Business Tips: Things to Consider when Going into Business for Yourself

What Will You Do?

When planning to start your own business the first thing you ask yourself is “What will I do?” Will your business be a service or will you be selling products on the internet? Finding the right business for you is crucial. Here are some steps to take when deciding what kind of business to start:

Make a list of the things you're good at and describe how others would benefit
How are your services valuable?
Is there competition; others offering your services in the area?
Learn from the success and failures of others
Believe in what you have to offer
Consider the risk involved and plan for success

What Do You Need to Begin?

When you decide what you want to do, the next step is to plan how to go about it. Do you possess the necessary skills to run your business? Is this something you can do by yourself or will you need to hire help?

Make a list of the items your business needs and what is required for you to be successful, including knowledge, skills, certifications, equipment and supplies.

What are the Legal Requirements?

You will need to be sure to meet the government requirements needed to operate your business. Go to your County Courthouse or City Hall and ask about requirements for starting your business.

The Secretary of State's website will have information about starting a business in your state, including licenses and permits.

Business Plan

Serious entrepreneurs start with a solid business plan. Many industries require special licenses and permits. You may need liability insurance. Even if you do not require much in start up costs, you may want to see if you an secure a line of credit, just in case.

You business plan should cover anticipated income and expenses. Make sure you are competitive with the market on what you are charging for your products and services and be sure you are considering all expenses.

Start Up Costs

How much money do you need to start your business? Do some research on the internet; look for sample business plans. Talk to others who are in business for themselves; ask them how they got started. Maybe you can borrow start up money from friends, family or investors.

You may need to start small to build revenue and a customer base, and then think about expanding. Get to know area vendors who offer supplies and services your business needs; they may be willing to extend credit to help you get started. Eventually, you will build equity in your business which can be used to obtain a business line of credit.

Advertising

One of the worst mistakes new business owners make is thinking they will have customers immediately. Many online entrepreneurs have launched a website just to experience the disappointment of no sales for months. It is critical that you know your target market and how to reach them.

Internet marketing is the least expensive and the most effective in getting the word out. Think about who needs your product or service and develop a marketing plan with a catchy slogan to draw attention to what you are offering.

Technology

A good computer system might be valuable to improving your productivity. There is software available for many applications that can make operating your business easier. The time saved on automating certain tasks allows you to focus on marketing and improving your products and services.

The Future

Are you starting your business with the intention of selling it when you retire? Are you hoping your children will take over one day? Many business owners do not think this far. If you plan to sell the business in the future, you must build something that will be attractive to investors.

Starting and managing your business takes dedication, motivation and talent. It requires a lot of planning and research to help minimize risk and prepare you for what is ahead. Lack of planning is one of the leading cause of business failure.

© Bill Bartmann

Article Source:
http://www.bestmanagementarticles.com
http://entrepreneurship.bestmanagementarticles.com

About the Author:
Bill Bartmann is a self-made billionaire who went from homeless at the age of 14 to becoming a billionaire, going bankrupt, then bouncing back to do it again! Bill has had his self-doubts and even bouts of depression; he wouldn't be human otherwise. However, when self-esteem is strong and you're clear about your values, then you can bounce back from the lows; each time, you bounce back just a little bit higher. Bring out the Billionaire in you; visit http://www.billionaireu.com/

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Owning a Business: Are You Right for Business Ownership?

Going into business offers much risk and reward; are you right for business ownership?

Be honest and give some thought to how you would answer the following questions:

Do you know what you're getting into?
Are you ready for business?
Are you the type who has the necessary attributes?
Do you possess the necessary skills?

Business ownership is not for everyone; some people should just be thankful for their job that provides a decent salary and benefits while offering some security. When it comes to working a job or owning a business, there is no question of which is better or worse; the question is, which one are we better suited for? Be consistent with yourself; ‘to thine own self be true'; if your skills dictate that you work for someone else, be happy and content; this is where you belong.

On the other hand, if you feel you possess the attributes necessary to be successful in business ownership, by all means, go for it! An entrepreneur is one who is willing to face risk in exchange for the reward; he would be a terrible employee, unable to accept being told what to do.

Do you have what it takes to be a successful entrepreneur?
Are you on who can stay focused on what you're doing and where you're going?
Can you make and keep a commitment?

Can you get past the word, “NO”? Getting past no is essential to your business success. When you're told “no,” do you freeze up or shut down? Do you take “no” for an answer? Are you persistent in asking questions, discussing issues and debating the reason for a “no” answer? To an entrepreneur, “no” means not yet or not until; no is not the final answer.

Do you possess enough confidence to prove others wrong when they tell you why you cannot succeed? A successful entrepreneur does not allow himself to be talked out of success by others. If you feel that you are right for business ownership, look into the idea; become educated and take control of your destiny.

© Bill Bartmann, Billionaire Business Systems

Article Source:
http://www.bestmanagementarticles.com
http://entrepreneurship.bestmanagementarticles.com

About the Author:
Bill Bartmann is a self-made billionaire who went from homeless at the age of 14 to becoming a billionaire, going bankrupt, then bouncing back to do it again! Bill has had his self-doubts and even bouts of depression; he wouldn't be human otherwise. However, when self-esteem is strong and you're clear about your values, then you can bounce back from the lows; each time, you bounce back just a little bit higher. Bring out the Billionaire in you; visit http://www.billionaireu.com/

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5 Quick Tips to Successful Social Business Networking

Social Business Networks inexpensively interconnect professionals online, in particular, independent entrepreneurs and smaller companies. Social Business Networks also give you the opportunity to showcase your experience and achievements within your network. If you are an entrepreneur or small business owner, you need to be literate in the current world of social networking profiles, tools, and online connections to stay competitive and promote your business.

Participating in social networking is an often-overlooked small business marketing tool. In the real world, our networks are hidden. Social networking sites solve this problem by letting you see who your friends and connections know, who your friends, friends know and so on. You then are free to contact anyone that interests you by inviting them to join your own social network.

If you are looking to expand your contact base, LinkedIn and Facebook are two of the more popular services that facilitate business-oriented connections. Facebook showed a 270 percent increase in visitors in 2007 over the year before according to comScore, a leader in measuring the digital world. Ecademy and Xing are also popular business networking sites.

