Entrep Q2 Module 3 9

Grade
12
ENTREPRENEURSHI
P
QUARTE2 – MODULE
R
MELCS: THREEunderstanding of
Demonstrate
the
4Ms of operations -0h-j-12
(CS_EP11/12ENTREP )
Describe the 4Ms (Manpower, Method, Machine,
Materials) of in relation to the
operations opportunit
business y
SHS
Republic of the Philippines
12 DEPARTMENT OF EDUCATION
Region I
1
Schools Division of Pangasinan II Binalonan, Pangasinan
ENTREPRENEURSHI
P
nd
2 Quarter Module 3
MELCS: Demonstrate understanding of the
4Ms of operations (CS_EP11/12ENTREP-0h-j-12)
Describe the 4Ms (Manpower, Method, Machine, Materials) of operations in relation
to the business opportunity:
• Discuss the value/supply chain in relation to the business enterprise; and
• Recruit qualified people for one’s business enterprise.
• Develop the business model
What I Need to Know?
2
After going through this module, you are expected to:
1. Understand the system of the Operating Work Flow.
2. Propose a perspective layout that fit the ideal workplace.
3. Interpret the right behavior of the managers towards the workers.
What I Know?
MULTIPLE CHOICE. Directions: Read and analyze the statements

below and identify the correct answer. Write your answer on the space
provided.
A. Production Programming and Scheduling
B. Quality Control
C. Operating Systems and Procedures
_____1. Each product line of the enterprise has its own demand and supply
analysis.
_____2. The enterprise should not produce too many goods, otherwise there
would be a lot of excess or obsolete inventory.
_____3. The materials and supplies used must adhere to strict technical
standards that would produce the desired output.
_____4. The input must be delivered to the factory or service shop at optimal
schedule.
_____5. These are “engineered methods”.
_____6. The larger facility, the larger the capital investment and financing
requirements needed.
_____7. Every step in the transformation process must be measured,

monitored, and evaluated according to the QDP standards in the transformation
process.
_____8. Consumer tastes change over time and competing products become
more aggressive.
3
_____9. They have been subjected to conceptual, analytical, critical, and
creative thinking processes.
_____10. They should be delivered at the right times and under the best terms
and conditions.
What’s New
FILL IT!!!
Directions: Guess the word that is frequently use in the Enterprise
Delivery System. Fill the missing letters to form a word.
1. L _ O _ T = gives meaning to your design and makes it look visually
appealing.
2. _ O T I _ A _ _ O _ = is the process that initiates, guides, and maintains
goal-oriented behaviors.
3. _ O _ _ E _ _ A _ I _ N = something, typically money, awarded to
someone as a recompense for loss, injury, or suffering.
4. _ _ _ T O _ E _ _ = a person or organization that buys goods or services
from a store or business.
5. W _ _ K _ L _ _ = are the paths that describe how something goes from
being undone to done, or raw to processed.
6. O _ _ R _ T _ _ _ = the fact or condition of functioning or being active.
7. _ _ C _ O R _ = a building or group of buildings where goods are
manufactured or assembled chiefly by machine.
8. D _ _ L _ Y _ E _ _ = the action of bringing resources into effective
action.
9. P _ O _ _ _ = human beings in general or considered collectively.
10. J _ _ = a paid position of regular employment.
11. _ _ R K _ O _ _ _ = the people engaged in or available for work,
either in a country or area or in a particular company or industry.
4
12. T _ _ H _ _ L _ G _ = the application of scientific knowledge for
practical purposes, especially in industry.
What is It
The Nine Critical Sub-Processes Or Sub-Systems in the Transformation Process
Continuation….
As discussed in Module 2, the transformation process or throughput system
shows how a well-managed differentiates from a poorly-managed EDS. There
are nine critical sub-processes or sub-systems in the transformation process
namely:

B. Quality Control
D. Layouting
E. Operating Work Flow
F. Worker Motivation, Skilling, Deployment, Compensation, and Control
G. Operations Management, Supervision and Control
H. Technology Application and Utilization
I. Support Services
The next three that we will discuss in this module are Operating Work Flow, Worker
Motivation, Skilling, Deployment, Compensation, and Control.
5
Operating Work Flow
The operating Work Flow (OWF) should follow the rationale of the
technology being adopted and used. It is the step-by-step process of sourcing
and storing the input, converting this input into output and delivering the
output to the customers. Two guiding principles should dictate the OWF.
1. The OWF must be very efficient in terms of time, movement, and

utilization of resources. Long waiting lines, lag times, down times, and
wasted time should be avoided. There should be as little distance as
possible between steps of the sequential work process. The movement of
people and materials should be kept to the minimum without sacrificing
the quality of the product or the service. In general, inventory levels
should be kept as low as possible. There should be minimal reworks and
returns. The former disrupts the workflow while the latter negates
whatever speed or movement efficiencies have been attained. Good
operations flow mapping, good factory or service ship layout, and good
standardization of work processes would serve the operations manager
well.
2. The OWF must be balanced capacity-wise. There should not be
significant disparities in the capacity of each step in the process.
Otherwise, the steps with very little capacity would create operating
bottlenecks and limit the overall production of the expected output. That
is why many operations managers want a balanced production line. The
entrepreneur should accept a reduction in overall capacity caused by
difficult products if they would generate substantially more profits than
the easier products.
Worker Motivation, Skilling, Deployment, Compensation, and Control
6
People run factories and service establishments. Even factories with the
most automated machines require good people to calibrate and maintain the
machines.
For service shops, people are everything. No customer will patronize a

bad barber or a lousy chef. Hiring the right people is the first step to good
operations management. Once hired, the job of the operations manager is to
properly motivate the people. A good working environment and professionally-
run establishment are good starting points. Beyond that, the operations
manager must be able to inspire the people to exert and do their best. Advising,
coaching, and mentoring people are critical to this inspirational process.
Giving people a sense of belonging in the workplace is another important
ingredient. Allowing people to participate in the planning and decision-making
processes will give them a sense of authorship and a degree of empowerment.
If people see a future in the enterprise and they feel that their work is valued,
then they can be readily motivated. Job enlargement and job enhancement
programs will definitely help raise the morale of the people. They have to be
sufficiently challenged to aspire for higher levels of production and
productivity.
Gaps in the competency or skills and attributes of people must be

addressed by operations managers through proper orientation and training
programs.
7
Finally, there is people control. This is less of a problem with highly
competent, highly motivated, and highly conscientious people, which must be
the first order of the day. However, control mechanisms do play a good
secondary role.
Control of people should start with a fair, just, but challenging scorecard.
This scorecard should contain all the metrics of performance expected from
the people. The performance evaluation and reward system must put a lot of
emphasis on the attainment of good scores based on transparent scorecards and
scorekeeping.
Lay outing
The operating work flow must translate into an appropriately-designed

and executed physical layout of the factory or service shop.
The space available for operations must be able to accommodate all the
machinery and equipment, the inventory of raw materials, work-in-process and
finished goods, and the operating and quality control personnel. For service
shops, there should be adequate space for holding customers waiting to be
served, customers being served, and customers being processed for payment.
The dimensions of the service facility should be configured correctly to
provide enough “elbow room” or human space to serve the customers
8
comfortably and expenditiously. The working environment should be
conducive for carrying out the operating activities with as little physical,
emotional, and mental stress as possible.
The layout should follow four principles:

1. The physical layout must allow the goods or the customers being
processed to go from one step to another with very little distance and
time spent between steps.
2. There should be minimal or no crisscrossing of goods or customers
within the physical space. This means that the goods or the customers
should not go back and forth from one workplace to another in a
confusing manner. The goods or the customers must follow a sequence of
steps that correspond to the physical layout of the factory or service shop.
3. The layout should capture the physical and psychological atmosphere

desired. On the physical level, there are aspects of lighting, ventilation,
energy consumption, and waste management to consider. On the
psychological level, they layout should provide enough “roominess” or
human working space, the proper ambience and the desired sense of
safety, security, and human sensitivity.
4. From the management perspective, the layout must be easy to see,
follow, monitor, and control.
When the factory or the service shop goes into full operations,
management must be able to easily track the movement and flow of all
materials, goods, and people as they pass through the different processes in the
different workspaces. this would allow management to easily spot bottlenecks
and work inefficiencies. Operations monitoring and quality control are
likewise easier to do when the sequence of operating activities follow a well-
designed and well-executed physical layout.
What ’s More
Multiple Choice
ACTIVITY 1 : CHOOSE ME!!!

