Week 3

Unit 1: Introduction to Bookkeeping

Topics: Financial Statements
Accountancy – the Profession
Career Opportunity

Learning Outcomes:
1. prepare financial statements
2. Describe Accountancy as a profession
3. Describe career opportunities

Concept Digest (Discussion)

Financial Statements
According to Mejorada, N (2007), financial statements are
periodic statements issued on the finances of a firm. They are
the following:
1. Income Statement – presents results of operation. In other
words, it shows how much the firm earned; how much expenses
it incurred, and the net income / loss for the period
covered in the statements. It is prepared based on the
following equation:

Revenue – Expenses = Net Profit/ Loss

If the difference is negative, (that is expenses exceed revenue),

the difference is a net loss

2. The Balance Sheet – presents the financial position of a

firm. It shows its assets, liabilities, and owner’s equity.
The following equation is used:

Assets = Liabilities + Owner’s Equity

Assets are things of value such as cash, receivables, land,

building, and equipment.

Liabilities are debts or amounts owed to other parties ( such as

those incurred for purchase of goods, for expenses, and for loans
obtained from financing companies).

Owners’ Equity is the share of the owner in the assets after

providing for the liabilities.
 3. Cash Flow Statement – shows sources and uses of funds.

The Double-entry and Single-entry Bookkeeping System

The double-entry bookkeeping system provides for recording

business transactions showing their effects in an equilibrium. It
is premised on the exchange of values in every transaction. That
is, in every transaction, there are values received and values
parted with. The two fold effects of transactions are reflected
on accounting records. An example is purchase of a book. The
value received is the books and the valued parted with is the
cash paid, (Mejorada, N., 2007).

Under the single-entry bookkeeping system only chosen

records are maintained so that the dual effects of transactions
on the basic accounting values are not reflected therein. An
example is a small business firm which maintains records of cash
payment and sales only. Major transactions such as purchase of
equipment are noted in a narrative form. This system adopted by
small business entities and by professionals, (Mejorada, N.,
2007).

Accountancy – the Profession

According to Mejorada, N. (2007), accountants belong to a

profession of recognized standing. The professional practice of
accounting is generally called Accountancy. It has the following
attributes:
a. It has the responsibility to serve the public – the public
and other parties rely on CPA’s for sound financial
reporting and advice on business affairs. To cope with this,
CPA’s are required to undergo continuing professional
education (CPE). They may do this by taking graduate/post
graduate studies, attending conferences, conventions and
seminars, and by conducting researches.
b. It has a body specialized knowledge acquired by formal
education. Specialization is acquired by working for the
four-year college degree, Bachelor of Science in Accountancy
(BSA).
 c. It has admission requirements – to be a member of the
profession, one has to complete the four-year collegiate
course (BSA) and pass the CPA examinations.
d. It has code of professional ethics – provides technical and
practical guidelines to CPA’s in maintaining a professional
attitude. It assures the public, clients, and employees that
the profession maintains high professional standard.
e. The practice of accountancy in the Philippines is governed
by an Accountancy Law. At present, this is the Accountancy
Act of 2004 (Republic Act 9298) This supersedes the previous
law (Presidential Decree No. 692).
f. It has maintained public confidence – CPA’s must gain and
nurture public confidence as manifested by the fact that
clients continue to seek their services and different
organizations give weight to the CPA certificate to
promoting employees.
g. It has national organization which holds annual conventions
for its members.
h. CPA’s are required to observe internationally accounting
standards or generally accepted accounting principles.
i. CPA’s are required to undergo continuing professional
education. CPE credits are a requirement for the renewal of
PRC identification cards.

Career Opportunities

According to Mejorada, N (2007), the proven reliability of CPA’s

in handling difficult situations particularly those related to
finance has broadened career opportunities in accountancy. A CPA
may choose to go into public accounting practice, government
service, accounting education, or to be employed in commerce and
industry. There are CPA consultants specializing in tax
consultancy and management advisory services.

Activities (Formative)
Title: Identification Exercise
Things to do:
1. Identify the following descriptive statements.
Questions:
_________________1.The process of recording business
transactions in a systematic manner.
_________________2.The recording of business transactions
showing their dual effects on accounting
values.
_________________3.The government agency that regulates the
practice of professions in the country.
_________________4.The statement that shows the sources and
uses of cash.
_________________5.It refers to the buying and selling of
goods.

Assessment (Summative)
Title: My Livelihood
Date of Submission:
Rubric Used: None
Things to do:
1. Determine if each of the following statements is true.
Explain if your answer is false.

Questions:
____________________1. The bookkeeper in correctly recording
business transactions contributes to
the reliability of accounting
records.
____________________2. When a bookkeeper commits an error, he
is apt to favor one or more of the
different parties interested in the
operations of a business entity to the
disadvantage of others.
____________________3. Bookkeeper need not be careful in
recording transactions because his
work is still subject to review by the
accountant and the auditors.
____________________4. Bookkeeping is synonymous to
accounting.
____________________5. An error in bookkeeping can result in
distorted information and
consequently in wrong decisions.

References
 Mejorada, N (2007). Bookkeeping. Quezon City, Philippines.
KATHA Publishing Co. Inc.
 https://www.thebalancesmb.com/bookkeeping-101-a-beginning-
tutorial-392961