Comparative Study Analysis Of Financial Statements Based On Historical Cost Accounting With General Price Level Accounting
Journal Title: International Journal of Business and Management Invention - Year 2018, Vol 7, Issue 7
Abstract
The 2004 Statement of Financial Accounting Standards (SFAS) by Indonesian of Accounting Assocition states the financial statement is historical. It means, that the data used as the basis of presentation of financial statement are prices existing at the times the transactions being accured. Consequently, the SFAS apllies the method of Historical Cost Accounting (HCA) as a presentation basis of financial statement. The advantages of historical financial statement are reliable, reflecting objective data, and can be verified by interested parties. Addition, that the application of this method should enclose the assumption that monetary unit purchasing power is stable. Under high inflation, however, this financial statement cannot provide any relevant financial information to meet the users need who want to make financial decision. To solve the problem, the experts propose a method of General Price Level Accounting (GLPA) as the basis financial statement which considers the main financial statement based on HCA method. The inflation rate in Indonesia is tending upward. There is a possibility, therefore that the historical financial statement presented cannot provide relevant financial information to meet the users needs. In such condition, however, no a single company in Indonesia which provide supplementary financial statement based on the GPLA method. The aim of this research is to obtaion the empirical evidence, whether there is any differences between the resuld of the financial analysis based on HCA method and one based on GPLA method. The population of this research is financial statements issued at 2010 by go public companies in Indonesia. The sample size is determined based on the formula of Frank Lynch (1974) totaling 23 financial statements. The statistical analysis instrument used to tes the hypothesis is t-test. The instrument is frequently widely applied to hypothesis testing to know the difference of research object group which is expose by two different treatments. The result of the hypothesis testing using t-test come to the conclutions that: (1) of 23 financial statement set analyzed using 17 accounting ratios indicated that there are only 5 accounting ratios computed based on GPLA method are significantly found different from accounting ratios computed based on HCA method, (2) there of 5 accounting ratios which significantly different include in profitability ratios group, while the two othe accounting ratio are in the cash position ratios group.
Authors and Affiliations
Dr. Sunupriyawan
Keywords
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