Basic Accounting Concept

7/31/2019 Basic Accounting Concept

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BASIC ACCOUNTING

CONCEPTPresented by:

Ady Setyo Putro

Nugraha W

Ribka Armanda

STIESIA SURABAYA

2012


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According to Statement of the Accounting

Principles Board No. 4, p. 8 Accounting is aservice activity. Its function is to provide

quantitative information, primarily financial innature, about economic entities that is intended to

be useful in making economic decisionsinmaking reasoned choices among alternative

courses of action.


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1. Identification

2. Recording

3. Communication


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1. Assumptions

2. Principle3. Constraints/Limitation


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PURPOSE OFFINANCIAL REPORT ASUMPTIONS

ACCOUNTINGSTANDARD

PRICIPLE, METHODE,

PROCEDURE

FINANCIAL REPORT RELATIONSHIP


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Separate/Economic Entity: a corporation isconsidered a living fictional being

Going Concern: corporation is assumed toremain in existence for an indefinitely long time

Measurement and Unit of Measure :Financial Statement only show economically

measureable activity of a company Periodicity: A company continuous life can be

divided into measured period of time


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Historical Cost : Financial Statementreport companies resources andobligation at an initial historical cost orusuallymean the original cost at thetime of a transaction

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Principle 2:Revenue Recognition. Accrual basis of accounting dictates that revenues

must be recorded when earned and measurable.

Principle 3:Matching Principle. Under the matching principle, costs associated with

making a product must be recorded (matched to)

the revenue generated from that product during thesame period.

Costs of a product must be recorded during the periodas revenue from selling it


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4. Full DisclosureCompany must reveal all the relevant economicinformation determined to make the difference totheir user

Such disclosure should be accomplished in thefollowing sections of companies reports:

Financial statements Notes to financial statements

Supplementary information


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5. Consistency

For each company, the preparation offinancial statements must utilize measurementtechniques and assumptions that are consistentfrom one period to another.


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Estimates & Judgments

Certain measurements cannot be performed completelyaccurately, and must therefore utilize conservativeestimates and judgments

Materiality

Inclusion and disclosure of financial transactions in

financial statements hinge on their size and effect onthe company performing them.


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Conservatism

Conservative is the stance taken by the accountant in theface of two or more alternatives in the preparation of

financial statements. If there was more than onealternative, the accountant should choose the termthat will not make overstated assets and revenue.


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THANK YOU

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Basic Accounting Concept