PENGANTAR

AKUNTANSI 1
3
1
Introduction to
Accounting and
Business
4
2. Summarize the development of accounting
principles and relate them to practice.
3. State the accounting equation and define
each element of the equation.
After studying this chapter, you should be able to:
1. Describe the nature of a business and the
role of ethics and accounting in business.
5
4. Describe and illustrate how business
transactions can be recorded in terms of the
resulting change in the basic elements of
the accounting equation.
After studying this chapter, you should be able to:
5. Describe the financial statements of a
proprietorship and explain how they
interrelate.
6
Describe the nature of a
business and the role of ethics
and accounting in business.
Objective 1
1-1
8
Service Business Service
The Walt Disney Company Entertainment
Delta Air Lines Transportation
Marriott International Hotels Hospitality and
lodging
Bank of America Corporation Financial services
XM Satellite Radio Satellite radio
1-1
Types of Businesses
9
Merchandising Business Product
Wal-Mart General merchandise
GameStop Corporation Video games and
accessories
Best Buy Consumer electronics
Gap Inc. Apparel
Amazon.com Internet books, music, video
Types of Businesses
1-1
10
Manufacturing Business Product
General Motors Corp. Cars, trucks, vans
Samsung Cell phones
Dell Inc. Personal computers
Nike Athletic shoes and apparel
The Coca-Cola Company Beverages
Sony Corporation Stereos and televisions
Types of Businesses
1-1
11
Proprietorship
Partnership
Corporation
Limited liability company
Common Forms of Business Organizations
1-1
12
Comprises 70% of business
organizations in the United States.
Requires low cost of organizing.
Is limited to financial resources of the
owner.
Is used by small businesses.
A proprietorship is owned by one
individual and
1-1
13
Comprises 10% of business
organizations in the United States.
Combines the skills and resources of
more than one person.
A partnership is similar to a
proprietorship except that it is owned
by two or more individuals and
1-1
14
Generates 90% of the total dollars of
business receipts received.
Comprises 20% of the businesses.
A corporation is organized under state or
federal statues as a separate legal taxable
entity and
1-1
Continued
15
Includes ownership divided into shares
of stock, sold to shareholders
(stockholders).
Is able to obtain large amounts of
resources by issuing stock.
Is used by large businesses.
1-1
16
Is a popular alternative to a
partnership.
Has tax and liability advantages to the
owners.
A limited liability company (LLC) combines
attributes of a partnership and a
corporation in that it is organized as a
corporation. However, a limited liability
corporation can elect to be taxed as a
partnership and
1-1
17
A business stakeholder is a
person or entity having an
interest in the economic
performance and well-being
of a business.
1-1
18
Capital market stakeholders
provide the major financing for the
business in order for the business to
begin and continue its operations.
1-1
19
Product or service market
stakeholders include customers
who purchase the businesss
products or services as well as
the vendors who supply inputs
to the business.
1-1
20
Government stakeholders have an
interest in the economic
performance of a business. City,
county, state, and federal
governments collect taxes from
businesses within their
jurisdiction.
1-1
21
Internal stakeholders include
individuals employed by the
business. Managers have an
incentive to maximize the
economic value of the business.
Employees have an interest
because their jobs depend on it.
1-1
22
The moral principles that
guide the conduct of
individuals are called ethics.
1-1
23
1. Individual
character
2. Firm culture
3. Laws and
enforcement
The answer to
What went
wrong for these
companies?
(Exhibit 2)
involves three
factors.
1-1
24
Accounting can be defined as an
information system that
provides reports to stakeholders
about the economic activities
and condition of a business.
1-1
25
The process by which accounting provides
information to business stakeholders is as follows:
Identify stakeholders.
Assess stakeholders information needs.
Design the accounting information system to
meet stakeholders needs.
Record economic data about business
activities and events.
Prepare accounting reports for stakeholders.
1-1
26
23
1-1
27
Financial accounting is primarily concerned
with the recording and reporting of
economic data and activities for a business.
Managerial accounting uses both financial
accounting and estimated data to aid
management in running day-to-day
operations and in planning future
operations.
1-1
28
Accountants employed by a business firm or
a not-for-profit organization are said to be
employed in private accounting.
Accountants and their staff who provide
services on a fee basis are said to be
employed in public accounting.
1-1
29
Summarize the development
of accounting principles and
relate them to practice.
Objective 2
1-2
30
The business entity concept
limits the economic data in
the accounting system to
data related directly to the
activities of the business.
1-2
31
The cost concept is the
basis for entering the
exchange price, or cost
of an acquisition in the
accounting records.
1-2
32
The objectivity concept
requires that the
accounting records and
reports be based upon
objective evidence.
1-2
33
The unit of measure
concept requires that
economic data be
recorded in dollars.
1-2
34
Example Exercise 1-1
On August 25, Gallatin Repair Service extended an offer of
$125,000 for land that had been priced for sale at $150,000. On
September 3, Gallatin Repair Service accepted the sellers
counteroffer of $137,000. On October 20, the land was assessed
at a value of $98,000 for property tax purposes. On December 4,
Gallatin Repair Service was offered $160,000 for the land by a
national retail chain. At what value should the land be recorded
in Gallatin Repair Services records?
Follow My Example 1-1
$137,000. Under the cost concept, the land should be recorded at
the cost to Gallatin Repair Service.
31
1-2
35
State the accounting
equation and define each
element of the equation.
Objective 3
1-3
36
Assets = Liabilities + Owners Equity
The resources
owned by a
business
The Accounting Equation
1-3
37
The rights of
the creditors,
which represent
debts of the
business
Assets = Liabilities + Owners Equity
The Accounting Equation
1-3
38
The rights of
the owners
Assets = Liabilities + Owners Equity
The Accounting Equation
1-3
39
The following accounts appear in the adjusted trial balance of
Hindsight Consulting. Indicate whether each account would be
reported in the (a) current asset; (b) property, plant, and
equipment; (c) current liability, (d) long-term liability; or (e)
owners equity section of the December 31, 2007, balance sheet
of Hindsight Consulting.
Example Exercise 1-2
John Joos is the owner and operator of Youre A Star, a motivational
consulting business. At the end of its accounting period, December 31,
2007, Youre A Star has assets of $800,000 and liabilities of $350,000.
Using the accounting equation, determine the following amounts:
a. Owners equity, as of December 31, 2007.
b. Owners equity, as of December 31, 2008, assuming that assets
increased by $130,000 and liabilities decreased by $25,000
during 2008.
Follow My Example 1-2
a. A = L + OE
$800,000 = $350,000 + OE
OE = $450,000

