Estimating Transactions Given Balance Sheets and an Income Statement

2000 ◽  
Vol 15 (3) ◽  
pp. 393-411 ◽  
Author(s):  
Anil Arya ◽  
John C. Fellingham ◽  
Douglas A. Schroeder
Keyword(s):  
Linear Algebra ◽  
Directed Graph ◽  
Traditional Approach ◽  
Financial Statements ◽  
Graph Representation ◽  
Accounting System ◽  
Balance Sheets ◽  
Systematic Fashion ◽  
Income Statement ◽  
Double Entry

One way to develop an appreciation for the power and beauty of doubleentry is to derive consistent transaction vectors, i.e., start with financial statements and derive the transaction amounts that could have generated the statements. Working backward to uncover transactions (the inverting exercise) complements the more traditional approach of working forward from transactions to financial statements. In addition, the approach highlights a fundamental accounting activity: aggregation. Financial statements summarize a firm's transactions using only a relatively small number of account balances. A consequence of aggregation is that there are infinite consistent transaction vectors. However, because these infinite solutions are all prepared in accordance with double-entry, they are linked to each other in a systematic fashion. We show how a directed graph representation of the accounting system can be used as a parsimonious means of characterizing all consistent transaction vectors. As the number of accounts and transactions are increased, the inverting exercise becomes tedious if one does not make use of the directed graph. To emphasize this point, the inverting exercise is conducted using a set of published financial statements. We also discuss the issue of picking the most likely transaction vector from the set of consistent transaction vectors. The authors have used this note in undergraduate, M.B.A., and Ph.D. classes. For the Ph.D. class, the note has been supplemented by the more rigorous analyses in the linear algebra literature and the accounting literature.

Horse Vet, LLC: Transaction Analysis and Statement of Cash Flows Preparation (Option 1)

2017 ◽  
pp. 1-12
Author(s):  
Mark E. Haskins
Keyword(s):  
Financial Reporting ◽  
Balance Sheet ◽  
Financial Statements ◽  
Cash Flows ◽  
Financial Statement ◽  
Balance Sheets ◽  
Income Statement ◽  
Transaction Analysis ◽  
Business Events ◽  
Statement Of Cash Flows

This case pertains to the foundational underpinnings of the accounting process and the statement of cash flows. In Part I, students are presented with 23 business events that they must evaluate for recording in the financial records. Part II requires students to prepare a 2012 statement of cash flows using the information presented in the company's 2011 and 2012 year-end balance sheets along with its 2012 income statement. In Part III, students must rely on a 2011 balance sheet and a 2011 statement of cash flows to work backward to derive the 2010 year-end balance sheet. There are two versions of this case: Option 1 and Option 2. The Option 2 case is a bit more challenging than the Option 1 case. Instructors should use Option 2 if they feel students are well grounded in their understanding of financial statement relationships and the customary financial reporting of a typical set of business events. Both cases reinforce students' learning related to the accounting process and the connectivity between the financial statements. Please note that only one version of the case should be used due to the existence of some overlap between the two.

Dog Concierges, LLC: Transaction Analysis and Statement of Cash Flows Preparation

2017 ◽  
pp. 1-9
Author(s):  
Mark E. Haskins
Keyword(s):  
Balance Sheet ◽  
Financial Statements ◽  
Cash Flows ◽  
Balance Sheets ◽  
Income Statement ◽  
Transaction Analysis ◽  
Business Events ◽  
Statement Of Cash Flows

This case is appropriate in a MBA module for the accounting process and is also an excellent exam case. It provides a diagram of the three basic financial statements (balance sheet, income statement, and statement of cash flows) used to capture, codify, and communicate the effects of a series of typical business events. The case also gives students the opportunity to prepare a simple statement of cash flows using two sequential balance sheets and to work backward from a balance sheet and statement of cash flows to craft the beginning of the year's balance sheet.

scholarly journals From Accountability to Readability in the Public Sector: Evidence from Italian Universities

