ACCOUNTING THEORY

STIE Dr. Mochtar Thalib

Curriculum Vitae

Name : Mahbub Junaedi Address : Cilangkap Rt. 005/03 Cipayung Jakarta Timur. Phone : 0811900371; 0813 177 86577 e-mail : mahbub@jmtlawhouse.com; junaedy2000@yahoo.com EDUCATION a. FE-UI Majoring in Accounting (1998) b. D-IV STAN Majoring in Accounting (2000) c. FHUI Majoring in Business Law d. S2 FHUI Majoring in International Trade Law WORKING EXPERIENCE a. Kabid Analisis Kerugian Industri Dalam Negeri Komite Anti Dumping Indonesia (2006) b. Indonesian Safeguard Committee Investigator c. Indonesian Anti Dumping Committee Investigator (2005-2009)

SAP
Kuliah 1 2 3 4 5 6 7 8 9-10 11-12 13-14 15 16 Pokok Bahasan Teori Akuntansi Sejarah Perkembangan Akuntansi Uraian Pengertian teori akuntansi & metodologi Sejarah Perkembangan Akuntansi

Konsep2 Pengukuran & Struktur Akuntansi Pengertian Konsep2 Pengukuran dan Struktur Akuntansi Kebijakan Akuntansi Sifat dan Tujuan Akuntansi Keuangan Income dalam Laporan Akt. Keuangan Reserves, Expenses, Gain & Loses UTS Aktiva Kewajiban Modal Perkembangan Akt. Untuk masa yad UAS/ UPS Sifat Aktiva dan Pengukurannya Konsep Kewajiban dan Pengukurannya Konsep Pemilik Modal (Owners Equity) Scope teori Aktsi di masa yad & Current Issues Kebijakan Akuntansi Pengertian Tentang Sifat & Tujuan Aktsi Keu. Pengertian & Teori Income dlm Lap. Akuntansi Keuangan

Ref.: Teori Akuntansi (Eldon S. Hendriksen / Ahmed R. Belkaoui

GRADING SCHEME
Alternative I Partisipasi/ Presentasi Paper Mid Test Final Exam Presensi Alternative II

: 20% : 20% : 25% : 30% : 5%

Introduction Brief Overview

Ideal Condition Intermediary Information Users Decision Asymmetry ----------------------Accounting Problem Reaction -----------------

------------------------------------------------------------------Complete and Perfect Information

Adverse Disclosure Selection

Rational Expectation Full in decision making

Value-Based IAI

FASB, IFAC,

Moral Hazard Income (self-interest)

Bonus/Compensation Hard Net package (use acc. procedure Debt covenants consistency)

Theory --- to explain

Accounting under Ideal Condition

1.

Objectives of Financial Reporting to provide useful financial information for decision making. the information shall be relevance and reliable (trade-off)
Relevance

Historical Cost Reliability

Contoh dalam Market Value Accounting: . current value accounting & current cost accounting (inflation accounting) high in relevance, poor in reliability. . historical cost relevance -- reliability

Teori Akuntansi Teori : suatu rangkaian gagasan (konsep), definisi, dan usulan yang saling berhubungan yang melambangkan suatu pandangan sistematis atas fenomena melalui penentuan hubungan yang ada diantara variabel-variabel dengan tujuan untuk menjelaskan dan meramalkan fenomena. Menurut E.S. Hendriksen, Teori Akuntansi adalah serangkaian prinsip2 yang luas yang (1) memberikan suatu kerangka referensi umum dimana praktik akuntansi dapat dievaluasi dan (2) memandu perkembangan dari praktik dan prosedur baru.

Accounting Theory Introduction and Methodology of Accounting

Approaches to (the development of) Accounting Theory . Tax Approach . Legal Approach . Ethical Approach . Economic Approach (Macro, Micro, and Corporate Social Acc.) . Behavioral Approach . Structural Approach 2. Classifying Accounting Theories . by its level (theory as language) : syntactic, semantic, pragmatic . by its reasoning (theory as reasoning): deductive, inductive . by its stance (theory as script): normative-prescriptive, positivedescriptive 3. Theory Verification establishing the acceptability, or the truth, of a theory.
1.

Accounting Theory Approaches to Accounting Theory

Question to Ask Tax Legal Ethical Economic : What is the tax situation? : What is required by law? Are there any specific regulations covering this industry? : What is the right thing to do? Is this fair presentation? : What effect will this accounting procedures have on the economy? What effect will this choice of accounting procedure have on shareholders? Is there full disclosure of the facts behind the procedure? What effect will this have on other stakeholders? : why does management want to make this choice? : Is there a specific rule covering this situation? What is the definition of revenue? What is GAAP? What are others doing in the industry?

