THE RESUME OF ENGLISH ECONOMICS SUBJECT

MIDTERM EXAM

The lecture:

Aslichatul Insiyah, M.Pd

With the student:

Novita Nurul Hayah (G94218209)

STUDY PROGRAM SHARIA ECONOMY

ISLAMIC ECONOMY AND BUSINESS FACULTY

NATIONAL ISLAMIC UNIVERSITY SUNAN AMPEL SURABAYA

2020
 LESSON 1
ECONOMICS
The Definition of Economy
Economics is the study of how humans make decisions in the face of scarcity. These can be
individual decisions, family decisions, business decisions or societal decisions. If you look
around carefully, you will see that scarcity is a fact of life. Scarcity means that human wants
for goods, services and resources exceed what is available. Resources, such as labor, tools,
land, and raw materials are necessary to produce the goods and services we want buy they exist
in limited supply.
There are at least four ways that societies organize an economy
- Traditional Economy
Traditional economies organize their economic affairs the way they have always done.
Traditional Economy used traditional method to do their own business. The example of
traditional economy is farmer.
- Command Economy
In a command economy, the government decides what goods and services will be produced
and what prices it will charge for them. The government decides what methods of
production to use and sets wages for workers.
In a market economy, decision-making is decentralized. Market economies are based on
private enterprise: the private individuals or groups of private individuals own and operate the
means of production (resources and businesses). Most economies in the real world are mixed.
They combine elements of command and market (and even traditional) systems. The U.S.
economy is positioned toward the market-oriented end of the spectrum.

Business
Business is the organized effort of individuals to produce and sell, for a profit, the goods and
services that satisfy society's needs. A person who risks his or her time, effort, and money to
start and operate a business is called an entrepreneur. To organize a business, an entrepreneur
must combine four kinds of resources: material, human, financial, and informational.
Three types of Business
- Manufacturing businesses (or manufacturers) are organized to process various materials
into tangible goods, such as delivery trucks or towels.
- Service businesses produce services, such as haircuts or legal advice.
- Middlemen are organized to buy the goods produced by manufacturers and then resell
them. For example, the General Electric Company is a manufacturer that produces clock
radios.
All three types of businesses may sell either to other firms or to consumers. In both cases, the
ultimate objective of every firm must be to satisfy the needs of its customers. People generally
don't buy goods and services simply to own them; they buy products to satisfy particular needs.

Capitalism and Socialism

The concept of socialism developed in the 1800s as a description of a hypothetical economic
system to be contrasted with the predominant market-based economic system of the time,
which was called capitalism. In theory socialism is an economic system based on individuals'
goodwill toward others, not on their own self-interest, and in which, in principle, society
decides what, how, and for whom to produce. In the other theory, socialism was an economic
system that tried to organize society in the same way as most families are organized. In practice
socialist governments had to take a strong role in guiding the economy.

Competition
A free-market system implies competition among sellers of products and resources.
Based on the of ideality, there are five different degrees of competition:
• Pure (or perfect) competition is the complete form of competition. It is the market situation
in which there are many buyers and sellers of a product, and no single buyer or seller is
powerful enough to affect the price of that product.
• Monopolistic competition is a market situation in which there are many buyers along with
relatively many sellers who differentiate their products from the products of competitors
and it is very easy to enter into this market.
• An oligopoly is a market situation (or industry) in which there are few sellers (2-8).
Generally, these sellers are quite large, and sizable investments are required to enter into
their market. For this reason, oligopolistic industries tend to remain oligopolistic.
Examples of oligopolies are the American automobile, industrial chemicals, and oil
refining industries.
• A monopoly is a market (or industry) with only one seller. Because only one firm is the
supplier of a product, it has complete control over price.

Demand
Demand is a schedule or a curve that shows the various amounts of a product that consumers
are willing and able to purchase at each of a series of possible prices during a specified period
of time. Demand shows the quantities of a product that will be purchased at various possible
prices, other things equal.
The ideas expressed above are the foundation of the law of demand: Quantity demanded rises
as price falls, other things constant. Or alternatively: Quantity demanded falls as price rises,
other things constant.
 the law of demand states that as the price goes up, the quantity demanded goes down,
other things constant. In other words, price and quantity demanded are inversely related, so the
demand curve slopes downward to the right. Notice that in stating the law of demand, I put in
the qualification "other things constant." That's three extra words, and unless they were
important I wouldn't have put them in. But what does "other things constant" mean? Say that
over two years, both the price of cars and the number of cars purchased rise. That seems to
violate the law of demand, since the number of cars purchased should have fallen in response
to the rise in price. Looking at the data more closely, however, we see that a third factor has
also changed: Individuals' income has increased.

