Fundamentals of SENIOR

Accountancy, Business HIGH

and Management 1 (FABM 1) SCHOOL

Self-Learning
Module

Financial Statements 18
666
Quarter 3
Fundamentals of Accountancy, Business and Management 1
Quarter 3 – Self-Learning Module 18: Preparing Financial Statements
First Edition, 2020

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 Fundamentals of
SENIOR
Accountancy, Business HIGH
and Management 1 SCHOOL

(FABM 1)

Self-Learning
Module

Financial Statements 18
12
Quarter 3
Introductory Message

For the facilitator:

Welcome to the Senior High School – Fundamentals of Accountancy, Business

and Management 1 Self Learning Module on Financial Statements!

This Self-Learning Module was collaboratively designed, developed and

reviewed by educators from the Schools Division Office of Pasig City headed by its
Officer-in-Charge Schools Division Superintendent, Ma. Evalou Concepcion A.
Agustin, in partnership with the City Government of Pasig through its mayor,
Honorable Victor Ma. Regis N. Sotto. The writers utilized the standards set by the K
to 12 Curriculum using the Most Essential Learning Competencies (MELC) in
developing this instructional resource.

This learning material hopes to engage the learners in guided and independent
learning activities at their own pace and time. Further, this also aims to help learners
acquire the needed 21st century skills especially the 5 Cs, namely: Communication,
Collaboration, Creativity, Critical Thinking, and Character while taking into
consideration their needs and circumstances.

In addition to the material in the main text, you will also see this box in the
body of the module:

Notes to the Teacher

This contains helpful tips or strategies that
will help you in guiding the learners.

As a facilitator you are expected to orient the learners on how to use this
module. You also need to keep track of the learners' progress while allowing them to
manage their own learning. Moreover, you are expected to encourage and assist the
learners as they do the tasks included in the module.
 For the learner:

Welcome to Fundamentals of Accountancy, Business and Management 1 Self

Learning Module on Preparing Financial Statements!

This module was designed to provide you with fun and meaningful
opportunities for guided and independent learning at your own pace and time. You
will be enabled to process the contents of the learning material while being an active
learner.

This module has the following parts and corresponding icons:

Expectations - This points to the set of knowledge and skills

that you will learn after completing the module.

Pretest - This measures your prior knowledge about the lesson

at hand.

Recap - This part of the module provides a review of concepts

and skills that you already know about a previous lesson.

Lesson - This section discusses the topic in the module.

Activities - This is a set of activities that you need to perform.

Wrap-Up - This section summarizes the concepts and

application of the lesson.

Valuing - This part integrates a desirable moral value in the

lesson.

Posttest - This measures how much you have learned from the
entire module.
 EXPECTATIONS

After going through this module, you are expected to:

1. discuss the complete set of financial statements; and

2. discuss how to prepare financial statements from the worksheet.

PRETEST

Directions: Write TRUE if the statement is correct, and FALSE if otherwise.

1. Statement of Financial Position as at the end of the period shows information on

assets, liabilities, and expenses.

2. Statement of Comprehensive Income for the period shows information on income

and expenses, and consequently, the profit and loss for the period

3. Statement of Changes of Equity for the period summarizes the changes

that occurred in owner’s equity.
4. Statement of cash flows classifies cash receipts as inflows and cash
payments as outflows.
5. The preparation of the statement of financial position or the balance sheet
and the statement of comprehensive income is greatly facilitated by the
worksheet.

RECAP
Directions: Fill in the blanks.
1. Adjusting entries and subdivided into_________, ________, and ________.