2017 ◽  
Vol 12 (3) ◽  
pp. 27
Author(s):  
Alessandra Allini ◽  
Luca Ferri ◽  
Marco Maffei ◽  
Annamaria Zampella
Keyword(s):  
Public Sector ◽  
Financial Statements ◽  
Accounting System ◽  
Accrual Accounting ◽  
Accounting Systems ◽  
Balance Sheets ◽  
The Public ◽  
The Past ◽  
Italian Government ◽  
Final Sample

This paper aims to explore the readability of the disclosure provided by Italian universities that changed their accounting systems to accrual accounting over the past three years. The transition from cash to accrual accounting not only concerns financial statements, but also the related notes. Indeed, the Italian government has paid great attention to the narrative sections of reports due to their capacity to provide more transparency. To provide better accountability, financial statements must be readable for all stakeholders. We used two different indexes, namely the Gunning fog and GULPEase indexes. The analysis was conducted on a sample of universities to analyze the narrative sections of the first financial statements prepared according to the new accounting system in 2012–2014. The final sample comprised 32 Italian universities. The research results demonstrated low readability in the balance sheets of Italian universities after switching to accrual accounting, illustrating an unsatisfactory level of accountability.

scholarly journals THE INFLUENCE OF A DIFFERENT ACCOUNTING SYSTEM ON INFORMATIVE VALUE OF SELECTED FINANCIAL RATIOS

2012 ◽  
Vol 18 (1) ◽  
pp. 149-163 ◽  
Author(s):  
Olga Malíková ◽  
Zdeněk Brabec
Keyword(s):  
Financial Markets ◽  
Financial Analysis ◽  
Financial Statements ◽  
Financial Ratios ◽  
Accounting System ◽  
Balance Sheets ◽  
Investment Opportunities ◽  
Optimal Efficiency ◽  
Global World ◽  
The Impact

In recent global world the importance of financial markets is growing as well as the amount of capital distributed through these markets. To enable optimal efficiency of these markets the best investment opportunities has to be chosen. An alternative how to compare and select suitable companies to invest in is represented by a financial analysis of financial statements. The results of financial ratios are mainly influenced by the presumptions according to those the financial statements have been prepared. Therefore, in this article there is analysed if and eventually how significant the input data, influence the results of financial ratios. Firstly, the description of financial ratios that are used in following analysis is made. After that, there are analysed the requirements of Czech legislation and IAS/IFRS and their influence on financial statements. Then, the influence of five selected accounting transaction on balance sheets and income statements that are prepared once according to the Czech legislation and for the second time according to the IAS/IFRS is analysed. The final part tries to examine if and how strong the impact of different accounting system on the results of the selected financial ratios is.

MICROENTERPRISES AS AN OBJECT OF ACCOUNTING

2016 ◽  
Vol 11 (3) ◽  
pp. 100-106
Author(s):  
Крупинова ◽  
Ekaterina Krupinova
Keyword(s):  
Economic Activity ◽  
Financial Statements ◽  
Accounting System ◽  
Federal Law ◽  
Distinctive Features ◽  
Special Character ◽  
The Russian Federation ◽  
Double Entry ◽  
Qualitative Characteristics ◽  
Micro Enterprises

With the Federal Law № 209-FZ of 24.07.2007 “On Development of small and medium-sized enterprises in the Russian Federation” coming into force, a number of legal entities and persons have acquired a new institutional status - microenterpises. Current legislation does not distinguish the microenterprise as a separate type of small and medium-sized enterprise, but in fact, classifies it within the small-sized entrepreneurship. Such approach happens to overlook the essential distinctive features of microenterprise, in particular putting them out of scope of consideration when the simplified accounting and reporting protocols are drafted. According to the results of the study a system of qualitative characteristics of financial and economic activity of micro-enterprises was developed, which implies separation of specific characteristics of the microbusiness into three groups: personal basis, operating specifics, special impact of external factors. As a special character of microbusiness in the accounting and reporting was to maintain of accounting records for a simple system without the use of double-entry, and on the basis of data, obtained through a simple recording, create simplified forms of accounting financial statements. A concept of a simple accounting system was developed, which allows to organize the accounting of microenterprises, taking into account the qualitative characteristics of financial and economic activity. In view of the specific features of microbusiness, it is recommended to allocate microenterpises as a separate category of micro-small and medium-sized business. The results of this study can be taken into account in the design and implementation of targeted state support measures, including those which are aimed to reducing the administrative burden on micro-enterprises in connection with the duty to keep accounting records and submit financial statements accounting.