Here are 5 Quick Tips to Successful Social Business Networking:

1. Take the time to learn how to properly use the business social networking site that you join. Most social networking sites offer online tutorials. Many sites allow you to post your own user generated content in the form of blogs, pictures, slide shows and videos. Many users do not use the social networking sites to their fullest potential by taking advantage of these features.

2. Don't let your ego take over and join in the race to build up a massive list of contacts to show off your "social power." If you have more than 500 "friends," take the time out to sort through these "friends" to be aware of the people you may be attracting to your network.

3. Build and manage your online reputation. According to a report on MSN, several companies are now using the "friends" on an applicant's social-networking page as references. Not only are they looking at your page on sites such as Facebook and LinkedIn, they may also take the next step in contacting your friends. The old days of a page with three references and three phone numbers on it that you controlled are over. With social business networking, you open up your rolodex for the whole world to see.

4. Be professional. Type your posts, e-mails, comments or chats in a professional manner and do not use internet slang such as "lol", "omg", etc. Type your email, comments or chat messages as if you were standing in front of the person speaking face-to-face. Let's face it; this could be your first impression with a potential client or HR recruiter.

5. Establish a Routine. When logging on to your preferred Business Social Networking sites, set aside a designated length of time to spend here. Have some specific goals in mind when visiting the site.

Don't take a pass on the whole social networking trend. Millions of professionals are learning how social networks work, how social networking works, and how shared applications can be viral and ever-present. Don't miss out on this opportunity to create a successful social business network of your own.

Article Source:
http://www.bestmanagementarticles.com
http://entrepreneurship.bestmanagementarticles.com

About the Author:
Robin Matuk is an Internet Business Coach who addresses the needs of entrepreneurs and business owners looking to maximize the power of the Internet to build, manage, and grow a thriving business. She is the founder of My Digital Coach, and a a blogger at Creating with Impact.

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What Makes an Enterpreneurs

Entrepreneurs - the fastest growing area of our economy. What makes these strange people, risk takers and wealth generators tick? Why do entrepreneurs take risks, endure pain, fatigue, and embarrassment? What makes them run? Is it money, fame, rock and roll or sex?

None of the above!

Entrepreneurs might want and enjoy those rewards but what drives them and what distinguishes them from an overachieving employee or salesperson is the desire to create. That's it. Are you an entrepreneur? Do you pass the test? Many overachievers are not entrepreneurs.

Leonardo Da Vinci, Thomas Edison and the Wright Brothers were entrepreneurs. They had dreams to create new horizons for humanity. A vision, inspiration and most importantly the belief that, "I can do that", is the defining image of an entrepreneur.

How do you motivate an entrepreneur? Tell them, "It can't be done". Entrepreneurs love an impossible challenge. They will prove you wrong. It took Edison 10,000 attempts to create a light bulb that burned for several seconds. That persistence is the essence of an entrepreneur.

Not everyone who starts a business is an entrepreneur. Some do it out of desperation, or until they get a real job. They might become entrepreneurs one day, but they must move their mind set from 'I can't do that' to one of 'can do'.

What Does It Take to Succeed as an Entrepreneur?

The ability to learn what is needed to make your dream come true - and to acquire and apply those lessons and skills. Successful entrepreneurs go past the dream stage. Many have the potential to be successful. They have dreams, great ideas and they may even be right. But imagine if Edison quit after 1,000 attempts. He could rightly rationalize that it couldn't be done. After all who would expect him to try 1,000, 2,000 or even 5,000 times? It took 10,000. Nobody cares about the failures. The results count. We now have light bulbs.

George Cohon, senior Chairman of McDonalds Canada & McDonalds Russia, endured 14 years of negotiation and posturing to open the first McDonalds restaurant in Russia. It was the most successful grand opening they ever had. They served over 30,000 customers that first day. But it took 14 years of running around, being nice to Soviet bureaucrats and pleading with his board to get there. Cohon had no idea it would take so long but he knew he could do it. I suspect that Bill Gates was not motivated by money. The power of effecting change and growth is more intoxicating. Money is only a wonderful by-product. That is what sets entrepreneurs apart.

Entrepreneurs are dreamers. They see things that others can not. They want to create change and growth. They believe in themselves. They want to control their destiny. Successful entrepreneurs seek out, acquire and practise the skills they need to succeed. Successful entrepreneurs do what they have to, to get to where they want to be.

Article Source:
http://www.bestmanagementarticles.com
http://entrepreneurship.bestmanagementarticles.com

About the Author:
©BMA George Torok is an entrepreneur, radio show host www.BusinessInMotion.ca and bestselling author of "Secrets of Power Marketing". www.PowerMarketing.ca He delivers inspirational keynote speeches and practical seminars to organizations who want to grow by showing them how to improve their thinking and communication skills. You can contact him at 800-304-1861 or visit www.Torok.com

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Lease Financing

Leasing is a super financing alternative if you are seeking funding to obtain business equipment. Finance companies, banks, and many firms that sell high-priced equipment will lease to you.

When you lease an item, the lessor retains ownership of it. You use the equipment by virtue of the monthly payments you will be required to make. You can often purchase the equipment at the end of the lease term for its market value or less.

A great advantage to leasing is that it may be allowed to be "off the balance sheet." This means that leases can be disclosed as balance sheet footnotes. They do not appear as debt even though they represent an ongoing company liability. This may sound like financial doublespeak, but it's not. Let's say a supplier is considering whether or not to extend credit to you, or a bank is weighing a loan proposal you have submitted. The lease commitment will play a relatively minor role in evaluating your debt burden.

Banks also tend to consider their total exposure when lending to small businesses. If you have obtained lease financing through a third party, they are more likely to lend you funds than if all of your borrowing needs have been met through them. This is very important if you have a relatively small business, because most banks expect you to use them exclusively for traditional lending but may not care if you use a nonbank source for lease financing. In any case, though, do keep your bank informed regarding any significant lease commitments you are considering prior to actually signing any agreements.

Sumber : BusinessTown.Com

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Components of the Accounting System

Think of the accounting system as a wheel whose hub is the general ledger (G/L). Feeding the hub information are the spokes of the wheel. These include :

# Accounts receivable
# Accounts payable
# Order entry
# Inventory control
# Cost accounting
# Payroll
# Fixed assets accounting

These modules are ledgers themselves. We call them subledgers. Each contains the detailed entries of its specific field, such as accounts receivable. The subledgers summarize the entries, then send the summary up to the general ledger. For example, each day the receivables subledger records all credit sales and payments received. The transactions net together then go up to the G/L to increase or decrease A/R, increase cash and decrease inventory.

