Department of Education: Learning Activity Sheet Third Quarter

Republic of the Philippines
Department of Education
REGION IV-A
SCHOOLS DIVISION OFFICE OF CAVITE PROVINCE
GENERAL MARIANO ALVAREZ TECHNICAL HIGH SCHOOL
LEARNING ACTIVITY SHEET

FUNDAMENTALS OF ACCOUNTANCY AND BUSINESS MANAGEMENT 1
Third Quarter
WEEK 1
MELC:
1. Define Accounting
2. Describe the nature of accounting
3. Narrate the history/origin of accounting
4. Define external users and give examples
5. Define internal users and give examples
OBJECTIVES:
1. Define accounting
2. Understand the inherent features of accounting
3. Narrate the history and origin of accounting
4. Differentiate internal from external users
REVIEW:
A. Directions: On a sheet of paper, write YES if the statement is correct and NO if otherwise.
1. Accounting is a system that measures business activities.
2. Accounting provides quantitative information, primarily financial in nature.
3. Accounting is part of business operation and operates in isolation.
4. By recording transactions, the information will be of unlimited use.
5. Accounting is both an art and a science.
B.
Congressional Road, Brgy. Poblacion I, General Mariano Alvarez, Cavite

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depedcavite.gmaths@gmail.com
“GMATHSIANS, LIFELONG CHAMPIONS”
REGION IV-A
DISCUSSION
In your community, there are businesses that exist some of the owner’s son and daughter maybe your
friends. Right? You may text/ask them thru your FB account: Who among them prepare simple bookkeeping? How
they prepare their reports? Do they have they knowledge in accounting or they ask help from professionals? Write
your answer in a clean sheet of paper and basing on their answer write a simple essay about the nature of their
business.
What is accounting ?
According to American Institute of Accountants (AICPA), accounting is the art of recording, classifying
and summarizing in a significant manner and in terms of money, transactions and events which are in part at least
of financial character and interpreting the results thereof. It is also is the process of identifying, recording and
communicating economic events of an organization to interested users (Weygandt, J. et. al).
Functions of Accounting
1. Identifying. This involves selecting economic events that are relevant to a particular business transaction. The
economic events at an organization are referred to as transactions. Transactions and events are generally supported
by documentary evidences or proofs. Like sales transactions supported by Sales Invoice together with Delivery
Receipt.
2. Recording. It involves the writing and effects of the transactions and events hat have been analyzed using
different books of accounts from General Journal, Special Journals and General Ledger.
3. Classifying. It is the sorting or grouping of similar transactions and events in a specific period of time.
4. Summarizing. It is the process that involves grouping of various accounts referred to the classifying process
where the accounts are grouped into assets, liabilities, owner’s equity, revenue, cost and expenses taken from the
general ledger.
5. Reporting. It involves the preparation of the financial statements such as statement of financial position,
statement of comprehensive income, statement of owner’s equity and statement of cash flows.
6. Interpreting. This is the final function in the accounting process. The data from the financial reports is being
used as basis for the future plan and framing of business policies.
Nature of Accounting
•Accounting is a service activity. It is involved in providing professional services particularly preparing financial
reports about the financial activities of the business entities.
•Accounting is a process. A process refers to the method of performing any specific job step by step according to
the objectives or targets.
•Accounting is both an art and a discipline. Art refers to the way something is performed. And because it follows
certain standards and professional ethics, it is also a discipline.
•Accounting deals with financial information and transactions. This is through the preparation and use of financial
statements. You will learn if the company is profitable or not.
•Accounting is an information system. Accounting is recognized and characterized as a store house of information.

