CBM FINANCIAL MANAGEMENT

Understanding Financial Statements

Mely Simpony, MBA
8 Mei 2018
 Objectives
• Intelligent users of accounting information

• Be comfortable looking through an annual report

• Able to use financial statements to assess a

company’s performance

• Have a sense of the limitations of financial data

2
 Comparing Financial Accounting and
Management Accounting
Financial Accounting Management Accounting
Provide information about the Provide information for
Purpose financial position and planning, evaluating, and
performance of the company. rewarding performance.
Balance sheet, income
Types of
statement, and statement of Various, non-standard reports.
Reports
cash flows.
Standards GAAP / PSAK - IFRS None
Reporting Usually the company taken A component of the
Entity as a whole. company's value chain.
Time
yearly, quarterly, or monthly Any period.
Periods
Investors, creditors, and other Management, customers, and
Users
external parties. others in the value chain.
3
 The Annual Report
• Management Letter
– Management discussion on developments during the year and
current state of the company

• Financial Statements
– Balance Sheet / Statement of Financial Position, Income
Statement, Statements of Changes in Stockholders’ Equity, Cash-
flow, Notes to Financial Statement.

• Auditor’s Report
4
 Some Principles
• Going concern
• Accruals – Revenue Recognition
• Matching
• Consistent
• Prudence (avoid overstatement)
• Materiality

5
Persamaan Akuntansi (Accounting Equation)
“Two Views of the Same Business”

Luca Pacioli (1445 - 1517)

Aset = Liabilitas + Ekuitas

(Assets) (Liabilities) (Owner’s Equity)
- Economic Entity
- Accrual Basis
- Dual Aspect  debit & credit
Expansion of Accounting Equation

7
Transactions
Question: Are the following events recorded in the accounting records?

Supplies are An employee Dividends are

Event
purchased on is hired. paid to
account. stockholders’.

Criterion Is the financial position (assets, liabilities, or

stockholders’ equity) of the company changed?

Record/ Don’t
Record
Transactions (1)
Transactions are a business’s economic events recorded by
accountants.

May be external or internal.

Change the financial position of the business.

Each transaction has a dual effect on the accounting

equation.
 Transactions (Problem)
Barone’s Repair Shop was started on May. Prepare a tabular analysis of the
following transactions for the month of May.

1. Stockholders invested $10,000 cash to start the repair shop.

Assets Liabilities Stockholders’ Equity

Accounts Accounts Common
Cash + Receivable + Equipment = Payable + Stock
1. +10,000 +10,000 Investment
 Transactions (Problem)
2. Purchased equipment for $5,000 cash.

Assets Liabilities Stockholders’ Equity

Accounts Accounts Common
Cash + Receivable + Equipment = Payable + Stock
1. +10,000 +10,000 Investment
2. -5,000 +5,000
 Transactions (Problem)
3. Paid $400 cash for May office rent.

Assets Liabilities Stockholders’ Equity

Accounts Accounts Common Retained
Cash + Receivable + Equipment = Payable + Stock + Earnings
1. +10,000 +10,000
2. -5,000 +5,000
3. -400 -400
Expense
 Transactions (Problem)
4. Received $5,100 from customers for repair service.

Assets Liabilities Stockholders’ Equity

Accounts Accounts Common Retained
Cash + Receivable + Equipment = Payable + Stock + Earnings
1. +10,000 +10,000
2. -5,000 +5,000
3. -400 -400
4. +5,100 +5,100
Revenue
 Transactions (Problem)
5. Paid dividends of $1,000 cash.

Assets Liabilities Stockholders’ Equity

Accounts Accounts Common Retained
Cash + Receivable + Equipment = Payable + Stock + Earnings
1. +10,000 +10,000
2. -5,000 +5,000
3. -400 -400
4. +5,100 +5,100
5. -1,000 -1,000
 Transactions (Problem)
6. Paid part-time employee salaries of $2,000.

Assets Liabilities Stockholders’ Equity

Accounts Accounts Common Retained
Cash + Receivable + Equipment = Payable + Stock + Earnings
1. +10,000 +10,000
2. -5,000 +5,000
3. -400 -400
4. +5,100 +5,100
5. -1,000 -1,000
6. -2,000 -2,000
Expense
 Transactions (Problem)
7. Incurred $250 of advertising costs, on account.