Direction: Choose the letter of the correct answer. Write the letter on the space
provided before the number.
_____1. Which of the statement is TRUE about Operating Work Flow?
9
A. Long waiting times, lag times, down times, and wasted times
should be avoided.
B. There should be minimal or no crisscrossing of goods or customers
within the physical space.
C. The technology provider should be tasked to transfer all the
relevant procedural information.
D. Good market forecasting should therefore dictate the PPS.
_____2. It should follow the rationale of the technology being adopted and
used.
A.Layouting
B.production Programming & Scheduling
C.Quality Control
D.D. Operating Work Flow
_____3. Which of the following is NOT belong in Layouting?

A. The layout should capture the physical and psychological
atmosphere desired.
B. The steps with very little capacity would create operating
bottlenecks.
C. The layout must be easy to see, follow, monitor and control.
D. The goods or the customers must follow a sequence of steps.
_____4. It is the first step to good operations management.
A. Job enlargement C. Mentoring people
B. Hiring the right people D. Motivation
_____5. Which is NOT TRUE about running and operating a business?
A. No customer will patronize a bad barber or a lousy chef.
B. It is advisable to make the workers work without participating in
the decision making.
C. Advising, coaching, and mentoring people are critical.
D. A good working environment and professionally-run establishment
are good starting points.
_____6. These programs will help raise the morale of people.
A. Job enlargement C. Both A and B
B. Job enhancement D. None of the Choices
_____7. The dimensions of the service facility should be configured correctly
to provide enough “_____”.
A. Product C. Work
B. Roominess D. Materials
10
_____8. The following are the guiding principles that dictate the Operating
Work Flow EXCEPT:
A. The OWF must be very efficient in terms of time, movement, and
utilization of resources.
B. The OWF must be balanced capacity-wise.
C. Both A and B
D. None of the Choices.
ACTIVITY 2: CHALLENGE YOURSELF
Direction: Assuming that you are planning to build your own local bakery
shop (or any other type of shop).
Create a top view floor layout. Try to work on the floor layout and see
how can you improve the workflow. (10 pts for the clear layout)
Post-Test
MULTIPLE CHOICE
Direction: Choose the letter of the correct answer. Write the letter on the
space provided before the number.
should be avoided.
used.
A. Layouting
B. production Programming & Scheduling
C. Quality Control
D. D. Operating Work Flow
_____3. Which of the following is NOT belong in Layouting?
atmosphere desired.
11
bottlenecks.
_____7. Gives meaning to your design and makes it look visually appealing.
A. Layout C. Technology
B. Customers D. Workforce
_____8. Something, typically money, awarded to someone as a recompense for
loss, injury, or suffering.
A. Payment C. Operation
B. Compensation D. Factory
_____9. The action of bringing resources into effective action.
A. Motivation C. Operation
B. People D. Deployment
_____10. A building or group of buildings where goods are manufactured or
assembled chiefly by machine.
A. Enterprise C. Factory
B. Office D. Site
12
SHS
12 Republic of the Philippines

DEPARTMENT OF EDUCATION
Region I
Schools Division of Pangasinan II Binalonan,
Pangasinan
ENTREPRENEURSHIP
nd
2 Quarter Module 4
MELCS: Demonstrate understanding of the
4Ms of operations (CS_EP11/12ENTREP-0h-j-12)
13
Describe the 4Ms (Manpower, Method, Machine, Materials) of operations in relation
to the business opportunity:
• Forecast the revenues of the business
• Forecast the costs to be incurred
• Compute for profits

