitabilitas perusahaan
laporan laba rugi konsolidasi
mengendalikan perusahaan
buku perusahaan
Tujuan perusahaan
pajak perusahaan
pusat biaya
harga pokok penjualan
biaya dan pendapatan
kredit
untuk kredit jumlah
kredit kolom - sisi kredit
nota kredit
aktiva lancar - aset mengambang
hari buku - buku jurnal
debit dan kredit
kolom debit - sisi debet
nota debet
hutang
debitur
akta asosiasi - undang perusahaan
Beban ditangguhkan - biaya yang ditangguhkan
penghasilan tangguhan - pendapatan ditangguhkan
membuka neraca
membuka saham - persediaan pembukaan
kerugian operasional
laba operasi
kemitraan biasa
kredit yang beredar
biaya overhead - biaya overhead
ekuitas pemilik
pemilik
mitra - pemegang saham
paten
Laporan berkala
biaya personil
pabrik dan peralatan
pabrik dan mesin
memasukkan kontra-entry
laba sebelum pajak
biaya produksi
nilai produksi
akuntan profesional
laba akun (GB) rugi - laporan laba rugi (US)
distribusi keuntungan
ketentuan
penyisihan piutang tak tertagih
suara proxy
untuk dimasukkan ke dalam likuidasi
kuorum
mengutip sebuah perusahaan
persediaan bahan baku
real estate
arsip
Kantor terdaftar
dana cadangan - cadangan
return on investment (ROI)
pendapatan - pendapatan - pendapatan
pajak pendapatan
pendapatan dan beban
pembulatan ke bawah
pembulatan
menjalankan biaya - biaya operasi
pajak tangguhan
aset yang dapat disusutkan
penyusutan
tunjangan penyusutan - tunjangan modal
dana penyusutan - dana amortisasi
pembukuan rangkap
masuk
tanggal masuk
Pajak ekuitas
pengeluaran - keluar - Beban
pusat biaya
penerimaan biaya
pertemuan luar biasa
akuntansi palsu
anjak palsu
biaya
untuk mengisi kembali PPN
saldo akhir
keuangan
penyewaan keuangan
manajemen keuangan
sumber daya keuangan
laporan keuangan
pembiayaan - dana
produk persediaan jadi
tahun fiskal - tahun keuangan
aktiva tetap (GB) - aset modal (US)
biaya tetap
modal disetor
akuntansi umum
mitra umum
kemitraan umum - kemitraan biasa
Beban goodwill - biaya start-up
marjin kotor
marjin usaha kotor
laba kotor
laba kotor
di hitam
pajak pendapatan
biaya akuntansi industri
Persediaan barang setengah jadi
untuk mendirikan sebuah perusahaan
modal saham (GB) - modal (US)
panggilan pemegang saham
rapat pemegang saham
daftar pemegang saham
materai
perusahaan negara yang dikontrol
laporan rekening - rekening
keseimbangan hukum
saham dan work in progress (GB) - persediaan (US)
modal ditempatkan - modal ditanggung
subsider
anak perusahaan - perusahaan yang dikendalikan
Pajak substitusi
pengambilan alih
pajak
akuntansi pajak
Ketetapan Pajak
pemeriksaan pajak - Pemeriksaan Pajak
basis pajak
kredit pajak
pembebasan pajak - tax allowance
Wajib Pajak
persentase pajak
terdaftar sebagai wajib pajak
SPT - SPT pajak penghasilan
penerimaan pajak
Nilai kena pajak - assessment
perpajakan
pajak dan iuran
keseimbangan sementara
total aktiva lancar
neraca saldo
pajak pertambahan nilai (PPN)
biaya variabel
Kembali PPN - deklarasi PPN
untuk memveto pemotongan pajak
persediaan akhir tahun

 

The Four Financial Statements

Businesses report information in the form of financial statements issued on a periodic basis. GAAP requires the following four financial statements:

Balance Sheet - statement of financial position at a given point in time.Income Statement - revenues minus expenses for a given time period ending at a specified date.Statement of Owner's Equity - also known as Statement of Retained Earnings or Equity Statement.Statement of Cash Flows - summarizes sources and uses of cash; indicates whether enough cash is available to carry on routine operations.

Balance Sheet

The balance sheet is based on the following fundamental accounting model:

Assets = Liabilities + Equity

Assets can be classed as either current assets or fixed assets. Current assets are assets that quickly and easily can be converted into cash, sometimes at a discount to the purchase price. Current assets include cash, accounts receivable, marketable securities, notes receivable, inventory, and prepaid assets such as prepaid insurance. Fixed assets include land, buildings, and equipment. Such assets are recorded at historical cost, which often is much lower than the market value.

Liabilities represent the portion of a firm's assets that are owed to creditors. Liabilities can be classed as short-term liabilities (current) and long-term (non-current) liabilities. Current liabilities include accounts payable, notes payable, interest payable, wages payable, and taxes payable. Long-term liabilities include mortgages payable and bonds payable. The portion of a mortgage long-term bond that is due within the next 12 months is classed as a current liability, and usually is referred to as the current portion of long-term debt. The creditors of a business are the primary claimants, getting paid before the owners should the business cease to exist.

Equity is referred to as owner's equity in a sole proprietorship or a partnership, and stockholders' equity or shareholders' equity in a corporation. The equity owners of a business are residual claimants, having a right to what remains only after the creditors have been paid. For a sole proprietorship or a partnership, the equity would be listed as the owner or owners' names followed by the word "capital". For example:

Sole Proprietorship:

John Doe, Capital

Partnership:

John Doe, Capital

Josephine Smith, Capital

In the case of a corporation, equity would be listed as common stock, preferred stock, and retained earnings.