We'll always check to be sure that the balance of the subledger exactly equals the account balance for that subledger account in the G/L. If it doesn't, then there's a problem.

Differences between Manual and Automated Ledgers

Think of the G/L as a sheet of paper on which transactions from all four categories of accounts-assets, liabilities, income, and expenses-are recorded. Some of them flow up from various subledgers, and some are entered directly into the G/L through a general journal entry. An example of such a direct entry would be the payment on a loan.

The same concept of a sheet of paper holds for each subledger that feeds the general ledger. A computerized accounting system works the same way, except that the general ledger and subledgers are computer files instead of sheets of paper. Entries are posted to each and summarized, then the summary is sent up to the G/L for posting.

Organization of the Accounting Department

Organize your small-business accounting system by function. Often there's just one person there to do all the transaction entries. From an internal control standpoint, this isn't desirable. Having too few people doing all the accounting opens the door for fraud and embezzlement. Companies with more people assign functions in such a way that those done by the same person don't pose a control threat.

Having the same person draft the checks and reconcile the checking account is a good example of how not to assign accounting duties. We'll talk extensively about internal control later. However, for now, small businesses often can't afford the number of people needed for an adequate separation of duties. The internal control structure that we'll install in your new accounting system helps mitigate that risk through mechanics and procedures rather than expensive people.

Assignment of Duties

Here's your first assignment: Figure out who is going to do what in your new accounting system. The duties and areas of responsibility we need to assign include :

# Overall responsibility for the accounting system
# Management of the computer system (if you're using one)
# Accounts receivable
# Accounts payable
# Order entry
# Cost accounting
# Monthly reporting
# Inventory control
# Payroll
# Internal accounting control
# Fixed assets

In many cases the same person will do many of these things. However, these are the areas we'll be dealing with in setting up the accounting system. The person you assign to be in overall charge of the system should be the one who is most familiar with accounting. If you are just starting your company, you might want to think about the background of some of your new employees. At least one should have the capacity to run the accounting system.

If you find it difficult to determine someone's expertise in a field with which you are unfamiliar, here are some solutions :

1. Have them interviewed by an expert. Your own CPA will probably be glad to interview a few for you.
2. Carefully check references from past jobs. Ask detailed questions on exactly what they did in the accounting function. Compare the answers with what they say they did.
3. Ask them some accounting questions. It may sound odd that you (of all people) should be asking such questions. However, even if you can't judge the technical merit of the answers, you can get a feel for how comfortable they are with the subject and the authority with which they answer.

Sumber : BusinessTown.Com

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KPK Release the Results of Study on State Treasury Offices

Jakarta, 01 December 2008 - In an effort to prevent corruption and to raise the quality of service at state treasury offices, the Corruption Eradication Commission (KPK) has conducted a study of the management systems in State Treasury Offices. This study was conducted from 1 February until 16 May 2008 and has been submitted by the Vice Chairman of KPK, Mochammad Jasin to the Director General of the Treasury, Department of Finance, Herry Purnomo on 27 November 2008 at KPK's Office, Jl H.R. Rasuna Said Kav. C-1 Jakarta Selatan. Today KPK will publicly announce the results of this study.

KPK conducted an analysis of 33 State Treasury Offices in the regions of Nanggroe Aceh Darussalam, West Java, Greater Jakarta and East Java. Based on these analyses, a number of potential corruption causing weaknesses were found to exist. These increase the potential for the misuse of authority and the loss of state funds through extortion, bribery, and the giving of gratuities. Systematic weaknesses included principles of program implementation, structural organization, and management of human resources.

In order to raise the level of effectiveness and efficiency of services at the State Treasury Offices, KPK recommended a number of reforms be made. The basis of these reforms is a system based on law enforcement and a strong leadership commitment.

With these recommendations, KPK hopes integrity levels of State Treasury Offices' staff will increase along with public perceptions and the perceptions of partner organizations.

As follow up to this study, the State Treasury Offices must compile an action plan to implement the recommendations of KPK. This action plan will be used by KPK as a basis to monitor the implementation of management reforms.

Conducting monitoring of state and government organizations is one of the KPK's duties as defined by Law 30/2002.

For further information, please contact:

Johan Budi SP
Public Relations
Corruption Eradication Commission
Jl. H.R. Rasuna Said Kav. C-1 South Jakarta
Telp. (021) 25578300

Sumber : www.kpk.go.id

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Accounting Cycle

The primary objectives of the accounting function in an organization are to process financial information and to prepare financial statements at the end of the accounting period. Companies must systematically process financial information and must have staff who prepare financial statements on a monthly, quarterly, and/or annual basis. To meet these primary objectives, a series of steps is required. Collectively these steps are known as the accounting cycle. The steps, applicable to a manual accounting system, are described below. Later, there will be a brief discussion of a computerized processing system.

The Steps of Cycle

1. Collect and analyze data from transactions and events: As transactions and events related to financial resources occur, they are analyzed with respect to their effect on the financial position of the company. As an example, consider the sales for a day in a retail establishment that are collected on a cash register tape. These sales become inputs into the accounting system. Every organization establishes a chart of accounts that identifies the categories for recording transactions and events. The chart of accounts for the retail establishment mentioned earlier in this paragraph will include Cash and Sales.

2. Journalize transactions: After collecting and analyzing the information obtained in the first step, the information is entered in the general journal, which is called the book of original entry. Journalizing transactions may be done continually, but this step can de done in a batch at the end of the day if data from similar transactions are being sorted and collected, on a cash register tape, for example. At the end of the day, the sales of $4,000 for cash would be recorded in the general journal in this form:
Cash 4000
Sales 4000

3. Post to general ledger: The general journal entries are posted to the general ledger, which is organized by account. All transactions for the same account are collected and summarized; for example, the account entitled "Sales" will accumulate the total value of the sales for the period. If posting were done daily, the "Sales" account in the ledger would show the total sales for each day as well as the cumulative sales for the period to date. Posting to ledger accounts may be less frequent, perhaps at the end of each day, at the end of the week, or possibly even at the end of the month.