1. Determine the 3 distinct phases of operation.
2. Understand the task of a technology provider.
3. Explain the importance of support services in all other units; and
4. Compute for profits.
What I Know?
MULTIPLE CHOICE. Direction: Choose the letter of the correct answer. Write the letter
of your choice on the space provided before the number.
should be avoided.
used.
14
A. Layouting
B. production Programming & Scheduling
C. Quality Control
D. D. Operating Work Flow
_____3. Which of the following does NOT belong in Layouting?
atmosphere desired.
bottlenecks.
_____7. This gives meaning to your design and makes it look visually
appealing.
A. Layout C. Technology
B. Customers D. Workforce
_____8. Something, typically money, awarded to someone as a recompense for
loss, injury, or suffering.
A. Payment C. Operation
B. Compensation D. Factory
_____9. The action of bringing resources into effective action.
A. Motivation C. Operation
B. People D. Deployment
_____10. A building or group of buildings where goods are manufactured or
assembled chiefly by machine.
A. Enterprise C. Factory
B. Office D. Site
15
What’s New
FILL IT!!!
Directions: Assuming that you have a bakery shop. Give 5 characteristics
on each phases of Operations.
Pre-Operations Operations Post-Operations
What is It
The Nine Critical Sub-Processes Or Sub-Systems in the Transformation Process
Continuation….
As discussed in Module 3, the transformation process or throughput system
shows how a well-managed differs from a poorly-managed EDS. There are
nine critical sub-processes or sub-systems in the transformation process
namely:
B. Quality Control
D. Layouting
E. Operating Work Flow
F. Worker Motivation, Skilling, Deployment, Compensation, and Control
G. Operations Management, Supervision and Control
16
H. Technology Application and Utilization
I. Support Services
The last three that we will discuss in this module are Operations Management, Supervision and
Control, Technology Application and Utilization, and Support Services.
Operations Management, Supervision, and Control
Operations managers and supervisors orchestrate and control the entire

EDS. There are three distinct phases of managing and controlling the EDS: (1)
Pre-operations; (2) Operations Proper; and (3) Postoperations.
Pre-operations management is concerned with: (a) designing and

developing the EDS; (b) choosing the operations site and the technology to be
used; (c) acquiring the technology, machinery and equipment, and all the
relevant service contracts; (d) constructing, Layouting, installing, and testing
the operations facilities and systems; (e) planning and programming the
production of goods and services; and (f) standardizing and manualizing all the
operating and administrative processes and procedures.
Operations proper implements and runs the factory or service shop that
converts the input into output or goods and services. Operations managers are
responsible for: (a) selecting, sourcing, and storing the appropriate raw
materials and supplies; (b) recruiting and deploying the right manpower; (c)
running and maintaining the factory or service shop using all the proper
technical, supervisory, and control methods; (d) continuously improving
operations and upgrading facilities; (e) quality assurance; and (f) productivity,
cost, and profit management.
Post-operations unit manages the logistics of warehousing, distributing,

and delivering the finished products to the customers. For service
establishments, post-operations is mainly concerned with obtaining customer
feedback in order to improve customer servicing practices. The marketing and
brand-building program of the enterprise provides the connection between
operations and the customers. The results of the marketing efforts and the
feedback from the customers should propel operations managers to create
better operating templates for future production.
17
Post-operations management should likewise be concerned about
evaluating the output and the outcomes of operations in order to improve the
input and the transformation process.
Good operations management, supervision, and control should focus on: (1)
creating the right metrics of performance; (2) perfecting the enterprise
operating methods; and (3) optimizing the mix of men, materials, and
machines. The metrics should measure efficiency, economy, and effectiveness.
Efficiency measurements relate the output produced to the input

provided. The higher the output to input ratio, the better the efficiency.
Efficiency also looks at the throughput or the cycle time to convert input into
output. The shorter the time, the more efficient the operating system is.
Another efficiency measure is the level of wastage or rejects. The lower the
wastage or reject level, the more efficient the system is.
Economy measures the cost of the input, the cost of transforming the
input into output, and the cost of the final output. It also measures the
investment cost in relation to the benefits, revenues, returns, or profits
generated.
Effectiveness measures the results or the outcomes realized by the