Assets Liabilities Stockholders’ Equity

Accounts Accounts Common Retained
Cash + Receivable + Equipment = Payable + Stock + Earnings
1. +10,000 +10,000
2. -5,000 +5,000
3. -400 -400
4. +5,100 +5,100
5. -1,000 -1,000
6. -2,000 -2,000
7. +250 -250
Expense
 Transactions (Problem)
8. Provided repair services on account to customers $750.
Assets Liabilities Stockholders’ Equity
Accounts Accounts Common Retained
Cash + Receivable + Equipment = Payable + Stock + Earnings
1. +10,000 +10,000
2. -5,000 +5,000
3. -400 -400
4. +5,100 +5,100
5. -1,000 -1,000
6. -2,000 -2,000
7. +250 -250
8. +750 +750
Revenue
 Transactions (Problem)
9. Collected $120 cash for services previously billed.

Assets Liabilities Stockholders’ Equity

Accounts Accounts Common Retained
Cash + Receivable + Equipment = Payable + Stock + Earnings
1. +10,000 +10,000
2. -5,000 +5,000
3. -400 -400
4. +5,100 +5,100
5. -1,000 -1,000
6. -2,000 -2,000
7. +250 -250
8. +750 +750
9. +120 -120
6,820 + 630 + 5,000 = 250 + 10,000 + 2,200
Financial Statements
Income Statement

Barone’s Repair Shop

Reports the revenues and expenses
for a specific period of time.
Income Statement
For the Month Ended May 31, 2007 Net income – revenues exceed
expenses.
Revenues:
Service revenue $ 5,850
4 Net loss – expenses exceed
8
revenues.
Expenses:
Salary expense 2,000 6
Rent expense 400 3
Advertising expense 250 7
Total expenses 2,650
Net income $ 3,200
Financial Statements
Statement of Changes
Income Statement
Baron's Repair Shop
Barone’s Repair Shop Statement of Changes Equity
Income Statement For the Month
Statement of Ended
ChangesMay 31, 2007
Equity

For the Month Ended May 31, 2007 Retained

Capital Earnings Total
Revenues: Balance May 1 0 0
Paid up 10,000 10,000
Service revenue $ 5,850 Net Income 3,200 3,200
5
Expenses: Dividends (1,000) (1,000)
Balance May 31 10,000 2,200 12,200
Salary expense 2,000
Rent expense 400
Advertising expense 250 Net income is needed to determine
Total expenses 2,650 the ending balance in retained
Net income $ 3,200 earnings.
Financial Statements
Retained Earnings
Statement
Statement indicates the reasons Baron's Repair Shop
Statement of Changes Equity
why retained earnings has increased
For the Month Ended May 31, 2007
or decreased during the period.
Retained
Capital Earnings Total
Balance May 1 0 0
Paid up 10,000 10,000
Net Income 3,200 3,200
5 Dividends (1,000) (1,000)
Balance May 31 10,000 2,200 12,200
Financial Statements
Balance Sheet Retained Earnings
Barone’s Repair Shop 1 Statement
2
Balance Sheet 3 Baron's Repair Shop
May 31, 2007 4 Statement of Changes Equity
5 For the Month Ended May 31, 2007
Assets 6
Cash $ 6,820 9 Retained
Accounts receivable 630 8 Capital Earnings Total
Balance May 1 0 0
Equipment 5,000 2 Paid up 10,000 10,000
Total assets $ 12,450 Net Income 3,200 3,200
5 Dividends (1,000) (1,000)
Liabilities Balance May 31 10,000 2,200 12,200
Accounts payable $ 250 7
Stockholders' Equity
1
Common stock 10,000
Retained earnings 2,200
The ending balance in retained earnings is
needed in preparing the balance sheet.
Total liab. & equity $ 12,450
Financial Statements
Balance Sheet
Barone’s Repair Shop 1 Reports the assets, liabilities, and
2 stockholders’ equity at a specific
Balance Sheet 3
May 31, 2007 4 date.
5
Assets 6 Assets listed at the top, followed by
Cash $ 6,820 9 liabilities and stockholders’ equity.
Accounts receivable 630 8
2
Total assets must equal total
Equipment 5,000
liabilities and stockholders’ equity.
Total assets $ 12,450
Liabilities
Accounts payable $ 250 7
Stockholders' Equity
Common stock 10,000 1
Retained earnings 2,200
Total liab. & equity $ 12,450
 Financial Statements
Balance Sheet Statement of Cash Flows
Barone’s Repair Shop
Barone’s Repair Shop
Balance Sheet Statement of Cash Flows
May 31, 2007 For the Month Ended May 31, 2007
Assets Cash flow from Operations
Cash $ 6,820 Cash receipts from customers $ 5,220 4 9
Cash paid for expenses (2,400) 3 6
Accounts receivable 630
Cash provided by operations 2,820
Equipment 5,000 Cash flow from Investing
Total assets $ 12,450 Purchase of equipment (5,000) 2
Liabilities Cash flow from Financing
Investment by owners 10,000 1
Accounts payable $ 250
Drawings by owners (1,000) 5
Stockholders' Equity
Cash provided by financing 9,000
Common stock 10,000 Net increase in cash 6,820
Retained earnings 2,200 Cash balance, May 1 -
Total liab. & equity $ 12,450 Cash balance, May 31 $ 6,820
Income Statement (Statement of Comprehensive Income)
Laporan Laba Rugi/Laporan Laba Rugi Komprehensive