Supply
Supply is a schedule or curve showing the amounts of a product that producers are willing and
able to make available for sale at each of a series of possible prices during a specific period.
In one sense, supply is the mirror image of demand. Individuals control the factors of
production - inputs, or resources, necessary to produce goods. Individuals supply of these
factors to the market mirrors other individuals. Demand for those factors. For example, say you
decide you want to rest rather than weed your garden. You hire some do the weeding you
demand labor. Someone else decides she would prefer more me instead of more rest; she
supplies labor to you. You trade money for labor, she horfor money. Her supply is the mirror
image of your demand.
There’s law of supply that corresponds to the law of demand. The law of supply states
Quantity supplied rises as prices rises, other things constant.
Or alternatively:
Quantity supplied falls as prices falls, other things constant

Notice how the supply curve slopes upward to the right. That upward slope captures the law of
supply. It tells us that the quantity supplied varies directly-in the same direction—with the price.
Equilibrium - Where Demand and Supply Intersect

When two lines on a diagram cross, this intersection usually means something. The point where
the supply curve (S) and the demand curve (D) cross, designated by point E in Figure 3.4, is
called the equilibrium. The equilibrium price is the only price where the plans of consumers
and the plans of producers agree that is, where the amount of the product consumers want to
buy (quantity demanded) is equal to the amount producers want to sell (quantity supplied).
Economists call this common quantity the equilibrium quantity. At any other price, the quantity
demanded does not equal the quantity supplied, so the market is not in equilibrium at that price.
 LESSON 2
ENTERPRISE
Definition of The Enterprise
Definition of the enterprise, according to experts:
- There is in Law No. 3 of 1982 on company registration Article 1, letter b
The company is every form of business that runs every type of business that is permanent
and continuously aimed at obtaining profits.
- According to Prof. Mr.W.L.P.A. Molengraaff
From an economic point of view, companies are all actions that are carried out
continuously, acting out to earn income by trading goods, delivering goods or entering into
agreements.
- Abdul Kadir in his book entitled "Introduction to Corporate Law in Indonesia"
Based on the legal aspect, definition of an enterprise refers to legal entities and the actions
of business entities in carrying out their business. Or the enterprise is a place of production
activities and the gathering of all factors of production.
The enterprise is an independent economic entity based on professionally organized workforce,
capable of manufacturing products demanded by consumers using capital goods available.
the purpose of the company as a business entity are:
- First, look for profit for now and future. This is the most important due to the survival of
the company.
- Secondly, it serves the market is competitive, both now and coming. For this purpose, there
that first goal can be met continuously.
- Third, create a conducive atmosphere for all employees, so as to create conditions of safety
and ability to compete and creativity for the betterment of the company.

Classification of Enterprise
• By type of primary profit-generating activity enterprises, are classified into: industrial,
agricultural, commercial, service, investment, insurance enterprises and others.
• Based on the source of the enterprise's funding, are classified into:
- Internal Enterprise Resources, meaning that funding from internal enterprises.
- External Enterprise Resources, meaning that capital originating from external sources
is a source that comes from outside the enterprise.
• By form of business ownership enterprises such as:
- Individual Proprietorship, a business owned by one person alone. So the owners of
this enterprises have the responsibility and unlimited power over the enterprise and its
assets. Because owning, managing, as well as leading the enterprise.
- Partnership, a merger between two persons (entities) or more to own or together and
run a company in order to benefit. Form of partnership is: trading partnership, non-
trading partnership, general partnership, and limited partnership.
- Corporations, core enterprise which has various subsidiary companies under it.
Function of The Enterprise
• Operation Function, such as: purchasing, marketing, finance, personnel, the company’s
main operating functions, administrative accounting, information technology,
transformation and communication, public services and law and supporting operations
functions.
• Management Function, such as: planning, organizing, steering, control. If both are going
well the company will keep operations running smoothly, coordinated, integrated in order
to achieve the goal.

Enterprise Environment
An enterprise environment can be defined as the whole of the factors that affect the company's
extern, both the organization and its activities. Enterprise environment is divided into two,
including:
- Internal Environment, includes; Labor force, Equipment and machinery, Capital (Owner,
investor, fund management)
- External Environment, is divided into 2; Micro External environment consists of
customers, competitor, suppliers, government representatives and financial institutions.
Macro External Environment consists of economic, technological, political, legal and
sociocultural.

Purpose of The Enterprise

The fundamental purpose of an enterprise is to achieve the maximum benefit or profit as much
as possible. The enterprise's goal to obtain maximum profit meant that the company can survive.
Establishment of the enterprise is not limited to a specific time, but is expected to survive
indefinitely. Therefore, the survival of the company will continue to be maintained by trying
to obtain the maximum profit.
 LESSON 3
FORM OF BUSINESS OWNERSHIP

Sole Proprietorship
An un incorporation business owned by one person is called a sole proprietorship. Often the
owner also acts as the manager. This form of business organization is common for small retail
stores, farms, service businesses, and professional practices in law, medicine, clothing shop,
corner grocery the street are likely to be sole proprietorships.
Two main characteristics of this form of ownership is simplicity and individual control.
Advantages of Sole Proprietorships
- Ease and Low Cost of Formation and Dissolution: No contracts, agreements, or other
legal documents are required to start a sole proprietorship.
- Retention of All Profit: all profits earned by a sole proprietorship become the personal
earnings of its owner.
- Flexibility
- Possible Tax Advantages
- Secrecy, sole proprietors are not required by federal or state government to publicly
reveal their business plans, profits, or other vital facts.
Disadvantages of Sole Proprietorships
- Unlimited Liability is a legal concept that holds a sole proprietor personally responsible
for all the debts of his or her business.
- Lack of Continuity Legally
- Limited Ability to Borrow
- Limited Business Skills and Knowledge
- Lack of Opportunity for Employees

Partnership
A partnership (or general partnership) is a business owned jointly by two or more people. An
unincorporated business owned by two or more persons voluntarily actin as partners (co-
owners) is called a partnership. Professionals can help you identify and resolve issues that may
later create disputes among partners;
• The Partnership Agreement
• Unlimited Liability and The Partnership
• Limited Partnerships
• Advantages and Disadvantages of Partnership