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REGION IV-A
Brief History of Accounting:

I. Early Development in Mesopotamia
• People followed a system of writing and counting money. The development of accounting may be related to the
taxation and trading activities of temples.
II. Development in the Roman Empire
• The reign of Emperor Augustus (63BC-14AD) provided more evidence about the development of accounting.
• The Roman government kept detailed financial information of the deed of Emperor Augustus regarding the
stewardship of Roman resources.
• Roman historian Suetonius and Cassius Dio recorded that in 23BC, Augustus prepared rationarium (account)
which listed public revenues, the amounts of cash in the aerarium (treasury), in the provincial fisci (tax officials),
and in the hands of the publican (public contractors); and that it included the names of the freedmen and slaves
from whom a detailed account could be obtained.
III. Dissemination of double-entry bookkeeping the 14th century Italy
• Most important event in accounting history
• Luca Pacioli is acknowledged as the father of modern accounting because of this. His “Summa de Arithmetica,
Geometria,Proportioni et Proportionalita” (Everything about Arithmetic, Geometry and Proportion) is the first
book printed with a treatise on bookkeeping.
IV. Signing of Charter by Queen Victoria
• The modern profession of the chartered accountant originated in Scotland in the 19th century when Queen
Victoria granted a royal charted to the Institute of Accountants in Glasgow.
V. Harmonization of Accounting Standards
• PAS –Philippine Accounting Standards corresponding to International Accounting Standards (IAS);
• PFRS—Philippine Financial Reporting Standards corresponding to International Financial Reporting Standards
(IFRS);
• Interpretation of the PFRS/PAS corresponding to interpretations of IFRS/IAS.
To know in details the accounting history, you may find our list of books in the Reference Section for more reading
purposes.
Users of Accounting Information

The users of accounting information may be classified based on the extent of their participation in the affairs of the
business such as:
1. Internal Users—composed of the management group who owns and/or manage and control the business entity.
2. External Users—composed of the financing group and public group. They do not own/manage and control the
business entity. Examples are the investors, employees, lenders, suppliers and other trade creditors, customers,
government and its agencies and the public.

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Learning Task 1:
Write only the letter of the correct answer in your notebook.
A. Analyzing D. Summarizing
B. Recording E. Reporting
C. Classifying F. Interpreting
1. It refer to the process of grouping similar transactions and events together.
2. The process of explaining the relationships of the different items in the financial statements.
3. The process of determining the effects on the different accounts of the documented transactions and
economic events.
4. The process of writing in the journal the effects, whether increases or decreases, of the analyzed
transactions and events.
5. The process of identifying the relationships of various items in the financial statements and pointing out
their effects and importance to decisions to be made by their users.
6. The process of preparing statements of financial position, statements of comprehensive income,
statements of owner’s equity and statements of cash flows.
Learning Task 2:
Write True if the statement is correct or False if it is incorrect. Write your answers in your notebook
1. The father of Accounting is Luca Pacioli.
2. The Philippines adopts IFRS.
3. ASC (Accounting Standard Council) is replaced by PFRS.
4. The father of modern accounting is a CPA.
5. All record-keeping of business transactions uses double-entry bookkeeping.
Learning Task 3:
Choose the letter that corresponds to the best answer. Write it in your notebook.
1. Accounting is composed of ______ processes.
a. 6 b. 5 c. 4 d. 3
2. Which of the accounting processes comes first ahead of the others?
a. Interpreting b. Summarizing c. Identifying d. Classifying
3. They are interested in the financial statements to determine the employer’s stability and profitability
a. employees b. Lenders c. Customers d. Public
4. The manager of the company is an example of
a. Internal user b. External user c. a and b d. Investor
5. External users of accounting information need more detailed information than the management group
a. True b. False c. Sometimes d. Never

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REGION IV-A
Answers key
Learning Task 1 (6 pts)

1. C 2. D 3. A 4. B 5. F 6 .E
1. True 2. True 3. False 4. False 5. True
1. A 2. D 3. C 4. A 5. B
References:
Deped Self Learning Module 1; Quarter 3 Fundamentals of Accountancy and Business Management1.
https://www.google.com/aclk?sa=l&ai=DChcSEwiQmMej47nvAhUpwRYFHb6RAZ0YABAC
GgJ0bA&ae=2&sig=AOD64_13RSxewr5t_FQD6rZ_loFnfdy5zA&dct=1&adurl=&q=
https://babington.co.uk/blog/accounting/brief-history-of-accounting/
https://accountingtheory.weebly.com/nature-and-scope-of-accounting.html.