Balance Sheet /St of Financial Position Laporan

Neraca/Laporan Posisi Keuangan
Keuangan
Statement of Cash Flows
(Laporan Arus Kas)

Statement of Changes in Owners’ Equity

(Laporan Perubahan Ekuitas)

Notes to Financial Statements

(Catatan atas Laporan Keuangan)
Neraca/ Laporan Posisi Keuangan
Laba Rugi Komprehensif Laba Rugi Komprehensif Laba Rugi Komprehensif Laba Rugi Komprehensif
(laporan laba Rugi) (laporan laba Rugi) (laporan laba Rugi) (laporan laba Rugi)

Laporan Arus Laporan Arus Laporan Arus Laporan Arus

Kas Kas Kas Kas

31 Maret 30 Juni 30 Sept 31 Dec

2012 2012 2012 2012
 The Need for Adequate Disclosure
Balance Sheet

Income Statement

Statement of Cash Flows Notes to the

financial statements
often provide facts
necessary for the
proper interpretation
of the statements.
27
 Akrual
• Upaya untuk mengukur kinerja tanpa memperhatikan kapan serah terima secara tunai
• Pengakuan Pendapatan
- ketika secara signifikan sudah selesai
- penagihan kas dapat dijustifikasi

• Prinsip Matching
– Match antara usaha dan manfaat (arus kas >< pendapatan)
– Capex (pengeluaran modal) bermanfaat dimasa yad, dibiayakan ketika manfaat
terealisasi
– Pengakuan liabilitas ketika usaha yang bermanfaat bagi periode sekarang memerlukan
pembayaran dimasa yad
technical bankruptcy 1 : run out of cash
cash flow statements
real cash balance sheet
uses of fund sources of fund

assets liabilities
current assets current liabilities
• cash long term liabilities
• account receivables
• inventory
equity
fixed assets
paid in capital
• accumulated depreciation
retained earnings

accrual
income statements
technical bankruptcy 2 : negative equity
IFRS (International Financial Reporting Standard)
Financial Statements

• Balance Sheet Statement of Financial Position

• Income Statement Statement of Comprehensive Income
• Statement of Retained Earnings Statement of Changes of Equity
• Statement of Cash Flows Statement of Cash Flows
• Notes to Financial Statement Notes to Financial Statement
 IFRS
“The move to IFRS is not so much about the
accounting but about the economics of shrinking
world”

Sir David Tweedie (June 4, 2009), www.cpa2biz.com

 business decisions
finance
investment
decisions

operational financing
decisions decisions

recording
accounting