Corporation
A corporation is an organization usually a group of people or a company authorized by the state
to act as a single entity and recognized as such in law for certain purposes. Early incorporated
entities were established by charter.
The Corporate Charter Once a "home state" has been chosen, the incorporators submit articles
of incorporation to the secretary of state. If the articles of incorporation are approved, they
become the firm's corporate charter. A corporate charter is a contract between the corporation
and the state, in which the state recognizes the formation of the artificial person that is the
corporation. Usually the charter (and thus the articles of incorporation) includes the following
information:
• Firm's name and address
• The incorporators' names and addresses
• The purpose of the corporation
• The maximum amount of stock and the types of stock to be issued
• The rights and privileges of shareholders
• How long the corporation is to exist (usually without limit)
Each of these key details is the result of decisions that the incorporators must make as they
organize the firm before the articles of incorporation are submitted.
Corporate ownership: The shares of ownership of a corporation are called its stock. The people
who own a corporation's stock—and thus own part of the corporation— are called its
stockholders, or sometimes its shareholders.
There a two kind of corporation
- A Close (Private) Corporation is a corporation whose stock is owned by relatively few
people and is not traded openly (that is, in stock markets)
- An Open (Public) Corporation is one whose stock is traded openly in stock markets and
can be purchased by any individual.

Corporate Structure
• Board of Directors, is the top body of a corporation
• Corporate Officers, is appointed by the board of directors

Advantages of Corporation
- Limited liability. Each owner’s financial liability is limited to the amount of money she
or he has paid for the corporation’s stock.
- Ease of transfer of ownership
- Ease of raising capital
- Perpetual life
- Specialized management
Disadvantage of Corporation
- Difficulty and expense of formation
- Government regulation, most government regulation of business is directed at
corporations.
- Double taxation
- Lack of secrecy
 LESSON 4
MANAGERIAL FINANCE

Finance
Finance can be defined as the art and science of managing money. Finance is concerned with
the process, institutions, markets, and instruments involved in the transfer of money among
individuals, businesses, and governments.

Managerial Finance
Managerial Finance is essentially a combination of economy and accounting. First, finance
managers utilized accounting information, cash flows, etc., for planning and distribution of
finance resources of the company. Secondly, managers use economic principles as a guide for
financial decision making that favor the interest of the organization. In other words, finance
constitutes an area applied in economics that is supported by accounting information.

The Different Among Managerial Finance and Accounting

• Accounting provides an important function in that all use of resources are clearly
accounted for as per agreed upon standards. Very often the financial reports that are
produced as part of accounting are historical in nature
• Finance on the other hand relies to a great extent on markets for all financial decisions.
• The most important financial statement that finance relies of the 3, is the cash flow
statement as the other 2 statements – balance sheet and income statement suffer from
historical bias and accounting judgements respectively

Basic Concepts in Principles of Managerial Finance

• Managerial Finance
According to Gitman, Lawrence (2003), “Managerial finance is the branch of finance that
concerns itself with the managerial significance of finance techniques. It is focused on
assessment rather than technique”.
The difference between a managerial and a technical approach can be seen in the questions
one might ask of annual reports.
• Financial Statements and Analysis
Financial statements (or financial reports) are formal records of a business' financial
activities. There are four basic financial statements; balance sheet, income statement, cash
flow statement, and statement of retained earnings.
According to Gitman, Lawrence (2003), "The objective of financial statements is to
provide information about the financial strength, performance and changes in financial
position of an enterprise that is useful to a wide range of users in making economic
decisions. Financial statements should be understandable, relevant, reliable and
comparable. Reported assets, liabilities and equity are directly related to an organization’s
financial position. Reported income and expenses are directly related to an organization’s
financial performance”.
 The difference between these inflows and outflows is the net income, also shown in the
income statement. Financial statements are used by a diverse group of parties, both inside
and outside a business, such as; (1) Internal users are owners, managers, employees and
other parties who are directly connected with a company. (2) external users are potential
investors, banks, government agencies and other parties who are outside the business but
need financial information about the business for a diverse number of reasons.
• Cash Flow and Financial Planning
According to Brigham, Eugene and Johnson, Ramon (1980), “Cash flow is an accounting
term that refers to the amounts of cash being received and spent by a business during a
defined period of time, sometimes tied to a specific project”.
Measurement of cash flow can be used to:
To evaluate the state or performance of a business or project. To determine problems with
liquidity. Being profitable does not necessarily mean being liquid. A company can fail
because of a shortage of cash, even while profitable. To generate project rate of returns.
The time of cash flows into and out of projects are used as inputs to financial models such
as internal rate of return, and net present value. To examine income or growth of a business
when it is believed that accrual accounting concepts do not represent economic realities.
Alternately, cash flow can be used to 'validate' the net income generated by accrual
accounting.
Cash flows can be classified into three, there are; Operational cash flows, Investment cash
flows, and Financing cash flows. All of them are necessary to reconcile the beginning cash
balance to the ending cash balance.
• Time Value of Money
According to Brigham, Eugene and Johnson, Ramon (1980), “The time value of money is
the premise that an investor prefers to receive a payment of a fixed amount of money today,
rather than an equal amount in the future, all else being equal.
Some standard calculations based on time value of money are:
- Present Value (PV) of an amount that will be received in the future.
- Future Value (FV) of an amount invested (such as in a deposit account) now at a given
rate of interest.
- Present Value of an Annuity (PVA) is the present value of a stream of (equally-sized)
future payments, such as a mortgage.
- Future Value of an Annuity (FVA) is the future value of a stream of payments
(annuity), assuming the payments are invested at a given rate of interest.
- Present Value of a Perpetuity is the value of a regular stream of payments that lasts
"forever", or at least indefinitely
• Risk and Return
According to Gitman, Lawrence (2003), “Risk adjusted return on capital (RAROC) is a
risk based profitability measurement framework for analyzing risk-adjusted financial
performance and providing a consistent view of profitability across businesses. Note,
however, that more and more Risk Adjusted Return on Risk Adjusted Capital (RARORAC)
is used as a measure, whereby the risk adjustment of Capital is based on the capital
adequacy.
• Interest Rates and Bond Valuation
Interest is a fee paid on borrowed assets. By far the most common form these assets are
lent in is money, but other assets may be lent to the borrower, such as shares, consumer
goods through hire purchase, major assets such as aircraft, and even entire factories in
finance lease arrangements. In each case the interest is calculated upon the value of the
assets in the same manner as upon money.
• Stock Valuation
According to Brigham, Eugene and Johnson, Ramon (1980), “Capital budgeting (or
investment appraisal) is the planning process used to determine a firm's long term
investments such as new machinery, replacement machinery, new plants, new products,
and research and development projects.”
• Capital Budgeting Cash Flows
According to Brigham, Eugene and Johnson, Ramon (1980), “Capital budgeting (or
investment appraisal) is the planning process used to determine a firm's long term
investments such as new machinery, replacement machinery, new plants, new products,
and research and development projects.”
• The Cost of Capital
According to Gitman, Lawrence (2003), “The cost of capital for a firm is a weighted sum
of the cost of equity and the cost of debt. It is also known as the "Hurdle Rate" or "Discount
Rate".
• Leverage and Capital Structure
Capital structure refers to the way a corporation finances itself through some combination
of equity, debt, or hybrid securities. A firm's capital structure is then the composition or
'structure' of its liabilities.
• Dividend Policy
The Dividend Decision, in Corporate finance, is a decision made by the directors of a
company.
• Working Capital and Current Assets Management
Working capital (also known as net working capital) is a financial metric which represents
the amount of day by day operating liquidity available to a business.
• Current Liabilities Management
One important area of business management and tax planning is revenue and expense
recognition for tax and financial statement reporting purposes. How revenue and expenses
are recognized depends on type and size of business, and company structure
 LESSON 5
MONEY