enterprise in relation to the resources utilized and time and effort exerted to
produce these outcomes. Effectiveness evaluates the QDP satisfaction levels of
customers, the marketing results (sales volume, market share, market reach,
market leadership), and the financial outcomes (rates of return, profits, stock
prices).
Methods included are the operating systems, technologies, practices, and

procedures, and are used by the enterprise in order to obtain the best
performance metrics. Methods are ways of doing things. They are engineered
by the enterprise through constant experimentation, testing, application,
evaluation, and reinvention. Methods also include control mechanisms that
allow the enterprise to monitor and correct the operating system.
The proper mix of Men, Machines, and Materials maximizes and

optimizes the productivity and performance of the operating system. The
operations manager must match the proficiency of Men with the rated capacity
of the machines and the suitability of the Materials used. The production line
must be balanced and running at the right tempo. Each of the three vital
18
elements of Men, Machines, and Materials must not, in any way, hinder the
full potential of the other elements.
Technology Application and Utilization
The enterprise managers and technicians must understand how the

technology works and how it should be properly utilized.
The technology provider should be tasked to transfer all the relevant

technical and procedural information, train the key operators of the technology,
provide after-sales and maintenance services, supply spare parts, and continue
giving advisory services. If the technology being applied and utilized is quite
common and known to many, then there will probably be no technology
contracts with the suppliers.
Support Services
The operations Function cannot perform well without soliciting and

getting the support of all the other units of the enterprise. Cross-functional
coordination is important to the success of any operations.
First, Operations must obtain a good sales forecast from the Marketing
department. It must also be briefed about the inventory levels being held by
distributors or retailers in order to recalibrate production schedules. Second,
Operations must obtain the required resources from the finance in order to
acquire machinery and equipment, improve facilities, purchase materials,
compensate workers, and pay suppliers. Third, Operations must coordinate
with Human Resource Department for the hiring and training of workers and
supervisors. Fourth, Operations must make sure that the Maintenance
Department is able to do its preventive maintenance and its trouble-shooting
interventions in case problems erupt. Fifth, Operations must get the support of
the Logistics department for the delivery of the materials to the factory or
service shop and the distribution of goods to the customers.
The list can go on. In short, Operations cannot operate well without the
support of the other units. This, the operations manager must carve in stone.
What ’s More
ACTIVITY 1: CHALLENGE YOURSELF!!!
19
Direction: Give the characteristics of each distinct phases of managing and
controlling the EDS. (4 pts.
each)
Pre-operations
Operations
Post-operations
ACTIVITY 2: EXPLAIN IT!

Direction: Answer the following questions below. (5 pts each)
1. Why the technology provider should provide relevant technical and procedural
information to the key operators of the technology?
2. Give at least 2 reasons why Operations Function cannot perform well without
getting the support for all other units of the enterprise.
ACTIVITY 3: LET’S SEE!!!

Direction: Compute for the profits of the bake shop for the month of
November 20xx.
Capital 70,000
Gas & Oil 5, 000
Baking Ingredients 25, 000
Salaries and wages (manpower) 30, 000
Wrapping materials 10, 000
Sales 90, 000
20
Post-Test
TRUE OR FALSE
Direction: Shade the correct answer of your choice.
1. Operations managers and supervisors orchestrate and control the entire EDS.
o TRUE oFALSE
2. Operations proper implements and runs the factory or service shops that converts the
input into output or goods and services.
o TRUE oFALSE
3. Pre-operations concerned about evaluating the output and the outcomes of the
operations.
o TRUE oFALSE
4. The enterprise managers and technicians must understand how the technology works.
oTRUE oFALSE
5. The technology provider are tasked to solicit and get the support of all other units.
o TRUE o FALSE
6. Operations managers are responsible for selecting, sourcing, and storing the appropriate
raw materials and supplies.
o TRUE o FALSE
7. Pre-operations management is also concerned with acquiring the technology, machinery
and equipment, and all the relevant service contracts.
o TRUE o FALSE
8. Economy measures the of the input, the cost of transforming the input into output, and
the cost of the final output.
o TRUE o FALSE
SHS
Region I
Schools Division of Pangasinan II Binalonan,
Pangasinan
ENTREPRENEURSHIP
21
2nd Quarter Module 5
MELCS: Manifest understanding of starting and operating
a simple business (CS_EP11/12ENTREP-0a-i-18)
• Implement the business plan