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REGION IV-A

Third Quarter
WEEK 2
MELC:
1. Explain the varied accounting concepts and principles
2. Solve exercises on Accounting principles as applied in various cases
OBJECTIVES:
1. Explain the varied concepts and principles of accounting
2. Solve exercises on accounting principles as applied in various cases
REVIEW:
DISCUSSION
Accounting concepts are important which accountant assume in recording business transactions like
separate entity, going concern, time period, accrual and monetary unit. These serve as the bedrock of accounting
and they are also known as postulates and accounting assumptions. In financial statements, it is assumed that these
accounting concepts are always present.
Basic Accounting Concepts

1. Separate Entity. The business is treated as having a separate personality from the owner/s or other entities. Only
transactions of the business are recorded in the books of accounts. Personal transactions of the business owners are
not recorded.

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REGION IV-A
2. Going Concern. The business entity will continue its operation indefinitely unless management decided to
liquidate the business or to cease its operations.
3. Time period (Periodicity, Accounting Period, or Reporting period Concept). It assumes that the life of
enterprise is divided into several periods. A reporting period is usually 12 months, although it can be longer or
shorter. A twelve month period can be either calendar year period (which starts on January 1 to December 31) or
fiscal year period which also covers twelve months but starts on a date other than January 1). Accounting period
that is shorter than 12 month is called interim period. An interim period can be a month, a quar-ter or a semi-annual
period.
4. Actual basis of accounting. It provides information about past transactions and other future economic events
that are most useful to users in the making of economic decisions and other future economic events that are most
useful to users in the making of economic decisions.
5. Monetary unit. All business transactions are measured and recorded using only one unit of measurement. In our
case, it is the Philippine peso. It also assume that the value of the currency you are using five (5) or thirty (30) years
ago is the same value today. Even if there is inflation, the amount of your money will not change.
6. Faithful representation—if the information is factual or represents the actual effects of events that have taken
place. For example, if a business makes a total sales of P2 million, it should report that amount in its financial
statement no more, no less.
7. Free from error—information is not materially misstated and there are no errors in the description and in the
process by which information is selected and applied.
8. Historical cost concept (Cost Principle). Acquired assets should be recorded at their actual cost and not at what
management thinks they are worth as at reporting date.
9. Matching (for Association of Cause and Effect). Under this concept, revenue is to be recognized in the
accounting period when goods and services are rendered or performed
10. Prudence or Conservatism. It is the inclusion of a degree in the exercise of judgements needed in making the
estimates required under conditions of uncertainty, such that assets or income are not overstated and liabilities or
expenses are not understated.
11. Full disclosure principle. It requires that all relevant information that would affect the user’s understanding
and assessment of the accounting entity to be disclosed in the financial statements.
12. Cost-benefit (Cost constraint). It suggests that the benefits of accounting for and reporting information should
outweigh the costs or the cost of processing and communicating information should not exceed the benefits to be
derived from it.
13.Consistency concept. The firms should use the same accounting method from period to period to achieve
comparability over time within a single enterprise.
Fundamental Qualitative Characteristics

The following are the characteristics that make information useful to users which is composed of relevance
and faithful representation.
Relevance. Information is relevant if it can affect the decisions of users without this trait the information deemed
irrelevant. Relevant information has the following aspects (Ferrer and Millan, 2019).
a. Predictive value—It can help users to make predictions about future outcomes.
b. Confirmatory value or feedback value—This is related to predictive value. Information is

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REGION IV-A
confirmatory if it can help users confirm their past predictions.