Definition of money
Money is anything that is accepted or trusted by the public as a means of payment or transaction.
Money in traditional economics is defined as any medium of exchange that can be generally
accepted. The medium of exchange can be any object that can be accepted by everyone in the
community in the process of exchanging goods and services. In modern economics, money is
defined as something available and generally accepted as a means of payment for the purchase
of goods and services and other valuable assets as well as for debt payments.

The History of Money

In ancient times, buying and selling carried out with a barter system. Barter is a trade that is
carried out by exchanging goods, after bartering people start using the agreed payment
instrument. Before using money, people used certain items as a means of payment, such as
seashells, pearls, gemstones, copper, gold, silver, beads, and animal teeth. And then money
exists to replace bartering system.

The Function of Money

• Original function; as a medium of exchange and a unit of account
• Derived function; as a means of payment and a hoarder of wealth

The Terms of Money

• Accepted and trusted by the public
• Have a stable value
• There is a guarantee from the government.
• Made of material that is not easily damaged.
• Easy to store.

The Types of Money

According to be used in daily life, the types of money can be divided into 2:
• Currency, is a legal payment under applicable laws that we use in daily life
• Demand deposit, can be interpreted as bills or bank accounts that can be used a legal tender
According to its value divided inti 2:
• Full bodied money, is the value stated above the money is the same value as the used
material
• Token money. For the example, to make Rp.1000,00 the government spends Rp.750,00
According to the material it is divided into 2;
• Coin, made from metal, silver and gold
• Paper money, made from paper with certain images and stamps and is a legal payment
instrument

The Factors that Influence the Demand and Supply of Money

Demand
The factors that influence the demand;
• Request for money
There are three motives that influence the demand for cash by the public;
- Transaction motive
- Precautionary motive
- Speculative motive
• The size of the state expenditure related to national income
• Fast or slow circulation of money
Money supply
Generally, the money supply is defined as follows;
• M1 is paper money and coins (banknotes) plus deposits in the form of checking accounts
(demand deposits)
• M2 is M1 + savings + time deposits at commercial banks.
• M3 is M2 + savings + time deposits at non-bank financial institutions.
The factors that influence money supply are as follows;
• The higher the interest rate, the less money in circulation. The lower the interest rate, the
more money in circulation.
• The higher the income of the community, the more money that is circulating because the
more frequent transactions.
• The more (dense) the population, the more and more quickly the money supply.
• Geographical conditions in cities are faster and there is more money in circulation than in
rural areas.
• The economic structure, an agrarian country is different from an industrial country, an
industrial country with a faster and more money circulation.
• Mastery of science and technology population. The science of the more developed
countries has more and faster money supply compared to countries that apply simple
technology.
• Globalization of industry in the corporate world. As global and international capital flows
between countries increase, the money supply is also influenced by international
transactions, in this case the exchange rate affects circulation.
 LESSON 6
FINANCIAL STATEMENTS

The Definition of Financial Statements

Reports Financial is a basic information to compile and evaluate the various policies that have
been implemented in the period that has past and to draw up plans and determine the direction
of the activities of companies’ future that will come. Harahap (2015; 1) defining statement of
financial is the media information that summarizes all of the activity of the company, whereas
in Kashmir (2014; 7) the report of financial the report that shows the condition of the financial
companies currently have or within a period specified.

