Introduction to Accounting 1

Instructor Introduction

• Name: Nofri Sohardianto
• Course: Introduction to Accounting 1
• Suggestion: Read the textbook and practice exercises before/during/after the lecture.

What is Accounting?

• Definition: Accounting is a system that provides financial information about a business.
• Key Concepts:
  • System: Every system has three components:
    1. Input
    2. Process
    3. Output (in this case, financial information)
  • Financial Information: Focus on financial aspects, not customer satisfaction or employee happiness.
  • Business: Accounting is specifically related to organizations (not societies or groups).

Types of Businesses

1. Manufacturing Business: Transforms raw materials into finished goods.
   • Examples: Coca-Cola, Samsung, Nike
2. Merchandising Business: Buys inventory and sells goods.
   • Examples: Indomaret, Alfamart, Matahari
3. Service Business: Provides services rather than goods.
   • Examples: Garuda Indonesia, Kereta Api Indonesia, Bank Mandiri

Forms of Business Organization

1. Proprietorship: Owned by one individual (e.g., small family business).
2. Partnership: Owned by two or more individuals.
3. Corporation: Owned by multiple shareholders, with shared capital.

Business Stakeholders

• Internal Stakeholders: Owners, managers who need information to run the business.
• External Stakeholders: Creditors, government agencies needing information about the business's financial health.

Importance of Financial Information

• Owners need performance insights to make informed decisions.
• Creditors assess creditworthiness and repayment ability.
• Financial information is essential for effective decision-making (e.g., hiring, purchasing inventory).

Accounting Process

• Input: Transactions that change the financial position of a company.
• Process: Analyzing, recording, and summarizing transactions to provide relevant financial information.
• Output: Financial statements such as:
  1. Income Statement
  2. Statement of Owner's Equity
  3. Balance Sheet
  4. Statement of Cash Flows (not covered in this course)

Key Accounting Concepts

• Transactions: Events that impact the financial position, such as sales, purchases, and payments.
• Accounts: Units of information that categorize financial data (e.g., assets, liabilities, equity).
• Accounting Equation: Assets = Liabilities + Owner's Equity.
• Business Entity Concept: Accounting focuses only on business transactions, not personal finances of the owner.

Financial Statements Overview

1. Income Statement: Shows revenues, expenses, and net profit for a specific period.
2. Statement of Owner's Equity: Reports changes in equity, including capital contributions and withdrawals.
3. Balance Sheet: Displays assets, liabilities, and owner's equity at a specific point in time.
4. Statement of Cash Flows: Details cash usage (not covered this semester).

Final Notes

• Engage in self-study and practice exercises after the lecture.
• Ask questions if needed; communication encouraged.
• Importance of understanding the basic principles of accounting as a foundational skill.