SOUTH WESTERN

CAREER COLLEGE, INC.

P-3, Simpak, Lala, Lnao del Norte

405106
Distance Learning Modality Permit: NO. FL07-520, s.2021
Onward, Shine Forth...

S – incerity
W – orthiness
C – redibility
C – hrist - centeredness

FUNDAMENTALS OF ACCOUNTANCY,
BUSINESS AND MANAGEMENT 1

1ST
LEARNER’S MATERIAL

Quarter- Module 3
11
USERS OF ACCOUNTING INFORMATION

Module Duration: ___________

 INTRODUCTORY MESSAGES

TO THE PARENTS/GUARDIANS OF THIS LEARNER’S MODULE

This module was designed and developed to cater the academic needs of your child in this trying time. Teaching and
learning process do not only happen inside the four corners of a classroom but also in your respective homes. We hope
that you will cooperate, provide encouragement and show full support to your children in answering all the activities found
in this module.
TO THE STUDENT OF THIS MODULE
Welcome to this module! You must be very eager to start with the learning activities prepared specifically for you. 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 resource while being an active learner.
You will do so in a little while, but before you do, try to familiarize yourself with the different sections of this module. It is
important that you know what each part covers so that you can achieve the learning objectives for each section. The
different sections of the module are presented to the following learning design. Familiarize yourself with these headings so
you would know what to do in each section.

BULLSEYE
This section gives you the idea of the skills and learning competencies that you are expected to learn
after answering this module.

SIZE UP
This section gives an activity that checks the students’ knowledge about the lesson. This is a diagnostic
section that gives the teacher the idea of the stock knowledge of the learner about the lesson.

MOBILIZE AND FIRM UP

This section stimulates your interest by linking past lesson to the new lesson through various activities
and have brief discussion of the lesson which aims to help you discover new concepts and skills.

ASPIRE AND ACQUIRE

This section allows you to deepen aspired knowledge from the lesson by engaging different activities
and exercises to practice the skills you need to acquire in preparation for assessment.

ARTICULATE & APPRECIATE

This section articulates your mastery of the lesson through varied assessment which mirrors a real-
world scenario and helps you appreciate the current lesson through reflective activities.

Do’s and Don’ts of this Module for Students

 Since every module will serve as entry to your portfolio, you will write all your answers here and please handle it with
care as portfolio will have a separate grade for neatness and organization.
 Read, analyze, and comprehend the discussions inside this module. Do not start answering if the teacher was not
able to discuss the lesson through teleconferencing.
 Read the instructions carefully before doing each task. Do not let anybody answer the activities. Observe HONESTY
AND INTEGRITY.
 If you encounter any difficulty in this module, teachers will call you on a scheduled time.
 Return this module to your teacher or drop this on the “DROP – OFF” box of your school every Friday. The
acceptance of this module will be 3:00 o’clock in the afternoon only.
We hope that through this material, you will experience meaningful learning and gain a deep understanding of the
relevant competencies. You can do it!

ACKNOWLEDGMENT
Republic Act 8293, section 176 states that: No copyright shall subsist in any work of the Government of the
Philippines.However, prior approval of the government agency or office wherein the work is created shall be
necessary for exploitation of such work for profit. Such agency or office may, among other things, impose as a
condition the payment of royalties. Borrowed materials (i.e., songs, stories, poems, pictures, photos, brand
names, trademarks, etc.) included in this module are owned by their respective copyright holders. Every effort
has been exerted to locate and seek permission to use these materials from their respective copyright owners.
The publisher and authors do not represent nor claim ownership over them.This module is partly adopted from
sectors of DepEd Region 10 thru http://deped10.com/ and PEAC thru https://peac.org.ph/ under the
development of South Western Career College, Inc. at P3, Simpak, Lala, Lanao del Norte.
 BULLLSEYE
1. Define external and internal users;
2. Identify the type of decisions made by each users;
3. Describe the type of information needed by the users.

SIZE UP

1. Parties outside the reporting entity or company?

a. Internal users c. bank
b. External users d. customers

2. Investors are:
a. Suppliers c. owners
b. Banks d. customers

3. Which of below users considered as internal users?

a. Owner c. middle management
b. bank d. buyer

4. Who utilize accounting information to make lending decisions?

a. Investors c. customers
b. creditors d. Employees

5. Who may need accounting information to decide which products to buy from which companies?
a. Investors c. creditors
b. Customers d. company’s owner

6. A company’s senior and middle management use accounting information to:

a. Make buy, sell or keep decisions related to shares
b. Determine a company’s profitability and profit sharing
c. Run the business
d. Utilize accounting information to make lending decisions

7. Data are checked by:

a. External users c. internal users
b. External users and internal users d. none of the above

8. Users of accounting information are:

a. External users c. External and Internal Users
b. Subsidiary users d. Internal users

9. Employees use accounting information to

a. Run the business
b. Determine a company’s profitability and profit sharing
c. Make lending decisions
d. Decide which products to buy from which companies
 Lesson EXTERNAL and INTERNAL
1
USERS

MOBILIZE AND FIRM UP

External users (secondary users) – If a user of the information is an external party and is not related to the business then
he/she is considered as one of the external or secondary users of accounting information.

