Financial Accounting Class

By: Dr. Erman A Sumirat

Difference between financial and managerial accounting:

 Financial Accounting = For external use
 Managerial Accounting = For internal use such as making procurement decisions,
expansions, monitoring cost (labor wages, production cost, maintenance, etc),
profitability analysis, taxation.

Depends on where said company resides, it must follow the local accounting standard. Such
as
International Finance Reporting Standard = If resides in Europe
US GAAP (generally accepted accounting standards)= If said company resides in USA
Indonesian Accounting Standard (including tax) = If said company resides in Indonesia

All financial report must be audited which could have 4 opinion:

1. Unqualified Opinion
Statements fairly present the company positions or result
2. Qualified Opinion
Everything is fine except for
3. Adverse Opinion
Statement don’t fairly present the company position or result
4. Disclaimer of opinion
Accountant couldn’t give any opinion since there are not enough evidence, data or
any such things that would be needed to proof such transaction ever take place at all.
Examples of such proofs are : property certificate (SHM), receipts, transfer records,
notary legal documents.

There are several financial reports / statements existed:

1. Cash flow
Report that consist inflow and outflow of company cash. Here you can see the surplus
or deficit.
2. Equity statement
Report that consists of company financial standing & identify their sources of
financing. Here we can also see whether the company is borrowing a lot of funds or
self-reliant.
3. Balance sheet
A statement that shows your assets, liability, capital, investments, inventory,
receivable (piutang)

Assets = Liability + Equity (liability + equity are a balancing factor to assets)

Liability and Equity are the sources for funding your assets.

Assets = How Much ?

Funding ?
How to monetize the asset ? (make it productive)
Liability = Must be paid at agreed time / mandatory.

If anything should happen, any assets should be use to cover or pay the liability first
then the rest would be owned by the share holders
4. QML (profit loss)
Is a statement where we can see the company reenues, expenses in a given period of
time, usually fiscal quarter or year.