4. Prepare an unadjusted trial balance: At the end of the period, double-entry accounting requires that debits and credits recorded in the general ledger be equal. Debit and credit merely signify position-left and right, respectively. Some accounts normally have debit balances (e.g., assets and expenses) and other accounts have credit balances (e.g., liabilities, owners' equity and revenues). As transactions are recorded in the general journal and subsequently posted to the ledger, all amounts recorded on the debit side of accounts (i.e., recorded on the left side) must equal all amounts recorded on the credit side of accounts (i.e., recorded on the right side). Preparing an unadjusted trial balance tests the equality of debits and credits as recorded in the general ledger. If unequal amounts of debits and credits are found in this step, the reason for the inequality is investigated and corrected before proceeding to the next step. Additionally, this unadjusted trial balance provides the balances of all the accounts that may require adjustment in the next step.

5. Prepare adjustments: Period-end adjustments are required to bring accounts to their proper balances after considering transactions and/or events not yet recorded. Under accrual accounting, revenue is recorded when earned and expenses when incurred. Thus, an entry may be required at the end of the period to record revenue that has been earned but not yet recorded on the books. Similarly, an adjustment may be required to record an expense that may have been incurred but not yet recorded.

6. Prepare an adjusted trial balance: As with an unadjusted trial balance, this step tests the equality of debits and credits. However, assets, liabilities, owners' equity, revenues, and expenses will now reflect the adjustments that have been made in the previous step. If there should be unequal amounts of debits and credits or if an account appears to be incorrect, the discrepancy or error is investigated and corrected.

7. Prepare financial statements: Financial statements are prepared using the corrected balances from the adjusted trial balance. These are one of the primary outputs of the financial accounting system.

8. Close the accounts: Revenues and expenses are accumulated and reported by period, either a monthly, quarterly, or yearly. To prevent their not being added to or comingled with revenues and expenses of another period, they need to be closed out—that is, given zero balances—at the end of each period. Their net balances, which represent the income or loss for the period, are transferred into owners' equity. Once revenue and expense accounts are closed, the only accounts that have balances are the asset, liability, and owners' equity accounts. Their balances are carried forward to the next period.

9. Prepare a post-closing trial balance: The purpose of this final step is two-fold: to determine that all revenue and expense accounts have been closed properly and to test the equality of debit and credit balances of all the balance sheet accounts, that is, assets, liabilities and owners' equity.

Computerized Accounting System

A computerized accounting system saves a great deal of time and effort, considerably reduces (if not eliminates) mathematical errors, and allows for much more timely information than does a manual system. In a real-time environment, accounts are accessed and updated immediately to reflect activity, thus combining steps 2 and 3 as discussed in the preceding section. The need to test for equality of debits and credits through trial balances is usually not required in a computerized system accounting since most systems test for equality of debit and credit amounts as they are entered. If someone were to attempt to input data containing an inequality, the system would not accept the input. Since the computer is programmed to post amounts to the various accounts and calculate the new balances as new entries are made, the possibility of mathematical error is markedly reduced.

Computers may also be programmed to record some adjustments automatically at the end of the period. Most software programs are also able to prepare the financial statement once it has been determined the account balances are correct. The closing process at the end of the period can also be done automatically by the computer.

Human judgment is still required to analyze the data for entry into the computer system correctly. Additionally, the accountant's knowledge and judgment are frequently required to determine the adjustments that are needed at the end of the reporting period. The mechanics of the system, however, can easily be handled by the computer.

BIBLIOGRAPHY
Dansby, Robert, Kaliski, Burton, and Lawrence, Michael (1999). College Accounting. St. Paul, MN: EMC Paradigm.

Ingram, Robert W., and Baldwin, Bruce A. (1998). Financial Accounting: A Bridge to Decision Making. Cincinnati, OH: South-Western College Publishing.

Larson, Kermit D. (1997). Essentials of Financial Accounting. Boston: Irwin/McGraw-Hill.

Meigs, Robert F., Meigs, Mary A., Bettner, Mark, and Whittington, Ray. (1998). Financial Accounting. Boston: Irwin/McGraw Hill.

Needles, Belverd E., and Powers, Marian (1998). Financial Accounting. Boston: Houghton Mifflin.

Porter, Gary A., and Norton, Curtis L. (1998). Financial Accounting. Fort Worth, TX: Dryden Press.

Sumber : www.enotes.com

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What is Accounting ??

Accounting is a body of principles and conventions as well as an established general process for capturing financial information related to an entity's resources and their use in meeting the entity's goals. Accounting is a service function that provides information of value to all operating units and to other service functions, such as the headquarters offices of a large corporation.

Origin of Accounting Modern accounting is traced to the work of an Italian monk, Luca Pacioli, whose publication in A.D. 1494 described the double-entry system, which continues to be the fundamental structure for contemporary accounting systems in all types of entities. When double-entry accounting is used, the balance sheet identifies both the resources controlled by the entity and those parties who have claims to those assets.

Early histories of business identify the bookkeeper as a valuable staff member. As businesses became more complex, the need for more astute review and interpretation of financial information was met with the development of a new profession—public accounting. In the United States, public accounting began in the latter part of the nineteenth century. The first organization was established in 1887; the first professional examination was administered in December 1896.

In the early days of the twentieth century, numerous states established licensing requirements and began to administer examinations. During the first century of public accounting in the United States, the American Institute of Certified Public Accountants (and its predecessor organizations) provided strong leadership to meet the changing needs of business, not-for-profit, and governmental entities.

Generally Accepted Accounting Principles (GAAP) No single source provides principles for handling all transactions and events. Over time, conventional rules have developed that continue to be relevant. Additionally, groups have been authorized to establish accounting standards. The Financial Accounting Standards Board (FASB) assumed responsibility for accounting standards and principles in 1973. It is authorized to amend existing rules and establish new ones. In 1992, the Auditing Standards Board established the GAAP hierarchy. At the highest level of the hierarchy are FASB statements and interpretations; APB opinions were issued from 1959 to 1973 by the Accounting Principles Board (APB), and Accounting Research Bulletins, issued until 1959 by the Committee on Accounting Procedure (CAP); both the APB and CAP were committees of the American Institute of Certified Public Accountants (AICPA).

What type of unit is served by accounting? Probably no concept or idea is more basic to accounting than the accounting unit or entity, a term used to identify the organization for which the accounting service is to be provided and whose accounting or other information is to be analyzed, accumulated, and reported. The entity can be any area, activity, responsibility, or function for which information would be useful. Thus, an entity is established to provide the needed focus of attention. The information about one entity can be consolidated with that of a part or all of another, and this combination process can be continued until the combined entity reaches the unit that is useful for the desired purpose.