For example, potential investors, lenders, vendors, customers, legal and tax authorities, etc.

1. Investors – They may be current investors, minority stakeholder, potential future investors, etc.

They use it for:

A. . Checking how the management is utilizing the equity invested in the business.
B. Decisions related to an increase in investment or to divest from the business.
C. Analysing their present investment in the business or the overall financial health in case of a potential
investor 
2. Lenders /Creditors and Potential Creditors– Banks and Non-banking financial companies which provide loans
in the form of cash or credit are termed as lenders.
They use it for
A. Evaluation of short-term and long-term financial stability of a business.
B. An insight into the liquidity, profitability, etc. with the help of ratio analysis 
3. Regulatory and Tax Authorities – Regulatory bodies such as the stock exchange & authorities include the govt.
Along with various statutory and tax departments.
They use it for
A. To keep a check and ensure that the firm is following all required accounting principles, standards,
rules & regulations.
B. .The ultimate intent is to protect business integrity & safeguard investors. 
C. Tax department as one of the users of accounting information assures accurate tax calculation by the
companies. 
4. Customers – Are buyers of goods or services and may exist at any stage of a business cycle. They may be
producers, manufacturers, retailers, etc.
They use it for
A. Checking the continuous inflow of stock and the pace of overall production.
B. Assessing the financial position of its suppliers which is essential to maintain a stable source of
supply.
5. Suppliers – Are the sellers of goods and services.
They use it for
A. . Inspecting the credibility of their customers by evaluating their repayment ability.
B. Setting up a credit limit & payment terms with their customers. 
6. Public – The general public is also among users of accounting information. They are keen to know the financial
health of a business to get a fair idea of the firm’s niche market, business environment, and economic atmosphere
of the country.

Internal users (primary users) – If a user of the information is part of the business itself then he/she is considered as one
of the internal or primary users of accounting information. 
For example, management, owners, employees, etc. The branch of accounting which deals with internal users is
called management accounting.

 Following are the primary users of accounting information:

1. Management – Organization’s internal management includes all junior and senior business managers. They plan,
organize, and run a business.

They use it for

.A. Budgeting, forecasting, analysis & take important financial decisions.
. B. Investment decisions, identification of warning and opportunity signals.
C.Taking informed & evaluated decisions.
D.Compliance with all statutory, regulatory, and any other external body.

2. Owners/Partners – Owners are the legal stakeholders of the business and the ultimate signing authority .

They use it for

A. Tracking their investment and monitoring their return on investment.
B. Observing their capital invested and evaluating its upward or downward move.
C. Keeping an eye on the overall well-being of the business.

3.  Employees – Full-time & part-time workers. They are essentially on the company’s payroll.
They use it for
A. Checking the overall financial health of the company as it affects their remuneration and job security.
B. Decision making in case of shares based payment such as ESOPs offered by the employers.
C. Examining if the employer is depositing all required funds to the appropriate authorities such as the
provident fund,

Internal Users(Primary External Users

users) (Secondary users)
Internal Management Potential Investors
Proprietors/ Partners Lenders
Employees Vendors
Customers
Legal & Tax authorities
Researchers
Government
General Public

ASPIRE AND AQUIRE

Activity 1. Word Scramble!

Direction: Arrange the scramble letter to come up with your answer.
 1. GENTMENAMA_____________To plan,organize, and run the business
2. ICUBPL____________________To know how the business helps the economy.
3. RSSUPLEPI_________________To determine whether debts owed to them will be paid when due.
4. METOCUSSR________________To know whether an entity will continue to honor product warranties.
5. OYPLEMEES________________To find out the financial capacity of the company in order to bargain for
benefits.
6. DITOCRRSE_________________To assess the capability of the business to pay its obligation including
therelated interests on maturity date.
7. GULRYREATO SBODIE_______________To ensure that the company’s disclosure of accounting
information is in accordance with the rules and regulations.
8. VERSSTOIN____________To decide wether to invest in the company.
9. GULRYREATO SBODIE___________To determine the correctness of the tax returns filed by the
company.
10. OYPLEMSEE____________They assess the company’s profitability and stability, its consequence on their
future salary and job security.

ARTICULATE AND APPRECIATE

Direction: Choose the letter only. Write your answer in your notebook.

