THE INTRODUCTION OF ACCOUNTING

ACCOUNTING

We all use accounting information in our daily lives for one or a variety of specific purposes. Where accounting information is expected to be defined as an information system that can measure and communicate financial information about economic activity. Accounting information is needed by the company management in formulating various decisions in solving all problems faced by the company. Accounting information generated from a financial statement is useful in preparing various projections, for example projections of future cash needs. For example, if we are considering buying a new vehicle that can be sold, we use information to determine whether we will be able to pay monthly installments.

But what is meant by accounting itself? Accounting is an information system that measures business activities, processes data into reports, and communicates the results to decision makers. Accounting is the "business language" because with accounting most business information is communicated. The company distributes accounting reports that summarize the company's financial performance to owners, creditors, the government, and potential investors. Good accounting is very important for business and good investment decisions. Poor accounting is something that cannot be tolerated. Investors will sell their shares and drop their share prices in response to indications of a company's accounting disharmony. The better we master the language of business, the better we will manage the company.

In the world of accounting known as accounting theory. Accounting theory is a branch of accounting consisting of systematic statements about principles and methodologies that differentiate from practice. Vernon Kam (1986) considers that accounting theory is a comprehensive system which includes postulates and theories related to it. He divides elements of the theory into several elements: basic postulates and assumptions, definitions, accounting objectives, principles or standards, and procedures or methods

Vernon Kam (1986) argues that the function of the existence of accounting theory is to become a guideline for accounting standard drafting institutions to compile their standards, provide a reference frame for solving accounting problems in the absence of official standards, determine limits in terms of doing "judgment" in preparing financial statements, improve the understanding and confidence of report readers of the information presented in the financial statements improve the quality of comparability

Hendriksen considers accounting theory as a set of general principles to be able to provide a general frame of reference from which accounting practices are valued. The accounting theory formulated will not be able to keep up with economic, social, technological and scientific developments that are so fast.

The American Accounting Association's Committee on Concepts and Standards for External Reports states that there is no complete financial accounting theory that covers and fulfills the desires of all circumstances and time effectively therefore. In the existing financial accounting literature is not accounting theory but a collection of theories that can be formulated to overcome differences in requirements desired by users of financial statements

For the formulation of accounting theory it cannot rely solely on accounting theory, it must use accounting literature and other relevant disciplines. But accounting theory is a very important instrument in compiling and verifying the accounting principles used in preparing financial statements to be presented to its users.

As a conclusion, accounting theory is a concept of the proposition that presents systematically the description of accounting phenomena that explains the relationship between variables and other variables in the accounting structure with the intention to explain and predict phenomena that may arise. There is no complete accounting theory at any time. Therefore accounting theory must also cover all accounting literature which provides approaches that differ from one another.

Source:

J. Weygandt, Jerry. dkk. 2005. Accounting Principles. USA: John Wiley & Sons, inc

Jusup, Al Haryono. 2011. Dasar-Dasar Akuntansi. Yogyakarta: Bagian Penerbitan Sekolah Tinggi Ilmu Ekonomi YKPN

harahap, sofyan syafri. 2007. Teori Akuntansi edisi revisi. Jakarta: Grafindo