b. A = L + OE
$130,000 = $25,000 + OE
OE = $155,000
OE on Dec. 31, 2008:
$605,000 ($450,000 + $155,000)
1-3
36
40
Describe and illustrate how
business transactions can be
recorded in terms of the resulting
change in the basic elements of the
accounting equation.
Objective 4
1-4
41
A business transaction is an
economic event or condition
that directly changes an entitys
financial condition or directly
affects its results of operations.
1-4
42
On November 1, 2007, Chris
Clark begins a business that will
be known as NetSolutions.
1-4
43
a. Chris Clark deposits $25,000 in a bank
account in the name of NetSolutions.
Chris Clark, Capital
25,000 Investment
by Chris Clark
Cash
25,000
a.
=
Assets Owners Equity
=
40
1-4
44
b. NetSolutions exchanged $20,000 for land.
Chris Clark, Capital
25,000
Cash + Land
25,000
Bal.
Assets Owners Equity
=
=
b. 20,000 +20,000
Bal. 5,000 20,000 25,000
41
1-4
45
Accounts Chris Clark,
Cash + Supplies + Land Payable Capital
Assets
c. During the month, NetSolutions purchased
supplies for $1,350 and agreed to pay the
supplier in the near future (on account).
Owners
Liabilities + Equity =
5,000 20,000 25,000
=
+1,350 +1,350 c.
Bal.
5,000 1,350 20,000 1,350 25,000
Bal.
42
1-4
46
Beginning with entry (d) the
asset section will be shown
first, then the liabilities and
owners equity will be shown in
the following slide.
1-4
47

