THE BASIC ACCOUNTING EQUATION AND GOVERNMENTS FINANCIAL STATEMENT

Efa Yonnedi SE, Ak (andalas), MPPM (monash), Ph.D (manchester)

The Basic Accounting Equation

Asset = Liability + Fund Equity
Asset Liability= Fund Equity
Provides the underlying framework for recording and summarizing governments economic transaction. Assets are claimed by either creditors or fund owners.

Asset
Resources a government owns.

Provide future services or benefits.

Cash, Supplies, Equipment, etc.

Liability
Claims against assets (debts and obligations).

Creditors - party to whom money is owed.

Accounts payable, Notes payable, etc.

Fund Equity
Ownership claim on total assets.

Referred to as residual equity.

In the private sectoreg. Paid-in Capital, Retained Earnings (Corporation). In the government sector
Current Fund Equity Investment Fund Equity

Reserve Fund Equity

Financial Statements: a comparison

Governments Accounting System

Identifying
Transactions

Recording
Summarizing

Reporting
Financial Statements

Entries /
Journals

General Ledgers

Worksheets

Subsidiary ledgers
Buku Register

Buku Jurnal
Penerimaan Kas

Kumpulan
Rekening (Ringkasan dan Rincian)

Laporan Realisasi
APBD

Bukti Penerimaan
Kas

Buku Jurnal
Pengeluaran Kas

Bukti Pengeluaran
Kas

Laporan Aliran Kas Neraca Daerah Catatan atas L/K

Buku Jurnal Umum

Bukti Memorial

Accounting Policy

Balance Sheet

Balance sheet reveals the basic accounting equation, known as:

Asset = Liability + Equity

Equity in the government sector: Fund Equity Equity in the private sector: ownership claims on total asset (sources of resources owned by the company) Fund Equity is Asset minus Liability

Aseet Liability = Fund Equity

Balance Sheet (cont)

The dual effect of one transaction on the accounting equation (asset, liability, fund equity) Assets account and liabilities accounts have its own account in the Fund Equity

Fund Equity

Current Fund Equity = Current Asset Current Liability. Investment Fund Equity depicts governments resources which are invested in long-term investment, fixed asset, and other assets Long term liability. Reserve Fund Equity reveals governments resources that are reserved for special purposes in accordance to governments regulation

Current Fund Equity

SiLPA Kas dan Setara Kas serta Investasi Jangka Pendek Pendapatan yang Ditangguhkan Kas di Bendahara Penerimaan Cadangan Piutang Piutang Lancar Cadangan Persediaan Persediaan Dana yang Disediakan untuk Pembayaran Utang Jangka Pendek Kewajiban Jangka Pendek

Investment Fund Equity

Invested in long term investment Long term investment Invested in fixed asset Fixed asset Invested in other assets Other assets Funds must be provided for long-term debt payment- Long term debt

Reserve Fund Equity

Is a counter account of reserve fund

ACCOUNTING FOR REVENUES

Revenues, expenses and financing cash basis. Applied to all governments reporting entity (APBN/APBD). Do not include state-owned enterprises Entities use accrual basis still need to prepare Statement of Budget Realization.

Matching the realization of revenue, expenses, and financing with its budget; Budgetary Accounting in the APBN and APBD:
Expenses:

appropriation; Revenues: estimation.

Accounting Basis

Revenues are recognised when received in the governments account: or rekening Kas Umum Negara/Kas Umum Daerah Expenses are recognized when cash out from the governments account or rekening Kas Umum Negara/Kas Umum Daerah Receipt of financing is recognized when it is received in the governments account: or rekening Kas Umum Negara/Kas Umum Daerah Cash out from financing is recognised when it is out from the governments account: or rekening Kas Umum Negara/Kas Umum Daerah

Budgetary Accounting
Budgetary accounting is a tool for responsibility and management control of revenues, expenses, transfer and financing. Revenue budget is called estimated revenues. Expenditure budget is called appropriation which is further called allotment (authorization to spend) Financing budget: receive of financiang and expenditure of financing.

Entries/Journal

Budget approval (entry when budget is approved by the DPR/DPRD) Journal of estimated revenue and expenditure allotment Journal of budget realization
Including:

Jurnal Korolari

Adjusting entries Closing entries

Copyright 2004 Prentice Hall

Jurnal Pengesahan APBD

Bendahara Umum Daerah Estimasi Pendapatan Apropriasi Belanja Surplus/Defisit

xxx
xxx xxx

Estimasi Penerimaan Pembiayaan xxx Pembiayaan Neto xxx Apropriasi Pengeluaran Pembiayaan xxx

Jurnal Otorisasi Kredit Anggaran

BUD
Alokasi Estimasi Pendapatan Alokasi Apropriasi Belanja Surplus/Defisit xxx
xxx xxx

SKPD
Estimasi Pendapatan yg Dialokasikan Utang kepada BUD Piutang kepada BUD Allotment Belanja xxx xxx

xxx
xxx

Definition of Revenue

All receipts in the governments account know as Rekening Kas Umum Negara/Daerah which add Current Fund Equity which will become the governments right and will not be repaid.

Accounting for Revenue

Revenue is classified by sources and types Transfer: from other entities such as General Allocation Fund (DAU), shared revenues (DBH) Revenues: measured by azaz bruto. Cannot be compensated by expenditures needed to get that revenue

Revenue realization
Directly to the governments account (Disetor langsung ke BUD) Through Units treasury (bendahara penerimaan SKPD)