Professional Documents
Culture Documents
Identify the following examples below on what type of business activities; it may be service, merchandising and
manufacturing.
Homework activity
Please Read!
• Business entity principle – a business enterprise is separate and distinct from its owner or investor .
Example : If the owner has a barber shop, the cash of the barber shop should be reported separately from personal
cash. o The owner had a business meeting with a prospective client. The expenses that come with that meeting
should be part of the company’s expenses. If the owner paid for gas for his personal use, it should not be included as
part of the company’s expenses.
• Going concern principle – business is expected to continue indefinitely.
Example: When preparing financial statements, you should assume that the entity will continue indefinitely.
• Time period principle – financial statements are to be divided into specific time intervals. Example : o Philippine
companies are required to report financial statements annually. o The salary expenses from January to December
2015 should only be reported in 2015.
• Monetary unit principle – amounts are stated into a single monetary unit Example : o Jollibee should report
financial statements in pesos even if they have a store in the United States. o IHOP should report financial statements
in dollars even if they have a branch here in the Philippines
• Objectivity principle – financial statements must be presented with supporting evidence. Example : o When the
customer paid Jollibee for their order , Jollibee should have a copy of the receipt to represent as evidence.
o When a company incurred a transportation expense, a voucher should be prepared as evidence.
• Cost principle – accounts should be recorded initially at cost. Example : o When Jollibee buys a cash register , it
should record the cash register at its price when they bought it. o When a company purchases a laptop, it should be
recorded at the price it was purchased.
• Accrual Accounting Principle – revenue should be recognized when earned regardless of collection and expenses
should be recognized when incurred regardless of payment. On the other hand, the cash basis principle in which
revenue is recorded when collected and expenses should be recorded when paid. Cash basis is not the generally
accepted principle today.
Example: When a barber finishes performing his services he should record it as revenue. When the barber shop
receives an electricity bill, it should record it as an expense even if it is unpaid.
• Matching principle – cost should be matched with the revenue generated. Example: When you provide tutorial
services to a customer and there is a transportation cost incurred related to the tutorial services, it should be recorded
as an expense for that period.
• Disclosure principle – all relevant and material information should be reported.
Example: The company should report all relevant information.
• Conservatism principle – also known as prudence. In case of doubt, assets and income should not be overstated
while liabilities and expenses should not be understated.
Example: In case of doubt, expenses should be recorded at a higher amount. Revenue should be recorded at a lower
amount.
• Materiality principle – in case of assets that are immaterial to make a difference in the financial statements, the
company should instead record it as an expense. Example: A school purchased an eraser with an estimated useful life
of three years. Since an eraser is immaterial relative to assets, it should be recorded as an expense.
Buyer Behavior
22•An important component of the consumer purchase decision-making process.
The Factors Influencing Buyer Behavior in Consumer Markets
•Culture and sub-culture – Many older Chinese like to eat Shark’s fin soup as well as Bird’s nest soup, which
environmentalist despise.
23•Social class – Buying a real estate property is dependent, among others, on the how consumer perceive the
quality of their desired neighborhood and the status symbol that comes with a high-end development.
Social Factors
24•Reference Group – High-end brands like Nike shoes or acquiring a Globe cellphone to be a member of their Gen
Txt Club are examples of how peers can affect a purchase
•Family – demand for products such as PLDT long-distance calls is influenced by the Pinoy’s strong family
attachment
•Role and status – Mont Blanc pens are positioned as the pen for presidents of companies, as well as countries.
Johnny Walker Label is another example of whiskey positioned for successful people.
Personal Factors
•Age and life cycle – Retirees are the prime market for many luxury cruises, as it is consistent with the slow,
relaxing pace they desire. •Occupation – Pamper Uni are bought by working mothers who cannot afford to rest in the
morning. The International School targets children of expatriates. •Economic Circumstances – Network marketing
offers equal opportunity to those who want to start and grow their own business without the large capital involved in
putting up traditional businesses. •Lifestyle – Kraft imported cheese and Lazy Boy chairs are examples of lifestyle
products. •Personality and Self-concept – Premium brands like Rolex, cars and even clothes are driven by how the
buyer looks at himself of herself
25Psychological Factors
•Motivation – Many government employees now enroll in graduate school to gain the competitive advantage versus
their peers in aspiring for a promotion. •Learning – AMC cookware utilizes demonstration to show the product’s
unique ability to fry chicken without oil, boil egg without water and cook food simultaneously without taste transfer
using low fire. •Beliefs and Attitudes – Sony is believed to be a brand with a higher quality. Some consumers think
that installing chimes can bring in good luck to homes and offices. A diamond ring is a must in every engagement
and wedding.
Marketing Plan
•The marketing mix is actually the heart of an important company document called the marketing plan, which
outlines how the company intends to grow in the marketplace and win against competition
4S’s in Marketing Plan
1.Sufficiency – the marketing mix must be able to adequately meet the defined marketing objectives. This means
ambitious growth objectives would naturally need the corresponding heavier investment in marketing support
programs.
2. Selective – the marketer must be able to consider all potential alternatives of each marketing mix before short-
listing all possible combinations of the marketing mix that can meet their marketing objectives. The one that can
provide the best profitability is the one logically to be chosen. This is not easy as there are literally millions of
combinations3. Synchronize – when the marketing mix is selected, the different elements must combine
harmoniously for the brand become successful. For example, a marketer cannot choose to invest in heavy advertising
of a low quality product sold on a high price. In such a case, the elements of the marketing mix is not logically
synchronized.
4. Sustainability – the marketing mix that is finally chosen must be able to last in the long term vis-à-vis
competition. For instance, a lower price strategy not only risks a price war but is not sustainable unless the firm is
the cost leader in the industry.