scholarly journals Impact of the IFRS Adoption on Financial Assets and Liabilities. Empirical Evidence from Bucharest Stock Exchange

2015 ◽  
Vol 8 (2) ◽  
pp. 69-90
Author(s):  
Maria Carmen Huian
Keyword(s):  
Stock Exchange ◽  
Balance Sheet ◽  
Financial Statements ◽  
Accounting System ◽  
Financial Assets ◽  
Ifrs Adoption ◽  
Income Statement ◽  
Before And After ◽  
The Individual ◽  
The Impact

AbstractThe aim of this paper is to study the impact of the transition to IFRS on financial assets and liabilities reported by non-financial companies listed on the Bucharest Stock Exchange. It uses data from the individual financial statements for the comparative year 2011, prepared under both Romanian accounting standards (RAS) and IFRS. Through a set of financial ratios involving information from balance sheet, income statement and cash flow statement, we study how the IFRS adoption affected financial assets and liabilities. We also test the empirical correlation between profitability (measured by ROE) and financial assets/ liabilities before and after the transition to IFRS. We find that financial instruments are very little affected by the change in the accounting system. However, the association between ROE and financial assets/ liabilities is of greater intensity for the IFRS data.

scholarly journals IMPLEMENTATION OF GOVERNMENT FINANCIAL INFORMATION SYSTEMS TOWARD LOCAL GOVERNMENT FINANCIAL STATEMENTS: CASE STUDY IN DELI SERDANG, INDONESIA

2021 ◽  
Vol IV (2) ◽  
pp. 98-106
Author(s):  
Fitri Yani Panggabean ◽  
Keyword(s):  
Local Government ◽  
Financial Management ◽  
Local Governments ◽  
Government Regulation ◽  
Financial Statements ◽  
Financial Accounting ◽  
Financial Statement ◽  
Accounting System ◽  
Accounting Systems ◽  
Balance Sheets

This paper aims to determine how the application of government financial accounting systems for financial statements government in the Deli Serdang district. The autonomy that has been carried out since 1999 in Indonesia refers to Law number 32 of 2004, which has been revised. Thus, local governments are given the authority to manage finances independently. The use of finance must be carried out accountably and transparently. The study was conducted in the Deli Serdang regency government – Indonesia, with descriptive qualitative research. The data were obtained primarily by the documentation technique, which is a regional financial statement document for two years, a central and local government regulation document. The results showed that; 1) preparation of financial statements, the Deli Serdang regency government has implemented a financial accounting system with inadequate equipment such as an uncomputerized system that has delayed financial statements; 2) delays in financial statements are also caused by unskilled human resources and a bit number of employees for the application of government financial accounting systems; 3) financial statements at the end of the year found that the calculation of the budget, calculation of the budget memorandum, cash flow, and balance sheets are in accordance. However, it is constrained by the unavailability of data comparisons with the previous year; and 4) the structure of government financial management organizations in the form of a direct line, in which leaders and employees have direct responsibility regarding their duties. This can facilitate the coordination of supervisors for the better.

scholarly journals Analysis of Accounting System Formulation for SMEs Based on SAK EMKM

2020 ◽  
Author(s):  
Suparti . ◽  
Dudung Ma’ruf Nuris ◽  
Sunaryanto . ◽  
Bety Nur Achadiyah
Keyword(s):  
Data Collection ◽  
Qualitative Data ◽  
Financial Statements ◽  
National Standards ◽  
Accounting System ◽  
Accounting Systems ◽  
Balance Sheets ◽  
Financial Position ◽  
Qualitative Data Collection

SMEs has become the backbone of the Indonesian economy. This study aims to describe the current condition of SMEs and the constraints faced by these businesses. This research is qualitative. Data collection was carried out by interview, observation and documentation to Putri Srikandi SMEs. The results showed that the majority of these SMEs do not have accounting systems that comply with national standards. The accounting system required consists of classifying account numbers, initial balance sheets, journals, ledgers, financial statements consisting of financial position reports, income statements and notes to financial statements referring to SAK EMKM. Keywords: accounting system, SMEs, SAK EMKM

scholarly journals Analisis Tingkat Kesehatan LPD Metode Capital, Assets, Management, Earning dan Liquidity LPD Desa Baluk Negara Periode 2016-2018