1. Understand the mission statement.
2. Determine the purpose of a business plan and its important information.
3. Explain in the 3 kinds of business; and
4. Create a business concept.
What is It
Introduction to Busines s Implementation
After much seeking and screening of entrepreneurial opportunities, the critical

decision to seize one particular opportunity culminates in the establishment of an
enterprise.
22
Presumably, all the market research has been done and the desired customer
segment as been targeted. Likewise, the final location has been chosen and the new
product has been designed and developed. These have all been part of the rigorous steps
taken in preparing for entrepreneurship. Now is the time to set up the enterprise, plan its
future, and mobilize the needed resources.
A Very Clear Purposes
The entrepreneur must be very clear about the purpose in establishing the
enterprise. Whether it is for generating profits or feeding the family, making a difference
in the industry or actualizing the self, the purpose must be compelling enough to motivate
the entrepreneur.
The personal purpose of the entrepreneur is his or her personal mission. However, it
may also well be the enterprise mission statement. As time passes, the enterprise begins
to have its own life and may have a purpose separate from the personal mission of the
entrepreneur.
The enterprise must state its mission statement clearly for:
• the sake of the customers being wooed;

• the investors who need to know what they are getting into;
• the financiers evaluating the enterprise; and
• the government functionaries who must regulate the activities of
industries and businesses.
Not by Any Other Name
Next, the entrepreneur must choose a very fitting name for the enterprise. A good
name identifies the company very well. It communicates what the company is all about
and what its product are all about. The entrepreneur must think long and hard about the
name because he or she has to live with it for a very long time. Thus, the company name
must project its very desired image.
A Very Good Business Plan

The next step for the entrepreneur is to have a very good business plan. It is wise
thing to do in order to chart the course of the business properly and to focus the efforts of
the entrepreneur. It is important to know what the business plan contains. Likewise, it is
important to know what the business plan’s purpose is: for whom it is being written (target
audience) , and what would be the coverage of the business plan (in terms of depth and
breadth).
The purposes of a business plan are:
1. Entice partners, investors, and bankers to fund a business venture.

2. Communicate what the enterprise is all about, what market it wants to serve.
3. Show what financial returns it could muster.
The business plan should contain important information about the following:
• the business itself;
23
• the organizers;
• the management and technical people;
• the financial structure
• its potential;
• its target market;
• its projected sales, expenses, and profits; and
• its probable risks.
The business plan should begin with the business concept and the vision for the
enterprise in the next three to five years.
Organizing and Structuring the Enterprise