2. Adjusting entries are prepared to adjust _______ and _______ accounts.

 LESSON

The end product of the accounting process are the financial statements.
Information from the journal and the ledger are meaningless to external and
internal users unless these are summarized and communicated through the
financial statements. The complete set of financial statements comprise:
a. Statement of Financial Position as at the end of the Period- shows
information on assets, liabilities, and equity
b. Statement of Comprehensive Income for the Period – shows information
on income and expenses, and consequently, the profit and loss for the
period
c. Statement of Changes of Equity for the Period – it summarizes the
changes that occurred in owner’s equity
d. Statement of Cash Flows for the Period – this statement provides
information about the cash receipts and cash payments of an entity
during the period. Statement of cash flows classifies cash receipts as
inflows and cash payments as outflows. Cash outflows are classified
as operating, investing, and financing. Cash inflows from operating
activities include, but not limited to receipts from sale of goods and
performance of services and receipts from royalties. Cash inflows from
investing activities include receipts from sale of property and
equipment; receipts from sale of investments in debt or equity securities
and receipts from collections on notes receivable. Cash outflows for
investing activities include but not limited to payments to acquire
property and equipment and payments to make loans to others
generally in the form of notes receivable. Cash inflow from financing
activities include receipts from investments by the owners and receipts
from issuance of notes payable. Cash outflow of a financing activities
include payments to owners in the form of withdrawals and payments
to settle notes payable.
 e. Notes, comprising a summary of significant accounting policies and
other explanatory information
f. Statement of Financial Position as at the beginning of the earliest
comparative period
The preparation of the statement of financial position or the balance sheet
and the statement of comprehensive income is greatly facilitated by the
worksheet. The main purpose of the worksheet is to assist the accountant in
executing procedures leading to the preparation of the financial statements.
In the worksheet, all income and expenses accounts in the adjusted trial
balance are simply extended to the income statement columns while all asset,
liability and equity accounts are extended to the balance sheet columns. In
preparing a worksheet, it includes entering the account balances in the
unadjusted trial balance columns total and the amounts; entering the
adjusting entries in the adjustments columns and the total amounts;
computing each account’s adjusted balance by combining the unadjusted
trial balance and the adjustment figures; extending the asset, liability, and
owner’s equity amounts from the adjusted trial balance columns to the
balance sheet columns; extending the income and expense amounts to the
income statements columns and computing profit or loss as the difference
between total revenues and total expenses in the income statement.

ACTIVITIES

Accounting Process

Directions: Summarize through illustration the major processes in accounting.

 WRAP-UP

To summarize what you have learned in the lesson, answer the following
questions:
1. What is the main purpose of the worksheet?
2. Why do you think information from the journal and the ledger are meaningless
unless they are summarized and communicated through the financial
statements?

VALUING

Reflect on this!

"For the things we have to learn before we can do them,

we learn by doing them.” – Aristotle

POSTTEST

Directions: Identify the statements below.

__________1.It refers to a multiple-column form that is used in preparing financial

statements.
__________2.It refers to a financial statement that shows information on assets,
liabilities and equity.
__________3.It refers to a financial statement that shows income and expenses.
__________4. It refers to a financial statement that provides information about cash
receipts and cash payments.
__________5. These refers to written records that show activities and performance of
a business.
 KEY TO CORRECTION

and expenses
deferrals of income 3. 5.FINANCIAL STATEMENTS
debts expense 4.STATEMENT OF CASH FLOWS
5. TRUE expenses and bad COMPREHENSIVE INCOME
4. TRUE depreciation 3. STATEMENT OF
3. TRUE recognition of 2. POSITION
2. TRUE and expenses 2. STATEMENT OF FINANCIAL
1. FALSE accruals of income 1. 1. WORKSHEET
PRETEST RECAP
POSTTEST

References
Ballada, W. 2017. Fundamentals of Accountancy, Business, and Management 1. VDomDane
Publishers.

Banggawan, RB. Asuncion, DJ. 2017. Fundamentals of Accountancy, Business, and

Management 1. Real Excellence Publishing.

Feme, PM. Cabuñag, HP. 2017. Fundamentals of Accountancy, Business and Management 1.
Fastbooks Educational Supply, Inc

Ferrer, RC. Millan, CV. 2017. Fundamentals of Accountancy, Business, and Management 1.
Bandolin Enterprise. San Juan, DA. 2018. Fundamentals of Accounting. Elmoer
Publishing

Rabo, JS. Tugas,FC.Salendrez, HE. 2016. Fundamentals of Accountancy, Business, and

Management 1. Vibal Group Inc.

San Juan, D. A. 2018. Fundamentals of Accounting. ELMOER Publishing.

"Basic Accounting Help." Basic Accounting Help. https://basicaccountinghelp.com/payroll-

accounting.html. Accessed on August 30, 2020.

Kagere, Peninah, Pushkar Chand, Danny, Ankebo, Hdjdb, Pulane.moroosele, Laban Muasa,
Haley, and Crisalyn. "Business Transaction - Types, Definition, Explanation and
Examples." Accounting for Management. September 24, 2019.
https://www.accountingformanagement.org/business-transaction/. Accessed on
August 30, 2020.