The types of Financial Reports

According to the Indonesian Institute of Accounting (IAI), the components of a complete
financial statement consist of:
• Statement of financial position at the end of the period
• Reports profit and loss comprehensively during the period
• Statement of changes in equity for the period
• Statements of cash flows for the period
• Notes on statements of financial, contains a summary of the policy of accounting is
important and get an explanation other
• Report of position financial at the beginning of the period comparative who served as the
entity implementing a policy account militancy or make a presentation of the back posts
in the statements financial

The Purpose of Financial Statements

The purpose of the report according to Hanafi and Abdul Halim (2003: 30);
• The information that is useful for decision -making
• The information that is useful estimate streams of cash to users of external
• The information that is useful estimate the flow of cash companies
• Information about the source of the power of economic and claim the company
• Income information and its components
• Cash flow information

The Definition of Financial Statement Analysis

Analysis reports finances by Harahap (2015: 207) is an " effort looking for the relationship
between the various posts that exist in the statement of financial companies ". According
Munawir (2010: 35) analysis reports Financial is a review rather than relationships and
tendencies or trends to determine the position of financial and results of operations and
development of the company are concerned.

The Purpose of Financial Statements Analysis

In general purpose and benefit analysis l Reports Financial in Kashmir (20 14:68) is as follows:
• To find out the company's financial position in a certain period, both assets, liabilities,
capital, and business results that have been achieved for several periods.
• To know the weaknesses of what course that became shortage company.
• To determine the strength - the strength of which is owned.
• To meet the step - step repair what just what needs to be done in the future that is associated
with the position of finance companies currently have.
• To undertake assessment of performance management in the future if necessary the
implementation or not mindless been considered successful or unsuccessful.
• Can be also used mainly as a comparison with companies similar on the results of
performance are achieved.

Financial Statement Analysis Techniques

There is a technique in the analysis of reports end of the financial early by Harahap (2015:
217):
• Comparative method
• Trend analysis
• Common size financial statement
• Index time series method
• Financial statement ratio
- Liquidity
- Solvency
- Profitability
- Leverage
- Activity
 LESSON 7
ANALYZING TRANSACTIONS

The Definition of Analyzing Transaction

Transaction analysis is a common activity for accountants. The process often involves looking
at the documents that support a business activity. Primary purposes of transaction analysis are
to gauge the relevance and reliability of a transaction. The accounting cycle defines when an
accountant should review transactions. It's important that accountants follow the accounting
cycle to properly account for all business activity. The first stage of the accounting cycle is
record transaction. This stage also allows for transaction analysis by accountants. Each
transaction must have the proper documentation and meet the company’s guidelines prior to
inclusion in the general ledger.

The Purpose of Transaction Analysis

• Provide information about finances, both assets and liabilities of the company
• Provides information about changes to various economic (net) sources of the company
• Provides corporate financial information that can help in making estimates of the
company's profit potential
• Provides information about changes in various sources of the company's economy, be it
assets, debt, and capital.
• Provides other information related to financial statements to help users of the report

The function of Analyzing Transaction in Business;

• Recording report
• Protecting property and assets
• Communicating results
• Legal meeting
• Classifying
• Make a summary
• Analysis and interpreting

The Benefits of Transaction Analysis in Business;

• Providing financial information as a basis for making managerial decisions
• Provide information / reports to external parties
• As a means of control and financial control
• As a company evaluation tool
• Become the basis in allocating resources

There are 6 Stages that must be considered in Analyzing a Transaction;

• Determine the account what is affected by the transaction or proof of transaction
The first step we have to do is determine which accounts are affected by the transaction.
as for some influential accounts are:
- Assets account
 - Accounts payable (Liabilities)
- Equity account (Owner’s Equity)
- Revenue accounts
- Expense accounts
• Determine whether the account balance is affected to increase or decrease
After determining what accounts are involved in the existence of a transaction. the next
step you have to do is determine whether the account balance has increased or decreased.
A decrease means that the accounts involved due to a transaction have decreased their
balance.
• Determine whether the increase or decrease in the account is recorded in the debit or credit
column
• Record the account in the journal
• Moving books (posting) journal verses to the big book
• Make a statement of financial position or balance sheet that has not been adjusted
 LESSON 8
BUSINESS PARTNERSHIP

The Definition of Business Partnership

The definition of a partnership based on the opinions of Cravens (2013), is an effort to
cooperate with stakeholders that include a vertical relationship that consists of relationships
with suppliers and customers, as well as horizontal consisting of lateral and internal
partnerships.
"Partnership refers to a long-term relationship and is based on mutual recognition and
understanding between transaction parties that the success of each company in the transaction
is intrinsically dependent on the other" (Kim & Park, 2003).
Business partnerships will produce efficiency and synergy of resources owned by the parties
that partner and hence benefit all parties who partner.