Widya Amrita ◽  
2021 ◽  
Vol 1 (1) ◽  
pp. 265-274
Author(s):  
Ni Komang Indah Permatasari ◽  
Made Dian Putri Agustina
Keyword(s):  
Financial Institution ◽  
Balance Sheet ◽  
Good Health ◽  
Financial Statements ◽  
Balance Sheets ◽  
Capital Assets ◽  
Income Statement ◽  
Improved Performance ◽  
The Village ◽  
Assets Management

The Village Credit Institution (LPD) is a financial institution belonging to the Pakraman village that has developed, providing social, economic and cultural benefits to its citizens, so it needs to be fostered, improved performance and preserved. The purpose of this study was to determine the level of LPD health using the method of capital, assets, management, earning and liquidity in the LPD at Baluk Village, Negara District for the period 2016-2018. The object of research is the LPD financial statements, especially the balance sheet and income statement at the Pakraman Baluk Village LPD. The population in this study is the financial statements of the LPD Desa Baluk from 2016 to 2018. The sample used in this study is the financial statements which include balance sheets and income statements for the last 3 years, namely 2016, 2017, and 2018. The results of this study indicate that the CAMEL value of the Pakraman Baluk Village LPD in 2016, 2017 and 2018 the health level of the Pakraman Baluk Village LPD is in good health. The suggestion in this research is to create new innovations, for example by making a lucky draw for customers.

scholarly journals ANALISIS KOREKSI FISKAL DALAM RANGKA PERHITUNGAN PPH BADAN PADA PT. BANK PERKREDITAN RAKYAT NUSA UTARA

2016 ◽  
Vol 11 (1) ◽  
Author(s):  
Brilliant Joy Leonardo Kalangie ◽  
Grace B. Nangoi ◽  
Inggriani Elim
Keyword(s):  
Income Tax ◽  
Accounting Standards ◽  
Financial Statements ◽  
Financial Accounting ◽  
Special Treatment ◽  
Tax Law ◽  
Accounting System ◽  
Income Loss ◽  
Taxable Income ◽  
Income Statement

The income statement is something that is very important in the financial statements. In the income statement presents income (revenue), costs (expenses) and income (profit / losses) a company within a certain time period or periods. Income statement itself is also a financial statement must be derived from the accounting system, both made in accordance with provisions in the Law - Tax Law as well as those in charge based financial Accounting Standards (GAAP). Basically, both of these things (Law - Tax Law and the Financial Accounting Standards) regulate the same thing that is about how much the amount of the charge to the consumer. However, the fiscal correction, we can find something different. This difference is what happens when the accounting of income in measuring too low and unnatural because of special treatment that favor the occurrence of this. Fiscal correction itself is a correction or adjustment must be done before calculating the taxpayer's income tax for corporate taxpayers and tax personal use of accounting in calculating taxable income. The aim of this study was to determine the fiscal correction is done by PT. Rural Bank Nusa North in order calculating corporate income tax. This study took place at the office of PT. Rural Bank Nusa North. The company is located at Jl. Nusantara No. 98 Complex Bersehati Market Manado. The object of this study is the income / loss of PT. Rural Bank Nusa North. This study uses descriptive qualitative research because in practice, such as data, analysis and interpretation of the meaning and the data obtained. In this study, the author will study the financial statements of the profit-rui in 2013 and 3014 were obtained from the company. Then analyzed whether fiscal reconciliation process made are correct and in accordance with regulations Regulations - Tax regulations prevailing in Indonesia at this time. The results showed that the company has made a statement profit / loss of commercial accordance with the applicable accounting standards, and has made statements of income / tax loss properly in accordance with the tax laws and regulations. So it can be taxable income of PT. RB Nusa North, then calculate the income tax in accordance with the calculation of the applicable tax rate on taxable income (PKP) from PT. RB Nusa North.

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