The balance sheet reports the resources of the entity. It is useful when evaluating the ability of the company to meet its long-term obligations. Comparative balance sheets are the most useful; for example, for the years ending December 31, 2000 and December 31, 2001.

Income Statement

The income statement presents the results of the entity's operations during a period of time, such as one year. The simplest equation to describe income is:

Net Income = Revenue - Expenses

Revenue refers to inflows from the delivery or manufacture of a product or from the rendering of a service. Expenses are outflows incurred to produce revenue.

Income from operations can be separated from other forms of income. In this case, the income can be described by:

Net Income = Revenue - Expenses + Gains - Losses

where gains refer to items such as capital gains, and losses refer to capital losses, losses from natural disasters, etc.

Statement of Owners' Equity (Statement of Retained Earnings)

The equity statement explains the changes in retained earnings. Retained earnings appear on the balance sheet and most commonly are influenced by income and dividends. The Statement of Retained Earnings therefore uses information from the Income Statement and provides information to the Balance Sheet.

The following equation describes the equity statement for a sole proprietorship:

Ending Equity = Beginning Equity + Investments - Withdrawals + Income

For a corporation, substitute "Dividends Paid" for "Withdrawals". The stockholders' equity in a corporation is calculated as follows:

Common Stock (recorded at par value)
+ Premium on Common Stock (issue price minus par value)
+ Preferred Stock (recorded at par value)
+ Premium on Preferred Stock (issue price minus par value)
+ Retained Earnings
----------------------------------------------------------------
= Stockholders' Equity

Note that the premium on the issuance of stock is based on the price at which the corporation actually sold the stock on the market. Afterwards, market trading does not affect this part of the equity calculation. Stockholders' equity does not change when the stock price changes!

Cash Flow Statement

The nature of accrual accounting is such that a company may be profitable but nonetheless experience a shortfall in cash. The statement of cash flows is useful in evaluating a company's ability to pay its bills. For a given period, the cash flow statement provides the following information:

Sources of cashUses of cashChange in cash balance

The cash flow statement represents an analysis of all of the transactions of the business, reporting where the firm obtained its cash and what it did with it. It breaks the sources and uses of cash into the following categories:

Operating activitiesInvesting activitiesFinancing activities

The information used to construct the cash flow statement comes from the beginning and ending balance sheets for the period and from the income statement for the period.

 

MANAGEMENT ACCOUNTING

Management accounting itself is the unification of the management section covers, presentation and interpretation of the information used for strategy formulation, activity planning and control, decision making, optimizing resource use, disclosure to the owners and outsiders, disclosure to workers, safeguarding assets.

the general objectives of management accounting systems are:

Provide the information needed for the calculation of the cost of services, products, and othe objects of interest managementProvide information needed for planning, control, evaluation, and continuous improvementProvide information for decision making.

Management accounting information is divided into three types based on relationship. namely

Full accounting information (Full Accounting Information) for the presentation of information that serves as an example for the full product information, department, activity.Differential accounting information (Differential Accounting Information) shows the comparison so as to produce an alternative or choice.Responsibility accounting information (Responsibility Accounting Information) as the responsibility of the authority such information manager.

Role in Organization and Management Accounting Information for Managers role.

Organization and goal

Organization can be defined as a group of people united together for some common purpose. Common goals that direct labor organization called the organization's objectives. Not all organizations have the same goals, but most organizations have a goal to make a profit. (Ray, H, Garrinson, DBA, Management Accounting 1987)

In addition to target to benefit from the funds that have been invested in the company, organization / company also has another goal which is to acquire and maintain a reputation for integrity, fair, and credible. The company wants to also be a positive force in the social and ecological environment where the company activities.

Differences between management accounting and financial accounting are:

Management accounting is the process of identifying, drafting, interpretation and delivery of information to help managers in the organization.

While financial accounting refers to the preparation of accounting information to be used by external parties such as shareholders and creditors.

MANAGEMENT ACCOUNTING

Management accounting itself is the unification of the management section covers, presentation and interpretation of the information used for strategy formulation, activity planning and control, decision making, optimizing resource use, disclosure to the owners and outsiders, disclosure to workers, safeguarding assets.

the general objectives of management accounting systems are:

Provide the information needed for the calculation of the cost of services, products, and othe objects of interest managementProvide information needed for planning, control, evaluation, and continuous improvementProvide information for decision making.

Management accounting information is divided into three types based on relationship. namely

Full accounting information (Full Accounting Information) for the presentation of information that serves as an example for the full product information, department, activity.Differential accounting information (Differential Accounting Information) shows the comparison so as to produce an alternative or choice.Responsibility accounting information (Responsibility Accounting Information) as the responsibility of the authority such information manager.

Role in Organization and Management Accounting Information for Managers role.

Organization and goal

Organization can be defined as a group of people united together for some common purpose. Common goals that direct labor organization called the organization's objectives. Not all organizations have the same goals, but most organizations have a goal to make a profit. (Ray, H, Garrinson, DBA, Management Accounting 1987)

In addition to target to benefit from the funds that have been invested in the company, organization / company also has another goal which is to acquire and maintain a reputation for integrity, fair, and credible. The company wants to also be a positive force in the social and ecological environment where the company activities.

Differences between management accounting and financial accounting are:

Management accounting is the process of identifying, drafting, interpretation and delivery of information to help managers in the organization.

While financial accounting refers to the preparation of accounting information to be used by external parties such as shareholders and creditors.