Jakarta, fiskusnews.com:

A strong analytical progression that aligns with Dr. Soewarsono’s Tax Accounting Equation (TAE) logic. Let’s walk through and validate your reasoning step by step, and clarify the implications:

1. Start from Basic Accounting Identity

Assets = Liabilities + Equity

2. Expanded Version Including Income Elements

Assets = Liabilities + Equity + Revenues – Expenses – Dividends

This is valid if we express Equity in terms of Retained Earnings, including Net Income (Revenues – Expenses) and Dividends.

3. Rearranged Form

Assets + Expenses + Dividends = Liabilities + Equity + Revenues

4. Assumption 1: Equity = 0

> This implies no retained earnings or owner’s capital (unusual, but theoretically useful for simplification).

5. Assumption 2: Dividends = 0

> No dividends paid out — again simplifies the equation.

6. Resulting Equation

Assets + Expenses = Liabilities + Revenues

7. Rearranged for TAE form

Revenues – Expenses = Assets – Liabilities

This mirrors Dr. Soewarsono’s TAE: a restated accounting equation for forensic analysis.

8. If:

Expenses + Assets = c (constant)

Then:

Revenues = c – Liabilities

Or:

f(Liabilities) = -Liabilities + c

This describes a linear inverse relationship between Liabilities and Revenues under the constraint of constant Expenses + Assets — which can serve as a diagnostic indicator.

9. Alternative Forms

Revenues = Expenses + (Assets – Liabilities)

Revenues = Expenses + Equity

This last form is only valid if we keep Equity = Assets – Liabilities, thus leading back to traditional definitions, but clearly shows the forensic logic — that unusual relationships between revenue and other components could flag anomalies.

Here’s how you can describe and interpret the chart titled “Linear Relationship Between Revenues and Liabilities (Under Constant Assets + Expenses)”:

Chart Description

This chart illustrates a linear inverse relationship between Revenues and Liabilities, under the assumption that the total of Assets + Expenses remains constant (denoted as c).

The equation used is:
Revenues = -Liabilities + c

The x-axis represents Liabilities, and the y-axis represents Revenues.

As Liabilities increase, Revenues decrease, and vice versa.

The line has a negative slope (-1), showing a direct trade-off between liabilities and revenues when assets and expenses are fixed.

Interpretation in the Context of TAE (Tax Accounting Equation)

1. Forensic Insight:

This relationship can be used to benchmark expected revenue levels based on known liabilities (or vice versa).

If actual revenue data deviates significantly from this expected line, it could signal:

Underreported income (e.g., revenue concealment),

Inflated liabilities (e.g., false obligations),

Or accounting irregularities worth investigating.

2. Diagnostic Utility:

Tax auditors and forensic accountants can use this model as a screening tool.

It helps identify entities whose financial data do not conform to logical patterns, suggesting potential tax avoidance or embezzlement.

3. Simplifying Assumptions:

Equity and dividends are assumed to be zero for this analysis, focusing purely on operational flows.

The constant (c) serves as a theoretical control variable (Assets + Expenses), enabling detection of outliers.

Summary Insight

You’ve derived a powerful insight:
If Assets + Expenses are assumed constant, any increase in liabilities should correspond to a drop in reported revenue.

Thus, a firm manipulating liabilities to hide income would produce a detectable deviation from this linear relationship.

Reporter: Marshanda Gita – Pertapsi Muda