Accounting activities may occur within or outside the organization. Although accounting is usually identified with privately owned, profit-seeking entities, its services also are provided to not-for-profit organizations such as universities or hospitals, to governmental organizations, and to other types of units. The organizations may be small, owner-operated enterprises offering a single product or service, or huge multi-enterprise, international conglomerates with thousands of different products and services. The not-for-profit, governmental, or other units may be local, national, or international; they may be small or very large; they may even be entire nations, as in national income accounting. Since not-for-profit and governmental accounting are covered elsewhere in this encyclopedia, the balance of this article will focus on accounting for privately owned, profit-seeking entities.

What is the work of accountants? Accountants help entities be successful, ethical, responsible participants in society. Their major activities include observation, measurement, and communication. These activities are analytical in nature and draw on several other disciplines (e.g., economics, mathematics, statistics, behavioral science, law, history, and language/communication).

Accountants identify, analyze, record, and accumulate facts, estimates, forecasts, and other data about the unit's activities; then they translate these data into information that can be useful for a specific purpose. The data accumulation and recording phase traditionally has been largely clerical; typically and appropriately, this has been called bookkeeping, which is still a common and largely manual activity, especially in smaller firms that have not adopted state-of-the-art technology. But with advances in information technology and user-friendly software, the clerical aspect has become largely electronically performed, with internal checks and controls to assure that the input and output are factual and valid.

Accountants design and maintain accounting systems, an entity's central information system, to help control and provide a record of the entity's activities, resources, and obligations. Such systems also facilitate reporting on all or part of the entity's accomplishments for a period of time and on its status at a given point in time.

An organization's accounting system provides information that (1) helps managers make decisions about assembling resources, controlling, and organizing financing and operating activities; and (2) aids other users (employees, investors, creditors, and others—usually called stakeholders) in making investment, credit, and other decisions.

The accounting system must also provide internal controls to ensure that (1) laws and enterprise policies are properly implemented; (2) accounting records are accurate; (3) enterprise assets are used effectively (e.g., that idle cash balances are being invested to earn returns); and (4) steps be taken to reduce chances of losing assets or incurring liabilities from fraudulent or similar activities, such as the carelessness or dishonesty of employees, customers, or suppliers. Many of these controls are simple (e.g., the prenumbering of documents and accounting for all numbers); others require division of duties among employees to separate record keeping and custodial tasks in order to reduce opportunities for falsification of records and thefts or misappropriation of assets.

An enterprise's system of internal controls usually includes an internal auditing function and personnel to ensure that prescribed data handling and asset/liability protection procedures are being followed. The internal auditor uses a variety of approaches, including observation of current activities, examination of past transactions, and simulation—often using sample or fictitious transactions—to test the accuracy and reliability of the system.

Accountants may also be responsible for preparing several types of documents. Many of these (e.g., employees' salary and wage records) also serve as inputs for the accounting system, but many are needed to satisfy other reporting requirements (e.g., employee salary records may be needed to support employee claims for pensions). Accountants also provide data for completing income tax returns.

What is the accountant's role in decision making? Accountants have a major role in providing information for making economic and financial decisions. Rational decisions are usually based on analyses and comparisons of estimates, which in turn, are based on accounting and other data that project future results from alternative courses of action.

External or financial accounting, reporting, and auditing are directly involved in providing information for the decisions of investors and creditors that help the capital markets to efficiently and effectively allocate resources to enterprises; internal, managerial, or management accounting is responsible for providing information and input to help managers make decisions on the efficient and effective use of enterprise resources.

The accounting information used in making decisions within an enterprise is not subject to governmental or other external regulation, so any rules and constraints are largely self-imposed. As a result, in developing the data and information that are relevant for decisions within the enterprise, managerial accountants are constrained largely by cost-benefit considerations and their own ingenuity and ability to predict future conditions and events.

But accounting to external users (financial accounting, reporting, and auditing) has many regulatory constraints—especially if the enterprise is a "public" corporation whose securities are registered (under the United States Securities Acts of 1933 and 1934) with the Securities and Exchange Commission (SEC) and traded publicly over-the-counter or on a stock exchange. Public companies are subject to regulations and reporting requirements imposed and enforced by the SEC; to rules and standards established for its financial reports by the FASB and enforced by the SEC; to regulations of the organization where its securities are traded; and to the regulations of the AICPA, which establishes requirements and standards for its members (who may be either internal or external accountants or auditors).

If the entity is a state or local governmental unit, it is subject to the reporting standards and requirements of the Government Accounting Standards Board. If the entity is private and not a profit-seeking unit, it is subject to various reporting and other regulations, including those of the Internal Revenue Service, which approves its tax status and with which it must file reports.

Largely as a result of the governmental regulation of private profit-seeking businesses that began in 1933, an increasingly clear distinction has been made between managerial or internal accounting and financial accounting that is largely for external users. One important exception to this trend, however, was the change adopted in the 1970s in the objectives of financial reporting such that both managerial and financial accounting now have the same objective: to provide information that is useful for making economic decisions.

But it must be recognized that although the financial accounting information reported to stakeholders comes from the organization's accounting system, its usefulness for decision making is limited. This is because it is largely historical—it reflects events and activities that occurred in the past, not what is expected in the future. Even estimated data such as budgets and standard costs must be examined regularly to determine whether these past estimates continue to be indicative of current conditions and expectations and thus are useful for making decisions. Thus historical accounting information must be examined carefully, modified, and supplemented to make certain that what is used is relevant to expectations about the future.

But it also must be recognized that accounting can and does provide information that is current and useful in making estimates about future events. For example, accounting provides current-value information about selected items, such as readily marketable investments in debt and equity securities and inventories, and it provides reports on what the organization plans to accomplish and its expectations about the future in budgets and earnings forecasts.

Who uses accounting information for decision making? The information developed by the accountant's information system can be useful to:
- Managers in planning, controlling, and evaluating their organization's activities
- Owners, directors, and others in evaluating the performance of the organization and determining operating, compensation, and other policies
- Union, governmental, regulatory, taxing, environmental, and other entities in evaluating whether the organization is conforming with applicable contracts, rules, laws, and public policies and/or whether changes are needed;
- Existing and potential owners, lenders, employees, customers, and suppliers in evaluating their current and future commitments to the organization
- Accounting researchers, security analysts, security brokers and dealers, mutual-fund managers, and others in their analyses and evaluations of enterprises, capital markets, and/or investors

The services that accounting and the accountant can provide have been enhanced in many ways since the 1970s by advances in computers and other information technology. The impact of these changes is revolutionizing accounting and the accounting profession. But the changes have yet to reach their ultimate potential. For example, accounting in the 1990s began to provide current-value information and estimates about the future that an investor or other user would find useful for decision making.