Behavioral Structural

Tax Approach

Tax institution is not so much interested in measuring the income of a company as establishing a base for tax purposes. Income tax were important in bringing the average accounting practice up to the standards of the better companies at the time. Regrettably, Income tax rules have had adverse effects on accounting theory and principles in many areas. The tendency to accept income tax provisions as accepted accounting principles and practices is unfortunate. e.g.: (a) Any depreciation method acceptable for tax purposes is acceptable for accounting purposes also, regardless of whether or not it follows good accounting theory. (b) LIFO must be used for financial reporting purposes if it is used in the tax return.

Legal Approach

enough income necessarily implies separation and realization. The increase of the forests is not income until it is cut. The increase in the value of lands due to the growth and prosperity of the community is not income until it is realized. ..

for legal opinion purposes. e.g. sale be recognized when legal title passes.. Much case law involves the nature of income. it is of the essence of income that it should be realized. Potentiality is not

The FASB, in establishing a Conceptual Framework for accounting, investigated the use of law to establish accounting principles.

Ethical Approach

The ethical approach to accounting theory places emphasis on the concepts of justice, truth (in accordance with the fact~representational faithfulness), and fairness.

Ethical considerations have a pervasive influence on all of accounting.

Economic Approach

Accountants have long attempted to interpret accounting concepts in terms of economic concept (exploring the correspondence between economic interpretations and accounting data): (a) Macroeconomic Macroeconomic approach attempts to explain the effect of alternative reporting procedures on economic measurements and economic activities at a level broader than the firm, such as an industry or national economy. e.g. Sweden, do attempt to base accounting concepts and practices on macroeconomic goals, while most countries implement macroeconomic policies through monetary and fiscal policies and direct controls (b) Microeconomic A Microeconomic approach to accounting theory attempts to explain the effect of alternative reporting procedures on economic measurements and economic activities at the level of the firm. Modern accounting theory focuses on the enterprise as an economic entity with its main activities affecting the economy through its operations in markets. (c) Corporate Social Accounting The costs of environmental pollution, unemployment, unhealthful working conditions, and other social problems are not normally reported by a firm (microeconomic view of accounting does not necessarily encompass all the effects companies have on society).

Behavioral Approach

Behavioral theories attempt to measure and evaluate the economic, psychological, and sociological effects of alternative accounting procedures and reporting media. The behavioral approach to accounting theory has stimulated a search among both academic and practicing accountants for basic objectives of accounting and for answers to questions, such as: who are the users of published financial statements? what is the nature of the specific information wanted by the several user groups? can common needs be found for the presentation of generalpurpose statements or should specific needs be met?

Structural Approach
Focus on the structure of the accounting system itself. Accountants attempt to classify similar transactions similarly or, more formally, to seek consistency in recording and reporting transactions. AIA (1941) defined accounting as: Accounting is the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions, and events, which are in part, at least, of a financial character, and interpreting the results thereof.

Although broader definition of accounting are in vogue today, the process of Recording, Classifying, and Summarizing --- is the heart of accounting.

Accounting Theory Classifying Accounting Theories by its Level

1.

Theory as Language What effect will the words have on listeners? What meaning, if any, do the words have? Do the words make logical sense? Pragmatics is the study of the effect of language Semantics is the study of the meaning of language Syntactics is the study of the logic or grammar of the language.

2.

Theory as Reasoning a) deductive reasoning the form of theoretical debate/the arguments flow from generalizations to specifics: different objectives different structure different principles. e.g. Tax Accounting vs Financial Accounting b) inductive reasoning the form of theoretical debate/the arguments flow from specifics to generalizations. Accounting theory can be considered as empirical / rely on experience. In accounting, the generalizations = postulates

Theory as Reasoning

Accountants hope to deduce accounting principles that will provide a basis for concrete or practical applications. With the deductive method, practical applications and rules are deduced from the postulates and not from observing practices. With the inductive method, principles are induced from best current practice.

Accounting Theory Classifying Theories

Theory Descriptive or Prescriptive (positive vs normative) Reasoning Language -------------------------------------------------------------------------------------------------------1. 2.

Deduction (is it logically sound?) Induction (what evidence is there?)

1. Syntactics (what are the rule?) 2. Semantics (what does it mean?) 3. Pragmatics (what effect will it have?)

SEJARAH PERKEMBANGAN AKUNTANSI

4.000 Years of Accounting The Renaissance Accountings Antecedents The Age of Stagnation The Rise of the Profession The Future of Accounting The Renaissance The earliest double-entry bookkeeping systems are found in Northern Italy and date back to 14th century. Brother Lucas Pacioli codified these systems in an appendix to a book published in Venice in 1494. Accountings Antecedents Accounting flowered in a soil made rich by centuries of learning, trade with the East, inventions like the lateen sail, printing, and a new number system. Much of this was brought to Europe from China and India by Arab Scholars.

