Operating Decisions PERTEMUAN X
KEMAMPUAN AKHIR YANG DIHARAPKAN
Mahasiswa mengetahui tentang konsep keputusan yang berkait dengan operasional, memahmi
Understanding the Business
How do business activities
How do business activities
affect the income statement?
affect the income statement? How do business activities
How do business activities
affect the income statement?
affect the income statement?
How are these activities
How are these activities
recognized and measured?
recognized and measured? How are these activities
How are these activities
recognized and measured?
recognized and measured?
How are these activities
How are these activities
reported on the
reported on the
income statement?
income statement? How are these activities
How are these activities
reported on the
reported on the
income statement?
The Operating Cycle
Begin Begin Purchase or Purchase or manufacture manufacture products or products or supplies on supplies on credit. credit. Purchase or Purchase or manufacture manufacture products or products or supplies on supplies on credit. credit.Deliver product
Deliver product
or provide service
or provide service
to customers on
to customers on
credit.
credit.
Deliver product Deliver product or provide service or provide service to customers on to customers on
The Operating Cycle
Time Period:
Time Period: The long life of a company can be The long life of a company can be reported over a series of shorter time periods
reported over a series of shorter time periods..
Time Period:
Time Period: The long life of a company can be The long life of a company can be reported over a series of shorter time periods
reported over a series of shorter time periods..
Recognition Issues :
Recognition Issues : When should the effects of When should the effects of operating activities be recognized (recorded)?
operating activities be recognized (recorded)? Recognition Issues :
Recognition Issues : When should the effects of When should the effects of operating activities be recognized (recorded)?
operating activities be recognized (recorded)?
Measurement Issues:
Measurement Issues: What amounts should be What amounts should be recognized?
recognized? Measurement Issues:
Measurement Issues: What amounts should be What amounts should be recognized?
Elements on the Income
Statement
Losses Losses
Decreases in assets or increases in
Decreases in assets or increases in
liabilities from peripheral transactions.
liabilities from peripheral transactions.
Losses
Losses
Decreases in assets or increases in
Decreases in assets or increases in
liabilities from peripheral transactions.
liabilities from peripheral transactions.
Revenues Revenues
Increases in assets or settlement of
Increases in assets or settlement of
liabilities from ongoing operations.
liabilities from ongoing operations.
Revenues
Revenues
Increases in assets or settlement of Increases in assets or settlement of
liabilities from ongoing operations. liabilities from ongoing operations.
Expenses Expenses
Decreases in assets or increases in
Decreases in assets or increases in
liabilities from ongoing operations.
liabilities from ongoing operations.
Expenses
Expenses
Decreases in assets or increases in
Decreases in assets or increases in
liabilities from ongoing operations.
liabilities from ongoing operations.
Gains Gains
Increases in assets or settlement of
Increases in assets or settlement of
liabilities from peripheral transactions
liabilities from peripheral transactions..
Gains
Gains
Papa John’s Primary Papa John’s Primary Operating Expenses Operating Expenses Papa John’s Primary Papa John’s Primary Operating Expenses Operating Expenses
Cost of sales Cost of sales (used inventory) (used inventory)
Cost of sales Cost of sales (used inventory) (used inventory) Salaries and Salaries and benefits to benefits to employees employees Salaries and Salaries and benefits to benefits to employees employees
Other costs (like Other costs (like
advertising, advertising, insurance, and insurance, and depreciation) depreciation) Other costs (like Other costs (like
How Are Operating Activities
Recognized and Measured?
Revenue is recorded
Revenue is recorded
when cash is received.
when cash is received. Revenue is recorded
Revenue is recorded
when cash is received.
when cash is received. Expenses are recorded
Expenses are recorded
when cash is paid.
when cash is paid.
Expenses are recorded
Expenses are recorded
when cash is paid.
when cash is paid.
Assets, liabilities, revenues, and expenses should be
Assets, liabilities, revenues, and expenses should be
recognized when the transaction that causes them
recognized when the transaction that causes them
occurs,
occurs,
not necessarily when cash is paid or received.
not necessarily when cash is paid or received.
Assets, liabilities, revenues, and expenses should be
Assets, liabilities, revenues, and expenses should be
recognized when the transaction that causes them
recognized when the transaction that causes them
occurs,
occurs,
not necessarily when cash is paid or received.
not necessarily when cash is paid or received.
Required by -
G
enerallyA
cceptableA
ccountingP
rinciplesRequired by -
G
enerallyA
cceptableA
ccountingP
rinciplesHow Are Operating Activities
Recognized and Measured?
Revenue Principle
Recognize revenues when . . .
Recognize revenues when . . .
Delivery has occurred or services
Delivery has occurred or services
have been rendered.
have been rendered.
There is persuasive evidence of an
There is persuasive evidence of an
arrangement for customer payment.
arrangement for customer payment.
The price is fied or determinable.
The price is fied or determinable.
Collection is reasonably assured.
Collection is reasonably assured.
Recognize revenues when . . .
Recognize revenues when . . .
Delivery has occurred or services
Delivery has occurred or services
have been rendered.
have been rendered.
There is persuasive evidence of an
There is persuasive evidence of an
arrangement for customer payment.
arrangement for customer payment.
Revenue Principle
CASH COLLECTED (Goods or services due to
customers)
over time will become
REVENUE (Earned when goods
or services provided)
Rent collected in advance Rent revenue
Unearned air traffic revenue Air traffic revenue Deferred subscription revenue Subscription revenue
Typical liabilities that become
Typical liabilities that become
revenue when earned include . . .
Revenue Principle
CASH TO BE
COLLECTED (Owed by
customers)
and already earned as
REVENUE (Earned when
goods or services provided)
Interest receivable Interest revenue Rent receivable Rent revenue
Royalties receivable Royalty revenue
Assets reflecting revenues earned but
Assets reflecting revenues earned but
not yet received in cash include . . .
The Matching Principle
Resources
Resources
consumed to earn
consumed to earn
revenues in an
revenues in an
accounting period
accounting period
should be recorded
should be recorded
in that period,
in that period,
regardless of when
regardless of when
cash is paid
cash is paid
.
.
Resources
Resources
consumed to earn
consumed to earn
revenues in an
revenues in an
accounting period
accounting period
should be recorded
should be recorded
in that period,
in that period,
regardless of when
regardless of when
cash is paid
The Matching Principle
CASH PAID FOR
as used over
time becomes EXPENSE Supplies inventory Supplies expense Prepaid insurance Insurance expense Buildings and equipment Depreciation expense
Typical assets and their related
Typical assets and their related
expense accounts include. . .
A = L + SE
A
=
L
+
SE
ASSETS ASSETS Debit for Increase Credit for Decrease LIABILITIES LIABILITIES Debit for Decrease Credit for Increase RETAINED RETAINED EARNINGS EARNINGS Debit for Decrease Credit for Increase CONTRIBUTED CONTRIBUTED CAPITAL CAPITAL Debit for Decrease Credit for Increase
Next, let’s see how
Next, let’s see how
EXPENSES EXPENSES
Debit for Increase
Credit for Decrease
REVENUES REVENUES
Debit for Decrease
Credit for Increase
RETAINED RETAINED EARNINGS EARNINGS
Debit for Decrease
Credit for Increase
Eipanded Transaction Analysis Model
Dividends decrease
Dividends decrease
Retained Earnings.