The Purpose of Business Partnership

• Increase profits or sales of parties who partner
• Improve knowledge of the market situation
• Get additional customers or new suppliers
• Increase product development
• Improve the production process
• Improve quality
• Increase access to technology

Performance Analysis of Business Partnership

Partnership is an attitude of running a business characterized by a long-term relationship, a
high-level collaboration, mutual trust, where suppliers and customers trade with each other to
achieve common business goals. Starting from this, it can be analyzed the partnership
performance as follows:
• Lack of transparency in the implementation of Presidential Decree 16
• The realization of the partnership title is still unsatisfactory
• The partnership did not develop well
• Not many domestic franchises have sprung up.

Constraints of Business Partnership

Partnership basically combines the activities of several business entities, so it is needed an
adequate organization. It is inseparable from the connection of the above, it will experience
several obstacles including:
• The big difference between Big Business and Small Business
• Production quality is not guaranteed
• Cooperation is less developed
• UB is vertical integration
• There has not yet been a transfer of technology and management from UB and the UK
• The underdevelopment of the system and partnership patterns and the development of
supporting elements
Five types of partnership developed in Europe and can be replicated:
• Buying and selling which includes suppliers and subcontracting activities
• Positive restructuring which includes outsourcing, spin offs, management buy-outs,
community renewal and tradeoffs.
• SME support which includes start-up companies, mentoring, research and development
(R&D) cooperation and export assistance.
• Training and education, for example for suppliers and internships as well as prospective
partner recruitment
• Local focus is a partnership activity with the aim of developing the regional economy.
The term of the partnership are as follows:
• The same general purpose
• Equality
• Mutual respect
• Contribute to each other
• There is a synergy effect
• Win-win solution

National Business Partnership Policy and Implementation Government Regulation

Number 44 of 1997
• Partnership is a business collaboration between Small Business and Medium Business and
or with Large Business accompanied by guidance and development by Medium Business
and or Large Business by taking into account the principle of mutual need, mutual
strengthening and mutual benefit.
• Small Business is a small-scale people's economic activity that has the criteria as regulated
in Article 5 of Law Number 9 of 1995 concerning Small Business.
• Medium Enterprises and or Large Businesses are economic activities that have criteria for
net worth or annual sales results greater than the net worth or results of annual sales of
Small Business.
• Technical Minister is the minister who is technically responsible for fostering and
developing the implementation of partnerships in the activity sectors which are his duties
and responsibilities.
• Minister is the Minister of Cooperatives and Small Business Development.
• Partnership patterns are forms of partnership that are regulated in Law Number 9 of 1995.
Partnership is one of the strategic instruments for small business development, but this does
not mean that all small businesses can immediately be effectively developed through
partnerships.

System Perspective
• Vertical backward linkage
• Vertical forward linkage
• Horizontal linkage
Implementation
• South Korea
The supporting institution called Small and Medium Industry Promotion Corporation is
semi-governmental and has the task of making the UK resilient and able to partner with
UB and carry out technology transfer and investment programs from UB to the UK.
• Japan
Japan established the Institute for promotion of subcontracting whose task is to strengthen
the position of the UK and UK technology and provide information.
• European Economic Community (EEC)
Supporting institutions in partnership established by MEE:
- BC-NET providing computerized partnership information
- BRITE, aims to improve UK skills in using technology and reduce technological gaps
with the UK
- ESPRIT, developing information technology
• Taiwanese
In developing industrial business partnerships in Taiwan, UB's satellite system Center was
made as a center and the UK and UM as satellites. To support the program, a Corporate
Synergy Development Center (CSD) was established, funded by the government and the
private sector.

Partnership Pattern
The partnership patterns include:
• Cooperation linkage between upstream-downstream (forward linkage)
• Collaboration between backward-upstream linkages (backward linkage)
• Cooperation in business owners, include the following:
- Written agreement
- Based on the principle of benefits
- Based on the fair principle
- There is no coercion
• Cooperation in the form of fathers and adopted children
• Cooperation in the form of foster father as venture capitalist
• Plasma core pattern
• Finding and achieve economies of scale
• Franchise
A common type of franchise today is the "franchise format business". In such transactions,
the franchisor has developed a product or service and the entire distribution / delivery
system and marketing of the product or service. Sometimes, component services or goods
services are also added to the system.
 LESSON 9
BANKING

The Definition of Banking

There are several meanings or the bank's definition, namely:
• According to the Dictionary of Banking and financial services by Jerry Rosenberg said
that what is meant by a bank is an institution accept demand deposits, deposits, and pay
on the basis of documents drawn to certain people or institutions, discounting letters
valuable, give loans and invest their funds in letters valuable.
• According to RI Law NO. 10 of 1998 concerning banking (article 1 paragraph 2), that the
bank is a business entity that collects funds from the community in the form of deposits
and distribution to society in the form of credit or in other forms with a purpose to improve
the lives of many people.
As a financial institution, banks provide various services in the financial sector, including bank
business activities: Funding (deposits in the form of current accounts, savings, time deposits
and certificates deposit). And Landing (distribution of funds in the form of credit. Credit
Consumer, Working capital, Investment, Export-Import, Bank Guarantee). Then Services
(Delivery, in the form of transfer services, clearing, SDB, Export-Import, Collection, Forex).