Cash + Supplies + Land
Assets
5,000 1,350 20,000

d. NetSolutions provided services to
customers, earning fees of $7,500 and
received the amount in cash.
Bal.
12,500 1,350 20,000
+7,500
d.
Bal.
44
1-4
48
d. NetSolutions provided services to
customers, earning fees of $7,500 and
received the amount in cash.
45
1-4
Liabilities + Owners Equity

Accounts Chris Clark, Fees
Payable Capital + Earned
1,350 25,000
Bal.
+7,500
d.
+
25,000 7,500
Bal.
1,350
49
1-4
The amounts used in earning revenue are
called expenses. Adding expenses to the
owners equity section results in a space
problem. To adjust for these added
headings, the word Bal. has been
omitted from Slides 48, 50, 52, and 54.
The bottom row in these four slides
provides the balances after each
transaction.
Expenses
50

Cash + Supplies + Land
Assets
e. NetSolutions paid the following
expenses: wages, $2,125; rent, $800;
utilities, $450; and miscellaneous, $275.
Bal. 12,500 1,350 20,000
Bal. 8,850 1,350 20,000
e. 3,650
47
1-4
51
Accounts Chris Clark, Fees Wages Rent Utilities Misc.
Payable + Capital + Earned Expense Expense Expense Expense
Liabilities + Owners Equity
1,350 25,000 7,500
2,125 800 450 275
e.
1,350 25,000 7,500 2,125 800 450 275
48
e. NetSolutions paid the following expenses:
wages, $2,125; rent, $800; utilities, $450; and
miscellaneous, $275.
1-4
52
f. NetSolutions paid $950 to
creditors during the month.

Cash + Supplies + Land
Assets
Bal. 8,850 1,350 20,000
Bal. 7,900 1,350 20,000
f. 950
49
1-4
53
Accounts Chris Clark, Fees Wages Rent Utilities Misc.
Payable + Capital + Earned Expense Expense Expense Expense
Liabilities + Owners Equity
1,350 25,000 7,500 2,125 800 450 275
400 25,000 7,500 2,125 800 450 275
f. NetSolutions paid $950 to
creditors during the month.
f.
950
50
1-4
54
g. At the end of the month, the cost
of supplies on hand is $550, so
$800 of supplies were used.

Cash + Supplies + Land
Assets
Bal. 7,900 1,350 20,000
Bal. 7,900 550 20,000
g. 800
51
1-4
55
Accounts Chris Clark, Fees Wages Rent Supplies Util. Misc.
Payable + Capital + Earned Exp. Exp. Exp. Exp. Exp.
Liabilities + Owners Equity
400 25,000 7,500 2,125 800 450 275
g. At the end of the month, the cost
of supplies on hand is $550, so
$800 of supplies were used.
g.
800
400 25,000 7,500 2,125 800 800 450 275
52
1-4
56