c. Materiality—Financial reporting is only concerned with information that is significant enough to
affect evaluations and decisions. Materiality depends on the size and nature of the item judged
in the particular circumstances of its omission.
Enhancing Qualitative Characteristics. These support fundamental qualitative characteristics and enhance the
useful information such as comparability, verifiability, timeliness and understandability (Ferrer and Millan,
2019).
a. Comparability—if it can help users identify similarities and difference between different set of
information.
b. Verifiability - if different users could reach a general agreement as to what the information intends to
represent.
c. Timeliness—if it is available in time to be able to influence their decisions. This is like the saying
“Too late the hero.”
d. Understandability—if information is presented in a clear and concise manner or by presenting data
that can be understood by the users of information.
Learning Task 1:
Choose the letter that correspond to your answer. Write it in your notebook
1. Preparing financial statements at least annually is an application of which of the following accounting
concepts?
A. Historical cost C. Stable monetary unit
B. Accrual basis D. Time period
2. An entity requires a stapler. Instead of recognizing the cost of the stapler as an asset to be subsequently
depreciated, Aeris Trading immediately charges it to expense. This is an application of which of the
following concept?
A. Prudence C. Cost-benefit
B. Materiality D. B and C
3. Which of the following does not answer the question” how financial reporting is done?”
A. Assumptions B. Principles C. Constraints D. Objectives
4. The owner of Company A is Mr. Arrow and is going out of business because he lost all the money in the
cockpit. What accounting assumption is applicable in this situation?
A. Going concern C. Consistency
B. Separate entity D. A and C
5. Under this concept, amounts in the financial statements are stated in terms of common unit of measure
and inflation is generally ignored.
A. Prudence C. Stable monetary unit
B. Materiality D. Ignoring concept
Learning Task 2:
Analyze the given independent cases below. Write your answer on a clean sheet of paper.

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REGION IV-A
Case 1: Mr Pierre acquired his business for P10,000,000. The fair market value of the business is
P11,000,000. Will it be more useful if accounting records were adjusted corresponding to the fair
market value amount of the business? Justify your answer.
Case 2: The owner of the business is questioning why the gasoline and oil consumed by the family in going
to Cagayan by his family which was paid from cash of the business charged to his personal drawing. He is
claiming that since he is the owner of the business, he has the discretion to the use of business cash. How
would you explain your accounting for such payment?
Learning Task 3:
Identify the concepts of accounting in the given situations.
A. Matching principle D. Full disclosure principle
B. Accrual accounting E. Materiality principle
C. Monetary unit F. Cost principle
1. A barber who performs services to clients should record revenue.
2. All relevant information should be included in the financial reports.
3. Expenses should be recorded in the period when the revenue is generated
4. A company that purchases furniture should record it at its acquisition cost.
5. Minimal costs incurred should be recorded as expense.
6. A Philippine company should report financial statements in pesos.
Learning Task 4:
Below are a number of accounting procedures and practices in Prospere General Merchandise. For each of
these items, list the assumption, principle, information characteristic, or convention that is violated. Write
your answer in your notebook.
1. The company prepares financial reports are based on the SFAS promulgated by the ASC.
2. The assets and owner’s equity are reported at fair value but business obligations are reported at historical
cost.
3. The company maintains only one employee to function as accountant, internal auditor, collector and
treasurer.
4. The financial reports are always delayed.
5. Due to recession, estimated future earnings are reported in the current financial reports of Prospere
General Merchandise.
6. The accounting methods and procedures used are regularly changed semiannually.
7. The accountant records transactions as desired by the owner without proper supporting documents.
8. The financial reports do not include minutes of the meeting, business contracts, and future plans because
they not financial in nature.
9. The company refuse to be audited by an external auditor because it has already an internal auditor who
religiously verifies the financial reports.
10.The company acquired a refillable pentel amounting to P200 and depreciated it because its estimated
life is good for five years.

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REGION IV-A
Answers key

1. D 2. C 3. D 4. C 5. B
Learning Task 2 (10 pts) Answers may vary

1. B 2. D 3. A 4. F 5. E 6. C
References:
Deped Self Learning Module 1; Quarter 3 Fundamentals of Accountancy and Business Management1
www.topsearch.co/search/now
https://www.investopedia.com/terms/a/accounting-principles.asp