The availability of computer software and the Internet greatly enhanced the potential for data and information services. Such changes create opportunities for accounting and accountants and also will require substantial modifications in the traditional financial accounting and reporting model.

What is the profession of accounting? At the core of the profession of accounting is the certified public accountant (CPA) who has passed the national CPA examination, been licensed in at least one state or territory, and engages in the practice of public accounting/auditing in a public accounting or CPA firm. The CPA firm provides some combination of two or more of four types of services: accounting, auditing, income tax planning and reporting, and management advising/consulting.

Analysis of trends indicates that the demand for auditing services has peaked and that most of the growth experienced by public accounting firms is in the consulting area.

Accounting career paths, specializations, or subprofessions for CPAs who join profit-seeking enterprises include being controllers, chief financial officers, or internal auditors. Other career paths include being controllers or chief financial officers in not-for-profit or government organizations and teaching in colleges and universities. Students should note that non-CPAs also could enter these subprofessions and that certificates, but not licenses, could be earned by passing examinations in several areas, including internal auditing, management accounting, and bank auditing.

How do environmental changes impact the accounting profession? Numerous changes in the environment make the practice of accounting and auditing much different in the new century than it was in the 1970s. For example, professional accounting firms now actively compete for clients by advertising extensively in various media, a practice that at one time was forbidden by their code of professional conduct. Mergers of clients have led CPA firms into mergers as well, such that the Big Eight is now the Big Five and the second-tier group has been reduced from twelve firms to about five. Another result of competition and other changes has been that some of the largest employers of CPAs now include income tax and accounting services firms such as H&R Block and an American Express subsidiary.

Competition among CPAs also has led the SEC to expand its regulatory and enforcement activities to ensure that financial reports are relevant and reliable. From its inception, the SEC has had legal authority to prescribe the accounting principles and standards used in the financial reports of enterprises whose securities are publicly traded, but it has delegated this responsibility to the accounting profession. Since 1973, that organization has been the FASB, with which the SEC works closely. But since the FASB is limited to performing what is essentially a legislative function, the SEC has substantially increased its enforcement activities to ensure that the FASB's standards are appropriately applied in financial reports and that accountants/auditors act in the public interest in performing their independent audits—for which the Securities Acts have given the CPA profession a monopoly.

How does a student prepare for the accounting profession? Persons considering entering the accounting profession should begin by doing some self-analysis to determine whether they enjoy mathematical, problem-or puzzle-solving, or other analytical activities; by taking some aptitude tests; or by talking with accounting teachers or practitioners about their work.

Anyone interested in becoming an accounting professional should expect to enter a rigorous five-year education program and to earn a master's degree in order to qualify to enter the profession and to sit for the CPA examination. To build a base for rising to the top of the profession, students should select courses that help them learn how to think and to define and solve problems. The courses should help them to develop analytical (logical, mathematical, statistical), communication (oral, reading, writing), computer, and interpersonal skills. The early part of the program should emphasize arts and sciences courses in these skill-development areas.

The person should begin to develop word-processing, data-processing, and Internet skills long before entering college and should expect to maintain competence in them throughout his or her professional career. These skills greatly enhance and facilitate all phases and aspects of what accounting and accountants attempt to do. What can be done is limited only by technology and by the sophistication of the system, its operators, and users.

BIBLIOGRAPHY
Hansen, Don R., and Mowen, Maryanne M. (2000). Management Accounting, 5th ed. Cincinnati, OH: Southwestern College Publishing.

Kimmel, Paul D., Weygandt, Jerry J., and Kieso, Donald E. (2000). Financial Accounting, 2d ed. New York: Wiley.

Sumber : www.enotes.com

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Accounting Information Systems

Accounting Information Systems (AIS's) combine the study and practice of accounting with the design, implementation, and monitoring of information systems. Such systems use modern information technology resources together with traditional accounting controls and methods to provide users the financial information necessary to manage their organizations.

AIS Technology

Input The input devices commonly associated with AIS include: standard personal computers or workstations running applications; scanning devices for standardized data entry; electronic communication devices for electronic data interchange (EDI) and e-commerce. In addition, many financial systems come "Web-enabled" to allow devices to connect to the World Wide Web.

Process Basic processing is achieved through computer systems ranging from individual personal computers to large-scale enterprise servers. However, conceptually, the underlying processing model is still the "double-entry" accounting system initially introduced in the fifteenth century.

Output Output devices used include computer displays, impact and nonimpact printers, and electronic communication devices for EDI and e-commerce. The output content may encompass almost any type of financial reports from budgets and tax reports to multinational financial statements.

Management Information System (MIS)

MISs are interactive human/machine systems that support decision making for users both in and out of traditional organizational boundaries. These systems are used to support an organization's daily operational activities; current and future tactical decisions; and overall strategic direction. MIS's are made up of several major applications including, but not limited to, the financial and human resources systems.

Financial applications make up the heart of an AIS in practice. Modules commonly implemented include: general ledger, payables, procurement/purchasing, receivables, billing, inventory, assets, projects, and budgeting. Human resource applications make up another major part of modern information systems. Modules commonly integrated with the AIS include: human resources, benefits administration, pension administration, payroll, and time and labor reporting.

AIS - Information System in Context

AISs cover all business functions from backbone accounting transaction processing systems to sophisticated financial management planning and processing systems. Financial reporting starts at the operational levels of the organization, where the transaction processing systems capture important business events such as normal production, purchasing, and selling activities. These events (transactions) are classified and summarized for internal decision making and for external financial reporting.

Cost accounting systems are used in manufacturing and service environments. These allow organizations to track the costs associated with the production of goods and/or performance of services. In addition, the AIS can provide advanced analyses for improved resource allocation and performance tracking.

Management accounting systems are used to allow organizational planning, monitoring, and control for a variety of activities. This allows managerial-level employees to have access to advanced reporting and statistical analysis. The systems can be used to gather information, to develop various scenarios, and to choose an optimal answer among alternative scenarios.