Cash + Supplies + Land
Assets
Bal. 7,900 550 20,000
Bal. 5,900 550 20,000
h. 2,000
h. At the end of the month, Chris
withdrew $2,000 in cash from
the business for personal use.
53
1-4
57
Accounts Chris Clark, Chris Clark Fees Wages Rent Supplies Util. Misc.
Payable + Capital + Drawing Earned Exp. Exp. Exp. Exp. Exp.
Liabilities + Owners Equity
400 25,000 7,500 2,125 800 800 450 275
h.
2,000
h. At the end of the month, Chris
withdrew $2,000 in cash from
the business for personal use.
400 25,000 2,000 7,500 2,125 800 800 450 275
54
1-4
58
Owners withdrawals
Expenses
Decreased by
Owners Equity
Increased by
Owners investments
Revenues
55
1-4
59
Example Exercise 1-3
Salvo Delivery Service is owned and operated by Joel Salvo. The following
selected transactions were completed by Salvo Delivery Service during
February:
56
1. Received cash from owner as additional investment, $35,000.
2. Paid creditors on account, $1,800.
3. Billed customers for delivery services on account, $11,250.
4. Received cash from customers on account, $6,740.
5. Paid cash to owners for personal use, $1,000.
1-4
Continued
60
Example Exercise 1-3
57
Indicate the effect of each transaction on the accounting equation elements
(Assets, Liabilities, Owners Equity, Drawing, Revenue, and Expense) by listing
the numbers identifying the transactions, (1) through (5). Also, indicate the
specific item within the accounting equation element that is affected. To
illustrate, the answer to (1) is shown below.
(1) Asset (Cash) increases by $35,000; Owners Equity (Joel Salvo, Capital)
increases by $35,000.
1-4
61
Follow My Example 1-3
58
(2) Asset (Cash) decreases by $1,800; Liability (Accounts Payable) decreases
by $1,800.
For Practice: PE 1-3A, PE 1-3B
(3) Asset (Accounts Receivable) increases by $11,250; Revenue (Delivery
Service Fees) increases by $11,250.
(4) Asset (Cash) increases by $6,740; Asset (Accounts Receivable) decreases
by $6,740.
(5) Asset (Cash) decreases by $1,000; Owners Equity (Joel Salvo, Drawing)
increases by $1,000.
1-4
62
Describe the financial
statements of a
proprietorship and explain
how they interrelate.
Objective 5
1-5
63
Accounting reports, called
financial statements,
provide summarized
information to the owner.
1-5
64
The income statement is
a summary of the
revenue and expenses for
a specific period of time,
such as a month or a
year.
1-5
65
1-5
62
Net income is
carried to the
statement of
owners equity
Income Statement
66
A statement of owners equity
is a summary of the changes
in the owners equity that
have occurred during a
specific period of time.
1-5
67
64
1-5
From the income statement
To the balance sheet
Statement of Owners Equity
68
A balance sheet is a list of
the assets, liabilities, and
owners equity as of a
specific date.
1-5
69
66
1-5
This amount is compared to the
net cash flow on the statement of
cash flows
From the statement of
owners equity
Balance Sheet
70
A statement of cash flows
is a summary of the cash
receipts and payments
for a specific period of
time.
1-5
71
68
This amount should match Cash on the
balance sheet.
Statement of Cash Flows
1-5
72
The income statement reports the
revenues and expenses for a period of
time based on the matching concept.
This concept is applied by matching the
expenses with the revenue generated
during a period by those expenses.
1-5
Income Statement
73
The excess of revenue over
the expenses is called net
income or net profit. If the
expenses exceed the revenue,
the excess is a net loss.
1-5
74
Example Exercise 1-4
The assets and liabilities of Chickadee Travel Service at April 30,
2008, the end of the current year, and its revenue and expenses
for the year are listed below. The capital of the owner, Adam
Cellini, was $80,000 at May 1, 2007, the beginning of the current
year.
71
Accounts payable $ 12,200 Miscellaneous expense $ 12,950
Accounts receivable 31,350 Office expense 63,000
Cash 53,050 Supplies 3,350
Fees earned 263,200 Wages expense 131,700
Land 80,000
Prepare an income statement for the current year ended April
30, 2008.
1-5
75
Follow My Example 1-4
72
CHICKADEE TRAVEL SERVICE
INCOME STATEMENT
For the Year Ended April 30, 2008
Fees earned $263,200
Expenses:
Wages expense $131,700
Office expense 63,000
Miscellaneous expense 12,950
Total expenses 207,650
Net income $ 55,550
For practice: PE 1-4A, PE 1-4B
1-5
76