1. A company received cash and issued common stock. What was the effect on the accounting
equation?
Stockholders’

Assets Liabilities Equity

A. + NE +
B. - NE -
C. + + NE
D. - - NE

2. A company purchased land by issuing a note payable. What was the effect on the accounting
equation?
Stockholders’
Equity
Assets Liabilities
A. - - NE
B. + + NE
C. + NE +
D. - NE -

3. Which of the following financial statements is concerned with the financial position of an
enterprise at a point in time?
A. Retained Earnings Statement.
B. Balance Sheet.
C. Income Statement.
D. Statement of Cash Flows.

4. Cash was collected from a customer on account. Which accounts were debited and credited?
Debit Credit
A. Accounts Receivable Cash
B. Cash Service Revenue
C. Cash Accounts Receivable
D. Cash Accounts Payable
5. Which pair of accounts is increased by recording a credit?
A. Common Stock and Rent Expense.
B. Cash and Accounts Receivable.
C. Treasury Stock and Common Stock.
D. Notes Payable and Service Revenue.

6. Which of the following errors will cause a trial balance to be out of balance?
A. A debit to Office Equipment is incorrectly debited to Office Supplies.
B. The bookkeeper forgot to journalize a transaction.
C. The bookkeeper forgot to post a journal entry to the ledger.
D. A credit was posted to an account as a debit.

7. When a magazine company receives advance payment for a subscription, it

A. Debits Cash and credits Subscriptions Revenue.
B. Debits Cash and credits Unearned Subscriptions Revenue.
C. Debits Unearned Subscriptions Revenue and credits Cash.
D. Debits Prepaid Subscriptions and credits Cash.

8. The Supplies account had a $360 debit balance at the end of the accounting period before adjustment
for supplies used, and an inventory of $80 worth of unused supplies were on hand. Which of the
following is the required adjusting entry?
A. Debit Supplies $280 and credit Supplies Expense $280.
B. Debit Supplies Expense $280 and credit Supplies $280.
C. Debit Supplies $80 and credit Supplies Expense $80.
D. Debit Supplies Expense $80 and credit Supplies $80.

9. A company’s weekly payroll of $750 is paid on Fridays. There are five days in a pay period. Assume that
the last day of the month falls on Wednesday. Which of the following is the required adjusting entry?
A. Debit Unpaid Salaries and credit Salaries Payable for $450.
B. Debit Salaries Expense and credit Salaries Payable for $450.
C. Debit Salaries Expense and credit Salaries Payable for $300.
D. Debit Salaries Payable and credit Salaries Expense for $450.

10. A company had the following balance sheet accounts and balances:

Accounts Payable $ 24,000 Cash $12,000

Accounts Receivable 4,000 Common Stock ?
Buildings & Equipment (net) 68,000 Retained Earnings 8,000
What is the balance of the Common Stock account?

A. $76,000
B. $68,000
C. $60,000
D. $52,000

11. An accountant is preparing adjusting journal entries. Which of the following entries could not

possibly be a correct adjusting journal entry?

A. Rent Expense 5,000
Rent Payable 5,000
B. Accounts Receivable 5,000
Service Revenue 5,000
C. Interest Expense 5,000
Interest Revenue 5,000
D. Unearned Revenue 5,000
Service Revenue 5,000
12. A company declared cash dividends of $0.20 per share. If there are 500,000 shares of
common stock authorized, 100,000 shares issued, and 80,000 shares outstanding at the date of
declaration, what is the amount that the company should record for the dividend?

A. $4,000
B. $16,000
C. $20,000
D. $100,000

13. What is the amount of Income from Operations that a company should report on its current
year multiple-step income statement based on the following data?

Cost of goods sold $ 250,000 Net sales $ 600,000

Income taxes expense 50,000 Selling, general &

Interest expense 25,000 administrative expenses 150,000

A. $350,000
B. $200,000
C. $175,000
D. $125,000

14. A company sold equipment for $100,000; the equipment had cost $300,000 and had
accumulated depreciation of $180,000. The company’s journal entry to record the sale of the
equipment would include a

A. Credit to Sale of Equipment for $100,000.

B. Credit to Equipment for $120,000.
C. Debit to Equipment for $300,000.
D. Debit to Loss on Sale of Equipment for $20,000.

15. Which of the following should be classified as a current asset?

A. Accounts Receivable.
B. Accumulated Depreciation.
C. Franchises.
D. Land Held for Future Use.

16. Which of the following is most likely to appear on the balance sheet as a current liability?
A. Bonds Payable.
B. Accumulated Depreciation.
C. Long-term Notes Payable.
D. Wages Payable.

17. Gross profit equals the difference between net sales and
A. Net Income.
B. Operating Expenses.
C. Cost of Goods Sold plus Operating Expenses.
D. Cost of Goods Sold.