Development

The development of an AIS includes five basic phases: planning, analysis, design, implementation, and support. The time period associated with each of these phases can be as short as a few weeks or as long as several years.

Planning—project management objectives and techniques The first phase of systems development is the planning of the project. This entails determination of the scope and objectives of the project, the definition of project responsibilities, control requirements, project phases, project budgets, and project deliverables.

Analysis The analysis phase is used to both determine and document the accounting and business processes used by the organization. Such processes are redesigned to take advantage of best practices or of the operating characteristics of modern system solutions.

Data analysis is a thorough review of the accounting information that is currently being collected by an organization. Current data are then compared to the data that the organization should be using for managerial purposes. This method is used primarily when designing accounting transaction processing systems.

Decision analysis is a thorough review of the decisions a manager is responsible for making. The primary decisions that managers are responsible for are identified on an individual basis. Then models are created to support the manager in gathering financial and related information to develop and design alternatives, and to make actionable choices. This method is valuable when decision support is the system's primary objective.

Process analysis is a thorough review of the organization's business processes. Organizational processes are identified and segmented into a series of events that either add or change data. These processes can then be modified or reengineered to improve the organization's operations in terms of lowering cost, improving service, improving quality, or improving management information. This method is appropriate when automation or reengineering is the system's primary objective.

Design The design phase takes the conceptual results of the analysis phase and develops detailed, specific designs that can be implemented in subsequent phases. It involves the detailed design of all inputs, processing, storage, and outputs of the proposed accounting system. Inputs may be defined using screen layout tools and application generators. Processing can be shown through the use of flowcharts or business process maps that define the system logic, operations, and work flow.

Logical data storage designs are identified by modeling the relationships among the organization's resources, events, and agents through diagrams. Also, entity relationship diagram (ERD) modeling is used to document large-scale database relationships. Output designs are documented through the use of a variety of reporting tools such as report writers, data extraction tools, query tools, and on-line analytical processing tools. In addition, all aspects of the design phase can be performed with software tool sets provided by specific software manufacturers.

Reporting is the driving force behind an AIS development. If the system analysis and design are successful, the reporting process provides the information that helps drive management decision making. Accounting systems make use of a variety of scheduled and on-demand reports. The reports can be tabular, showing data in a table or tables; graphic, using images to convey information in a picture format; or matrices, to show complex relationships in multiple dimensions.

There are numerous characteristics to consider when defining reporting requirements. The reports must be accessible through the system's interface. They should convey information in a proactive manner. They must be relevant. Accuracy must be maintained. Lastly, reports must meet the information processing (cognitive) style of the audience they are to inform.

Reports are of three basic types: A filter report that separates select data from a database, such as a monthly check register; a responsibility report to meet the needs of a specific user, such as a weekly sales report for a regional sales manager; a comparative report to show period differences, percentage breakdowns and variances between actual and budgeted expenditures. An example would be the financial statement analytics showing the expenses from the current year and prior year as a percentage of sales.

Screen designs and system interfaces are the primary data capture devices of AISs and are developed through a variety of tools. Storage is achieved through the use of normalized databases that assure functionality and flexibility.

Business process maps and flowcharts are used to document the operations of the systems. Modern AISs use specialized databases and processing designed specifically for accounting operations. This means that much of the base processing capabilities come delivered with the accounting or enterprise software.

Implementation The implementation phase consists of two primary parts: construction and delivery.

Construction includes the selection of hardware, software and vendors for the implementation; building and testing the network communication systems; building and testing the databases; writing and testing the new program modifications; and installing and testing the total system from a technical standpoint. Delivery is the process of conducting final system and user acceptance testing; preparing the conversion plan; installing the production database; training the users; and converting all operations to the new system.

Tool sets are a variety of application development aids that are vendor-specific and used for customization of delivered systems. They allow the addition of fields and tables to the database, along with ability to create screen and other interfaces for data capture. In addition, they help set accessibility and security levels for adequate internal control within the accounting applications.

Security exists in several forms. Physical security of the system must be addressed. In typical AISs the equipment is located in a locked room with access granted only to technicians. Software access controls are set at several levels, depending on the size of the AIS. The first level of security occurs at the network level, which protects the organization's communication systems. Next is the operating system level security, which protects the computing environment. Then, database security is enabled to protect organizational data from theft, corruption, or other forms of damage. Lastly, application security is used to keep unauthorized persons from performing operations within the AIS.

Testing is performed at four levels. Stub or unit testing is used to insure the proper operation of individual modifications. Program testing involves the interaction between the individual modification and the program it enhances. System testing is used to determine that the program modifications work within the AIS as a whole. Acceptance testing ensures that the modifications meet user expectations and that the entire AIS performs as designed.

Conversion entails the method used to change from an old AIS to a new AIS. There are several methods for achieving this goal. One is to run the new and old systems in parallel for a specified period. A second method is to directly cut over to the new system at a specified point. A third is to phase in the system, either by location or system function. A fourth is to pilot the new system at a specific site before converting the rest of the organization.

Support The support phase has two objectives. The first is to update and maintain the AIS. This includes fixing problems and updating the system for business and environmental changes. For example, changes in generally accepted accounting principles (GAAP) or tax laws might necessitate changes to conversion or reference tables used for financial reporting. The second objective of support is to continue development by continuously improving the business through adjustments to the AIS caused by business and environmental changes. These changes might result in future problems, new opportunities, or management or governmental directives requiring additional system modifications.

Attestation

AISs change the way internal controls are implemented and the type of audit trails that exist within a modern organization. The lack of traditional forensic evidence, such as paper, necessitates the involvement of accounting professionals in the design of such systems. Periodic involvement of public auditing firms can be used to make sure the AIS is in compliance with current internal control and financial reporting standards.

After implementation, the focus of attestation is the review and verification of system operation. This requires adherence to standards such as ISO 9000-3 for software design and development as well as standards for control of information technology. Periodic functional business reviews should be conducted to be sure the AIS remains in compliance with the intended business functions. Quality standards dictate that this review should be done according to a periodic schedule.

Enterprise Resources Planning (ERP)

ERP systems are large-scale information systems that impact an organization's AIS. These systems permeate all aspects of the organization and require technologies such as client/server and relational databases. Other system types that currently impact AISs are supply chain management (SCM) and customer relationship management (CRM).