The statement of owners
equity reports the changes in
the owners equity for a period
of time. It is prepared after
the income statement.
1-5
Statement of Owners Equity
77
Example Exercise 1-5
Using the data for Chickadee Travel Service shown
in Example Exercise 1-4, prepare a statement of
owners equity for the current year ended April 30,
2008. Adam Cellini invested an additional $50,000
in the business during the year and withdrew cash
of $30,000 for personal use.
74
1-5
78
Follow My Example 1-5
CHICKADEE TRAVEL SERVICE
STATEMENT OF OWNERS EQUITY
For the Year Ended April 30, 2008
75
Adam Cellini, capital, May 1, 2007 $ 80,000
Additional investment by owner during year $ 50,000
Net income for the year 55,550
$105,550
Less withdrawals 30,000
Increase in owners equity 75,550
Adam Cellini, capital, April 30, 2008 $155,550
For Practice: PE 1-5A, PE 1-5B
1-5
79
The balance sheet reports
the amounts of a firms
assets, liabilities, and
owners equity at the end
of a specific period.
1-5
Balance Sheet
80
The account form of balance
sheet lists the assets on the left
and the liabilities and owners
equity on the rightsimilar to
design of an account.
1-5
81
The report form of balance
sheet presents the liabilities
and owners equity sections
below the assets section.
1-5
82
Example Exercise 1-6
Using the data for Chickadee Travel Service shown in Example
Exercise 1-4 and 1-5, prepare the balance sheet as of April 30, 2008.
79
For Practice: PE 1-6A, PE 1-6B
Follow My Example 1-6
1-5
CHICKADEE TRAVEL SERVICE
BALANCE SHEET
April 30, 2008
Assets Liabilities
Cash $ 53,050 Accounts payable $12,200
Accounts receivable 31,350
Supplies 3,350 Owners Equity
Land 80,000 Adam Cellini, capital 155,550
Total assets $167,750 Total liab. & owners eq. $167,750
83
The statement of cash flows
consists of three sections:
1-5
(1) Operating activities
(2) Investing activities
(3) Financing activities
Statement of Cash Flows
84
The cash flows from
operating activities section
reports a summary of cash
receipts and cash payments
from operations.
1-5
85
The cash flows from investing
activities section reports the cash
transactions for the acquisition and
sale of relatively permanent assets.
1-5
86
The cash flows from financing
activities section reports the
cash transactions related to
cash investments by the owner,
borrowings, and cash
withdrawals by the owner.
1-5
87
Example Exercise 1-7
A summary of cash flows for Chickadee Travel Service for the year ended April 30,
2008, is shown below.
84
Cash receipts:
Cash received from customers $251,000
Cash received from additional
investment of owner 50,000
Cash payments:
Cash paid for expenses 210,000
Cash paid for land 80,000
Cash paid to owner for personal use 30,000
The cash balance as of May 1, 2007, was $72,050.
Prepare a statement of cash flows for Chickadee Travel Service for
the year ended April 30. 2008.
1-5
88
Follow My Example 1-7
For Practice: PE 1-7A, PE 1-7B
CHICKADEE TRAVEL SERVICE
STATEMENT OF CASH FLOWS
For the Year Ended April 30, 2008
Cash flows from operating activities:
Cash received from customers $251,000
Deduct cash payments for expenses 210,000
Net cash flows from operating activities $ 41,000
Cash flows from investing activities:
Cash payments for purchase of land (80,000)
Cash flows from financing activities:
Cash received from owner as investment $ 50,000
Deduct cash withdrawals by owner 30,000
Net cash flows from financing activities 20,000
Net decrease in cash during year $(19,000)
Cash as of May 1, 2007 72,050
Cash as of April 30, 2008 $ 53,050
85
1-5
89
The income statement and the statement
of owners equity are interrelated.
Net income or net loss
appears on both statements.
1-5
Interrelationships Among Financial Statements
90
The statement of owners equity
and the balance sheet are
interrelated.
The owners capital at the end of
the period on the statement of
owners equity also appears on the
balance sheet as owners capital.
1-5
91
The balance sheet and the statement
of cash flows are interrelated.
The cash on the balance sheet also
appears as the end-of-period cash on
the statement of cash flows.
1-5
Bullet Point Slide
Bullet Point 1
Bullet Point 1
Bullet Point 1
Example Chart
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Category 1 Category 2 Category 3 Category 4
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