SEJARAH PERKEMBANGAN AKUNTANSI

The Age of Stagnation Relatively few developments occurred in accounting in the next several centuries. This period was marked by great explorations such as that of the Americas by Columbus and by the onset of Industrial Revolution The Rise of the Profession Accounting Professionals began making their appearance in the late 18th century. The English and Welsh Institute of Chartered Accountants was founded in 1880. the American Institute followed in 1887. The Future of Accounting Accounting developed in response to upheavals in the environment, new discoveries, and technological advances. There is no reason to believe that accounting will not continue to evolve in response to changes that we are experiencing in our times.

SEJARAH PERKEMBANGAN AKUNTANSI

1.

2.

Evolusi Pembukuan Pencatatan Berpasangan Sejarah Awal Akuntansi Kontribusi Luca Pacioli Perkembangan Pembukuan Pencatatan Berpasangan Relevansi Sejarah Akuntansi

Scott , Goethe, Cayley -- Apakah Profesi Akuntansi adalah Profesi yang Terhormat? dikaitkan dengan fungsinya sebagai: Alat pertanggungjawaban Alat untuk mencegah terjadinya fraud (kecurangan) Alat untuk membantu dalam pengambilan keputusan (industri, dunia usaha, pemerintah, manajer bisnis, dll.)

EXERCISE I
What is the Conceptual Framework for Accounting / financial reporting - under IFRS & PSAK? What is the purpose and status of the conceptual framework - under IFRS & PSAK? What is the scope of the conceptual framework - under IFRS & PSAK? What is the objective of financial reporting - under IFRS & PSAK? What is the qualitative characteristics of useful financial information - under IFRS & PSAK? Gambarkan dalam bentuk flow chart Accounting Cycle Sebutkan jenis-jenis Laporan Keuangan yang utama menurut IFRS/ PSAK! Sebutkan dan Jelaskan unsur-unsur Laporan Posisi Keuangan menurut PSAK dan IFRS?

1.

2.

3.

4. 5.

6. 7.

8.

A Conceptual Framework For Accounting

Economic Entity

IMPLEMENTATION GUIDELINES Recognition Measurement Reporting

Going Concern

FUNDAMENTAL CONCEPTS Accrual Accounting

Qualitative Characteristics of Accounting Information Elements of Financial Statements

Arms Length Transaction

OBJECTIVES Information for Decision Making

Accounting Periods

Stable Monetary Unit

1. Objectives of Financial Reporting

Overall Objective: Provide useful information for decision making Primary Objectives: Provide information: a) for assessing cash flow prospects b) about financial condition c) about performance and earnings d) about how funds are obtained and used Additional Objectives: Provide information: a) that allows managers to make decisions in the best interest of owners b) that allows owners to assess managements performance c) as explanations and interpretations to help users understand the financial information provided.

Information Spectrum

261-26

Hierarchy of Accounting Information Qualities

2. Fundamental Concepts
A.

Qualitative Characteristics of Accounting Information 1. Overriding quality decision usefulness 2. Primary qualities a) Relevance .predictive value .feedback value .timeliness b) Reliability )verifiability )neutrality )representational faithfulness 3. Secondary Qualities a) Comparability b) Consistency 4. Constraints a) Cost effectiveness (pervasive constraint) b) Materiality (recognition threshold) c) Conservatism (healthy skepticism)

2. Fundamental Concepts
B.

Elements of Financial Statements 1. Assets 2. Liabilities 3. Equity 4. Investments by owners 5. Distribution to owners 6. Comprehensive income 7. Revenues 8. Expenses 9. Gains 10. Losses

3. Implementation Guidelines
A.

Recognition Criteria 1) Definition 2) Measurability

3) Relevance 4) Reliability

B.

Measurement Attributes 1) Historical Cost 4) Net Realizable Value 2) Current Replacement Cost 5) Present (or discounted) value 3) Current Market Value Financial Reporting 1) Full Disclosure 2) Set of general-purpose financial statements a. Financial position b. Earnings (net income or loss) c. Comprehensive income d. Cash flows e. Investments by and distributions to owners

C.

4. Traditional Assumptions of Accounting Model Economic Entity Going Concern Arms-Length Transaction Stable Monetary Unit Accounting Periods Accrual Accounting

a)

b)

c)

d)

e)

f)

Karakteristik Umum Laporan Keuangan

Review of The Accounting Process

SUMMARY OF DOUBLE-ENTRY ACCOUNTING

1. 2.

3.

4.

5.

6. 7.

Assets are always increased by debits and decreased by credits Liability and owners equity accounts are always increased by credits and decreased by debits. Owners equity for a corporation includes capital stock accounts and the retained earnings account. Revenues, expenses, and dividends relate to owners equity through the retained earnings account. Expenses and dividends are increased by debits and decreased by credits. Revenues are increased by credits and decreased by credits. The difference between total revenues and total expenses for a period is net income (loss), which increases (decreases) owners equity through Retained Earnings.

Debit and Credit Relationships of Accounts