Traditional AISs recorded financial information and produced financial statements on a periodic basis according to GAAP pronouncements. Modern ERP systems provide a broader view of organizational information, enabling the use of advanced accounting techniques, such as activity-based costing (ABC) and improved managerial reporting using a variety of analytical techniques.

Sumber : http://www.enotes.com/

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Choose the Right Accounting Software for Your Business

Do you need accounting software for your business? Sometimes, it may be quite confusing when it comes to choosing the right accounting software for your company. There are so many brands around which make the whole matter more complex. The fact that you are reading this article is because you know that good accounting software can really assist your business in many ways. It can help simplify your finances and make all accounts accountable. However, if you choose the wrong software, it will only complicate things further.

If you go to search engines and conduct a search, you can find many different types of accounting software with many different features. Before you purchase any accounting software, you need to first understand what your business needs. Some software is meant for personal use and those may not have the feature that you want. So, it is important to focus on software that is meant for business finance rather than personal finance. With this in mind, it will narrow down your choices and make selection much easier.

In this article, let me share with you some tips to choose the right accounting software for your business.

The first step that you should take is to find out what accounting software is on the market. The best way to do this is to use search engines. Just search for "Accounting Software" on Google and it should return you some choices for your selection.

Visit the different websites and read reviews about the software that you are interested in. You can also ask your business associates, friends or family members for recommendation. You should gather as much information as you can at this point of time.

Once you have gathered enough information for the various products, the next step is to list down all the software you found out about. Do a deeper research for each one of them. Find out exactly what are the features that each product is offering. Also look out for anything special that may make a product stand out.

After you have done your research, it is time to eliminate any product that does not impress you. You should also take the cost of each product into your consideration before purchasing. Some products are just over-priced and they are not worth spending on.

Last but not least, once you have decided on particular software, do ask the company to provide you with a demo version so that you can try it out yourself. With the demo version, you will be able to know the ease of use and see whether the features that it provides are suitable for your business.

Sumber : Pankaj Govil

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Management Accounting

Management accounting is concerned with the provisions and use of accounting information to managers within organizations, to assist management making decisions and managerial control functions.

Management accounting is also concerned with the process of identification, measurement and accumulation of product and service costs; preparation of statements relating to materials, labor and overheads; standard costs; budgeting for decision-making; and the communication of information used by management to plan, evaluate and control an entity to assure appropriate use of and accountability for its resources.

Management accounting also comprises of preparation of financial reports for non- management groups such as shareholders, creditors, regulatory agencies and tax authorities.

In the late 1980s, accounting practitioners and educators were heavily criticized on the grounds that management accounting practices (and, even more so, the curriculum taught to accounting students) had changed little over the preceding 60 years, despite radical changes in the business environment.

Professional accounting institutes, perhaps fearing that management accountants would increasingly be seen as superfluous in business organizations, subsequently devoted considerable resources to the development of a more innovative skills set for management accountants.

The distinction between ‘traditional' and ‘innovative' management accounting practices can be illustrated by reference to cost control techniques.

Traditionally, management accountants' principal technique was variance analysis, which is a systematic approach to the comparison of the actual and budgeted costs of the raw materials and labor used during a production period.

While some form of variance analysis is still used by most manufacturing firms, it nowadays tends to be used in conjunction with innovative techniques such as life cycle cost analysis and activity-based costing, which are designed with specific aspects of the modern business environment in mind.

Life cycle costing recognizes that managers' ability to influence the cost of manufacturing a product is at its greatest when the product is still at the design stage of its product life cycle, since small changes to the product design may lead to significant savings in the cost of manufacturing the product.

Activity-based costing (ABC) recognizes that, in modern factories, most manufacturing costs are determined by the amount of ‘activities' and that the key to effective cost control is therefore optimizing the efficiency of these activities.

Activity-based accounting is also known as Cause and Effect accounting. Both life cycle costing and activity-based costing recognize that, in the typical modern factory, the avoidance of disruptive events is of far greater importance than reducing the costs of raw materials. Activity-based costing also deemphasizes direct labor as a cost driver and concentrates instead on activities that drive costs, such as the provision of a service or the production of a product component.

Management accounting plays a very vital role in the determination of product and service costs; the preparation of statements; budgeting; decision-making; and the communication of information.

To be successful in this field, we must address issues on product rates, causes of quality problems, profitable market segments, higher profit margins, delivery of goods and the costs of introducing new products.

Sumber : Aweng Moral-Basco

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Press Release : BPK RI Promotes the Transparent and Accountable Government

Jayapura, Thursday (12 February 2009) – To fulfill the mandate of the Constitution 1945 Article 23 G and Law Nr. 15/ 2006 on the Audit Board, the Vice Chairman of BPK RI, Abdullah Zainie, inaugurated the BPK RI Building of Representative of Papua Province today (12/2) in Jayapura. The construction of this building is one of the realizations of Reformation of Bureaucracy which has been planned by BPK RI in 2007. Previously, since 2005 the operational activity of BPK RI Representative of Papua Province was still conducted by borrowing the Autonomy Official Building which belongs to the Government of Papua Province for conducting its operational activity.

According to Zainie, the BPK Reformation of Bureaucracy has very wide scopes which consist of the institutional, human resource, business process, facility and infrastructure, and also cooperation with the stakeholder. The forth mentioned points become the major sticks of Reformation of Bureaucracy and also the strong foundation for BPK RI to enhance its role in promoting the good, clean, transparent and accountable governance. One of the important factors to run the organization is the sufficient budged. The budged received by BPK from DPR and Government is more increasing. In 2004, BPK RI has budged IDR 329 billion and in 2009, increases to IDR 1’725 trillion.

Reformation of Bureaucracy in BPK is also realized in the addition of representative offices from 6 offices in 2004 becomes 33 representative offices in 2008. This includes the provision of supporting facilities such as the office buildings, employee housings, etc. “Without the support of the proper facility and infrastructure, the capable human resource can not optimally work and can not achieve the targeted achievement,” states Zainie.

The BPK RI Representative Building of Papua Province which is inaugurated is located in Jl. Balai Kota No. 2 Entrop Jayapura. The contractor of the two floors building of which land width 10’370 m2 and building width 2’854 is PT Adhi Karya (Persero).

By the construction of this building, it is expected that BPK RI can get closer to the entities to promote the transparent and accountable government in the Republic of Indonesia.

www.bpk.or.id

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