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REGION IV-A

Third Quarter
WEEK 3 and 4
MELC:
1. Illustrate the accounting equation
2. Perform operations involving simple cases with the use of accounting equations
3. Discuss the five major accounts
4. Prepare a Chart of Accounts
OBJECTIVES:
1. Illustrate the accounting equation
2. Analyze and solve simple cases using the accounting equation
3. Classify and discuss the five major accounts
4. Discuss the importance of chart of accounts in recording business transactions
5. Prepare chart of accounts for a service business
REVIEW:
Directions: Supply the missing terms.
1. It is important to understand the manner in which data are presented using the underlying accounting
assumptions which are _______________, _____________, ________________, ________________ and
________________.
2.To be useful, financial reports generated by professional accountants use set of basic accounting
principles which are _______________, _____________, _______________, __________________,
____________________, __________________ and ___________________.
3. The five major accounts are ________, ________, ________, ________, and____________.
4. The normal balance of assets and expenses is ___________ while the normal balance of liabilities,
capital or owner’s equity and income is ____________.
5. The two approaches for financial accounting are ____________ and _____________.
DISCUSSION
Since you are already familiar with the different concepts and principles of accounting, you are now ready to meet
the different accounting elements of accounting that plays major role in the accounting equation which IASB
Framework provides:

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REGION IV-A
Statement of Financial Position Accounts (SFP) Current Assets An asset shall be classified as
current when it satisfies any of the following criteria: 1. It is expected to be realized in, or is intended for sale
or consumption in the entity’s normal operating cycle; 2. It is held primarily for the purpose of being traded;
3. It is expected to be realized within the twelve (12) months after the SFP date. 4. It is cash or a cash
equivalent, unless restricted from being changed, or used to settle a liability at least twelve (12) months after
the SFP date.

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REGION IV-A
All other assets are classified as noncurrent
Current Liabilities A liability shall be classified as current when it satisfies any of the following criteria: 1. It
is expected to be satisfied in the entity’s normal operating cycle; 2. It is due to be settled within twelve (12)
months after the SFP date; 3. The entity does not have an unconditional right to deter settlement of the
liability for at least twelve (12) months after the SFP date.
All other liabilities shall be classified as noncurrent.

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REGION IV-A

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REGION IV-A
The result of the operations is either a net income or a net loss. In sole proprietorship, the net income
increases the equity of the proprietor, while net loss decreases his/her equity. In some instances, the result of
operations is neither a net income or a net loss, or zero. A zero result is a breakeven where total revenue
equals total cost and expenses.
The account
Account is the basic storage of information in accounting it is a record of the increases and
decreases in a specific item of asset, liability, equity , income or expense.
An account may be depicted through a “T-account” called such name because it resembles the letter
“T”. A “T” account has three parts, namely:
1. Account title—describes the specific item of asset, liability, equity, income or expense.
2. Debit side—the left side of the account.
3. Credit side—the right side of the account.
Chart of Accounts—is a list of all the accounts used by the business.
Learning Task 1:
Identify or classify the different account titles as to whether they belong to Assets, Liabilities, Owners’
Equity Revenue or Expense of the business. Fill the amounts of the following SFP and SCI elements:
Current Assets____________________ Sales __________________
Noncurrent Assets ______________Expenses _____________
Current Liabilities_________________ Net Income (Loss)______
Noncurrent Liabilities ____________

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REGION IV-A
Learning Task 2:
Read carefully the following situation and determine the Assets, Liabilities, and Equality of this situation.
Write your answer in your notebook.
The business was put up from a cash of ₱200,000, the initial capital of the owner. Then, ₱40,000 of the
cash was used to purchase an equipment to be used in business. The purchase of equipment resulted in a
liability of ₱20,000. How much are the total assets of the business?
Solutions: ________________________________________________________________
Learning Task 3:
The following transactions were made during the first month of a single proprietor’s business
operation. Do not forget to write your answer in your notebook.
1. Mr. Y started a grocery store. He invested P 200,00 as initial investment.
2. He registered his business paying P 1,500 for registration.
3. He paid P 20,000 for store rent applicable for one year.
4. He incurred and paid P25,000 for the repair of the grocery store.
5. He purchased merchandise for sale amounting to P 300,000, paying P 200,000 with the balance to
be paid after 60 days.
6. He paid P2,000 for the transportation of the merchandise purchased.
7. He hired a saleslady for a contract of P 5,000 per month salary.
8. He sold P100,000 worth of merchandise for P160,000 for cash.
9. He sold P20,000 worth of merchandise for P35,000 on credit.
10.He paid business taxes and licenses amounting to P5,000 during the month.
11.He paid P3,000 electricity expense during the month.
12.He paid the salary of his saleslady.
13.He paid 50% of his obligation to his supplier.
Required:
1. Determine what accounting element is affected by the business transactions including their
amounts..
2. How much is the total assets, liabilities, and owner’s equity at the end of the month.