Banking Function
According to Santoso (2006: 9) explained that the main function of the bank as a Financial
Intermediary, a financial institution raising funds and the community in the form of deposits
and then channel it back to the community in the form credit then launches trade and circulation
transactions money. In more specifications, the functions of banks can be explained as follows:
• Agent of trust
• Agent of development
• Agent of service

The types of Banking

• According from its function
Law No. 7 of 1992 which was then emphasized in Banking Law No. 10 of 1998, the type
of bank seen of its functions, including:
- Central Bank, which is a state-owned financial body given the responsibility to regulate
and oversee activities the activities of financial institutions and guarantee actives
financial institutions will create the level of activity stable economy.
- Commercial Banks, namely banks that carry out business activities conventional
banking and / or based on principles Islamic Sharia which in its activities provide
services in the past cross payment. The general nature here is to give whole existing
banking services and operating in almost all regions Indonesia. Commercial banks
came to be known as banks commercial (commercial bank).
- Rural Credit Bank (BPR), which is the implementing bank conventional banking
activities and sharia principles Islam in which its activities do no provide services in
the past cross payment.
• According from the ownership
Divided into 4, such as; state-owned bank (BUMN), private-owned banks national,
foreign-owned banks and joint venture banks.
• According of the status
Bank classification seen from its status divided into two, such as; foreign exchange banks
and bank non-foreign exchange.
• According from how to determine price
Based on the type of bank seen from how to determine the price, the bank divided by
conventional principles, and sharia principles. Bank The conventional system applies
prices according to interest rates or commonly known as spread base, as well as the fee
base method or the term is calculating the costs needed.

The Benefit of Banks

• Working balance
• Investment fund
• Saving purpose

Sources of Bank Funds

bank funds are used as a tool for the operations of a bank sourced from funds as follows:
• First party funds
Own capital funds consist of several parts, as following:
- Paid-up capital
- Agio stock
- Reserves
- Retained earning
• Second party funds
Second party funds are loan funds from outside parties. Which consist on funds as follows:
- Call money
- Ordinary interbank loans
- Loans and non-bank financial institutions
- Loan and central banks
• Third party funds
Fund from the community consists of several types, namely as follows:
- Demand deposit
- Deposits (time deposit)
- Savings
 LESSON 10
SECURITIES MARKET

The Definition of Securities Market

The Securities Market can be defined as a meeting of sellers and buyers of certain types of
securities or financial assets for the purpose of being allocated to other economic sources.

Various Kinds of Securities Markets

The securities market consists of various types of securities that are traded including ordinary
shares, preferred shares, bonds and derivative securities.
• Common stock, is a type of security as proof of ownership of the company.
• Preferred stock, are shares that have a combination of bonds and ordinary shares. Preferred
shareholders benefit from dividends and company assets on bond claims if the company
experiences liquidation
• Bond, is an assign of debt over an issuing company
• Derivative securities, are bought and be like generally in the form option and future.

Securities Market Function

The main function of the securities market is as a primary market in marketing securities to be
offered to the general public. And this is very important for the role of an investment manager
where managers can help with publishing and bidding.

Buy and Sell in Primary and Secondary Markets

• Primary market, is a market where investors buy financial securities (through
investment bank or other representatives from the securities issuer.
• Secondary market, is a market for existing financial securities that are currently traded
between investors.

The Definition of Broker or Stock Brokers

Broker or stock broker is a person or firm that becomes an intermediary for investors in making
transactions or buying and selling shares in the capital market.

The Duties as Broker or Stock Broker

The job of a broker or stock broker is to conduct a sale and purchase transaction of shares
between a client and a stock buyer. Brokers or stock brokers do not have the task of buying or
selling direct shares of investors, but only carry out buying and selling of shares at the best
price.

Various Kinds of Stock Brokers

In carrying out his profession as executor of a share purchase transaction or securities issued
or issued by an investor company as an issuer, the stock broker or stock broker is divided into
3 types, namely:
• Full service broker
• Broker discount
• Deep discount broker

Trading Mechanism Stock

Stock trading takes place in the secondary market which is a market for securities that have
been listed on the exchange. In other words, the secondary market is a market where investors
can buy and sell securities after the securities are listed on the stock exchange, so the secondary
market is a continuation of the primary market. In Indonesia there is one stock exchange, the
Indonesia Stock Exchange, as a place for securities trading to take place in the secondary
market.
Clients can sell or buy orders after the investor is approved to become a customer at the relevant
securities company. In general, a number of securities companies require their clients to deposit
a certain amount of money as a guarantee that the client is eligible to buy and sell securities.
After an investor has an account at one of the securities companies, investors can immediately
recommend buying and selling shares through a broker with a price limit that the investor wants,
domestic stock is generally sold in multiples of 500 shares called LOT, there are also shares
that can be purchased units under 500 pieces called ODD LOT, small investors can buy one
share of a number of their abilities not necessarily one lot.
 LESSON 11
ACCOUNTING AND ACCOUNTANT

The Definition of accounting

Accounting has the definition as diverse according to their point of view - each expert which
defines the accounting. In general, accounting is a service activity that serves to provide
quantitative information about the financial condition and results of companies expected
operation useful in making economic decisions.

The Definition of Accountant

Accountant Is a degree obtained by a scholar who has been educated in the accounting
department of economic faculty at a college or university and already graduated from the
Accounting profession (PPAK).

The Benefits of Accounting

• Presenting financial information as the basis for making managerial decisions
• Providing information such as the types of financial statements to external parties
• As a means of control and financial control
• Simplify the process of evaluating the company's financial
• Provide a basis for allocating resources
• Make a recording of financial transactions of financial proof corresponding elements of
the financial statements which can be accounted for
• It helps to know a variety of miscellaneous expenditure corresponding financial ratios

The Purpose of Accounting

• Provide financial information consists of the assets and liabilities of the company.
• Provides information about changes in various economic resources that have been reduced
by taxes and various fees (net)
• Provide financial information that can assist in making estimates of the company's
financial potential
• Provides information about changes to the company's various economic resources in the
form of assets, debt and capital.
• Provide other information relating to the financial statements to help users of the report.

The Types of Accountant

On development, accounting has been divided into several kinds of fields so it requires the
presence of the proper accounting and in accordance with the field. Here are some kinds of
accountants;
• Certified public accounts
• Internal accountant
• Government accountants
• Accounting educators
Guidelines for Accounting Profession
Accounting Standards is one of the important things that must be learned by each accountant.
In addition to studying things - things about accounting, the accountant also required to be able
to understand the basic rules of the form code of professional conduct and standards of the
activities of an accountant job. Code of conduct of Indonesian Accountants has posted some of
the ethical principles as follows:
• Professional responsibility that is always wearing a moral and professional judgment on
any activity undertaken.
• The public interest, namely the duty to act within the framework of services to the public,
respect the public trust and demonstrating a commitment to professionalism.
• Namely integrity in its efforts to maintain and enhance public confidence must fulfill their
professional responsibilities with the highest integrity
• Objectivity, means must maintain objectivity, neutral and free from the conflicts of interest
in fulfilling their professional obligations.
• Competence and prudence.
• Confidentiality means respecting the confidentiality of information obtained during the
professional services of accountants
• Standard techniques that carry out professional services in accordance with the technical
standards and the relevant professional standards.

The Fields of Accounting

• The Financial Accounting is Accounting which has the aim to generate financial reports
for the benefit of outsiders.
• Accounting management accounting which has a goal to produce information in the form
of interest management. The type of information required in management accounting in
many different things with the information needed outsiders. The information needed by
management to be very deep and needed to do a management decisions and usually not
publicized to the general public.
 LESSON 12
MANUAL AND COMPUTERIZED ACCOUNTING SYSTEM

The Definition of Manual Accounting System

A manual accounting system is a system where records are maintained by hand, without using
a computer system. Instead, transactions are written in journals, from which the information is
manually rolled up into a set of financial statements. Accounting pages have four or more
printed columns and multiple rows, natural divisions for the necessary information, such as
date, description and dollar amounts. Numerical entries typically have space for every digit.

The Advantages
• Making changes
• Accessibility
• Avoid corrupt data
• Duplication mistakes

Disadvantage
• Data entry errors
• Potential loss of physical copies
• Knowledge of accounting procedure

The Definition of Computerized Accounting System

Computer accounting system is a continuation of a system of manual accounting systems and
the differences lie there on how to use and the device used. Overall accounting system with
computers assessed is faster and more efficient than manual accounting system.

The Advantages
• Speed, data entry onto the computer with its formatted screens and built-in databases of
customers, supplier details and stock records can be carried out far more quickly than any
manual processing.
• Automatic document production, fast and accurate invoices, credit notes, purchase,
printing statements etc. all done automatically by software.
• Accuracy, there is less room for errors as only one accounting entry is needed for each
transaction rather than two (or three) for a manual system.
• Up to date information, the accounting records are automatically updated and so account
balances (e.g. customer accounts) will always be up to date.
• Availability of information, the data is instantly available and can be made available to
different users in different locations at the same time.
• Current time information, reports can be produced easily which will help management
monitor and control the business.
• Legibility, data is easy to read. The onscreen and printed data should always be legible and
so will avoid errors caused by poor figures.
• Efficiency, better use is made of resources and time; cash flow has improved through better
debt collection and inventory control.
• Staff motivation, the system will require staff to be trained to use new skills, which can
make them feel more motivated.
• Cost savings, computerized accounting programs reduce staff time doing accounts and
reduce audit expenses as records are neat, up-to-date and accurate.
• Reduce frustration, management can be on top of their accounts and thus reduce stress
levels associated with what is not known.
• The ability to deal in multiple currencies easily – many computerized accounting packages
now allow a business to trade in multiple currencies with ease. Problems associated with
exchange rate changes are minimized.

Disadvantages
• Reduction of manpower
• High cost
• Require special skills
• Other problem

Problem Faced in Computerized Accounting System

• User training
• System dependency
• Hardware requirements
• System failure
• Backups and prints
• Voucher management
• Security

The Difference Between Manual and Computerized Accounting

• Recording Transactions: Recording of financial transactions in manual accounting is
through books of original entries. In computerized accounting system the data is stored in
a well-designed accounting database.
• Classification: In manual accounting transactions are recorded in the books of original
entry and further classified and posted to ledger accounts whereas in computerized
accounting no such data duplication is made to cause classification of transactions
• Summarization: In manual accounting system the transactions are summarized to outturn
to trail balance accounts. In computerized accounting the original stored transactions data
are processed out for a list of balances of various accounts to be shown in the trial balance
report.
• Adjusting Entries: The entries are made to follow the principle of cost matching revenue
in manual accounting system whereas in computerized accounting Journal vouchers are
prepared and stored to follow the principles of cost matching revenue.
• Financial Statements: In manual accounting the preparation of financial statements per-
supposes the availability of trail balance. In computerized accounting the generation of
financial statements is independent of producing the trail balance.
• Closing the Books: After the completion of financial reports, the accountants get ready for
the next accounting period by posting closing and reversing journal entries. In
computerized accounting there is year-end processing to create and store opening balances
of accounts in database.