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REGION IV-A
Answers key
Learning Task 2 (10 pts) Answers may vary
References:

(046) 443-9890, 487-3947, 487-1912
REGION IV-A
Deped Self Learning Module 1; Quarter 3 Fundamentals of Accountancy and Business Management1
https://www.investopedia.com/terms/c/chart-accounts.asp
https://mpm.ph/what-are-the-books-of-account/
https://www.google.com/search?ei=MUZPYO_fIYf8wQOenr_gDg&q=economics+as+social+science+an
d+applied+science&oq=Economics+as+social+&gs_lcp=Cgdnd3Mtd2l6EAEYATIFCC4Q
https://www.google.com/search?ei=aEZPYIW6M8T6-
Qax5qjIAg&q=analytic+and+holistic+rubrics&oq=Analytic+and+&gs_lcp=Cgdnd3Mtd2l6EAEYADICCAAyAg
gAMgIIADICCAAyAggAMgIIAD

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Department of Education: Learning Activity Sheet Third Quarter

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Republic of the Philippines

LEARNING ACTIVITY SHEET

Congressional Road, Brgy. Poblacion I, General Mariano Alvarez, Cavite

Congressional Road, Brgy. Poblacion I, General Mariano Alvarez, Cavite

Brief History of Accounting:

Users of Accounting Information

Congressional Road, Brgy. Poblacion I, General Mariano Alvarez, Cavite

Congressional Road, Brgy. Poblacion I, General Mariano Alvarez, Cavite

Learning Task 1 (6 pts)

Congressional Road, Brgy. Poblacion I, General Mariano Alvarez, Cavite

LEARNING ACTIVITY SHEET

Basic Accounting Concepts

Congressional Road, Brgy. Poblacion I, General Mariano Alvarez, Cavite

Fundamental Qualitative Characteristics

Congressional Road, Brgy. Poblacion I, General Mariano Alvarez, Cavite

confirmatory if it can help users confirm their past predictions.

Congressional Road, Brgy. Poblacion I, General Mariano Alvarez, Cavite

Congressional Road, Brgy. Poblacion I, General Mariano Alvarez, Cavite

Learning Task 1 (5 pts)

Learning Task 2 (10 pts) Answers may vary

Learning Task 3 (6 pts)

Congressional Road, Brgy. Poblacion I, General Mariano Alvarez, Cavite

LEARNING ACTIVITY SHEET

Congressional Road, Brgy. Poblacion I, General Mariano Alvarez, Cavite

Congressional Road, Brgy. Poblacion I, General Mariano Alvarez, Cavite

All other assets are classified as noncurrent

All other liabilities shall be classified as noncurrent.

Congressional Road, Brgy. Poblacion I, General Mariano Alvarez, Cavite

Congressional Road, Brgy. Poblacion I, General Mariano Alvarez, Cavite

Chart of Accounts—is a list of all the accounts used by the business.

Congressional Road, Brgy. Poblacion I, General Mariano Alvarez, Cavite

Congressional Road, Brgy. Poblacion I, General Mariano Alvarez, Cavite

Learning Task 1 (7 pts)

Learning Task 2 (10 pts) Answers may vary

Learning Task 3 (13 pts)

Congressional Road, Brgy. Poblacion I, General Mariano Alvarez, Cavite

Congressional Road, Brgy. Poblacion I, General Mariano Alvarez, Cavite

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