The business plan must be able to estimate the capital required by the enterprise.
The capital required would be dictated by the investment in the assets of the enterprise.
These assets are composed of the following:
1. The current assets, which are short-lived assets. They are composed of cash,
inventory, accounts receivables, and other current assets.
2. The long-lived or fixed assets. they are composed of property, plant, and
equipment.
3. The other assets. They are composed of organizational and pre-
operating expenses.
The assets of the enterprise are financed by its liabilities. these liabilities are
composed of: (1) current liabilities such as suppliers’ credit and other short-term credit;
(2) long term debt; and (3) owner’s equity.
The simplest and easiest enterprise to organize is the sole proprietorship. In this
structure, the owner or entrepreneur has sole control over the enterprise. He or she reaps
all the profits and, all the losses. But he or she will incur all the risks.
Before getting the permit, there are clearances that must be obtained. These are the
following:
• Barangay clearance
• Fire safety clearance
• Certificate of occupancy
• Department of Trade and Industry (DTI) certificate
• Lease contract id space is leased.
• Locational clearance
There may be additional requirements depending on the type of business and the
ordinances issued by the concerned local government.
If two or more persons bind themselves into a contract to contribute money,
property, and expertise in a common venture with the intention of dividing the profits
among themselves, then they would have entered into a partnership.
A partnership is vested with its owl legal personality quite distinct and separate
from its individual members. Thus, a partnership venture can own its own assets. It can
incur its own liabilities. It can sue and it can get sued.
24
There are two types of partnership based on the liability of the partners: general
partnership and limited partnership.
A general partnership is composed of partners who are liable individually and
collectively to all those who have claims against them. Claimants can run after all the
personal assets of all the partners.
A limited partnership consists of partners who have limited liabilities while others
in the partnership have unlimited liabilities. A limited partner is not personally liable for
all the obligation of the partnership beyond his or her prorated capital contribution to the
partnership. The law requires that there must be at least one general partner in a limited
partnership to assume the unlimited liabilities. The limited partnership must add the word
“Limited” to its partnership name.
The partnership should obtain all the required government clearances, permits, and
licenses. It should get:
• a bank certificate of deposit on the money contributions of the partners; and
• the approval for its partnership name from the DTI.
The third form of business organization is the corporation. Like the partnership, the
corporation also
has a separate legal personality quite distinct from the investors who contributed money to
the enterprise.
A corporation can be formed or incorporated by, at least five, or at most 15 natural
persons. According to the Philippine law, the majority of the incorporators must be
residents of the Philippines. However, once the corporation is established, there is no limit
to the number of natural or juridical persons who can invest in the corporation.
There are four types of corporations, which are follows:

1. Stock Corporation. It issues capital stocks divided into shares. Based on the
submission of Articles in Incorporation to the SEC, the corporation is authorized to
raise capital that has a corresponding number of shares.
2. Non-Stock Non-Profit Corporation. It is organized to carry out a purpose
or purposes other than generating profits for investors, It is usually has a social
mission. Hence, all the surpluses generated by the corporation are not distributed to
the funders in the form of dividends.
3. Close Corporation. It has Articles of Incorporation that limit the ownership
of issued stocks to at most 20 persons. There are strict restrictions on the transfer of
stocks. the stocks cannot be listed in any stock exchange nor can any public
offering of shares be made.
4. Corporation Sole. It is a special form of corporation allowed by law, usually
associated with the clergy. The corporation sole is a trusteeship that is set up for the
purpose of administering and managing the affairs, property, and temporalities of a
church or group of clergy.
25
The start-up corporation established by the entrepreneur is quite a long way from
the politics of large corporations. However, the more ambitious entrepreneur must plan
way ahead for this type of politics.
The entrepreneur must make a decision. “Do I want absolute control or do I want to
become a very wealthy person because of high value of my shares in the stock market?”
Meanwhile, at the start-up stage, who will the entrepreneur invite as co-investors in the
enterprise? It begins as an issue of investors in the enterprise? It begins as an issue of
investor compatibility and investment flexibility, but eventually, it will become an issue of
control as the enterprise grows and prospers.
ACTIVITY 1: GETTING STARTED

What ’s More
Direction: Answer the following questions below.

1. If you were to set up a business venture, what would be your personal
purpose for doing so? What type of business would you set up? What
would be the mission of this enterprise?
2. What is your compelling business concept? What would be your vision
for your business five years after setting it up?
3. What name would you give to your business venture? What is the
significance of that name? Would it project the image you desire for your
business?
4. If you were to invite investors to your business, who would they be and
why? What are the possible sources of financing for your business
venture?
Post-Test
Direction: Identify the correct answer for each question below.

_________ 1. Composed of partners who are liable individually and
collectively to all those who have claims against them.
_________ 2. It has Articles of Incorporation that limit the ownership of issued
stocks to at most 20 persons.
_________ 3. In this structure, the owner or entrepreneur has the sole control
over the enterprise.
_________ 4. Composed of 2 or more persons bind themselves into a contract
26
to contribute money, property, and expertise in a common venture
with the intention of dividing the profits among themselves.
_________ 5. Can be formed or incorporated by, at lease 5, or at most 15 natural
persons.
Direction: Write TRUE if the statement is correct, write False if the statement is
wrong.
_________ 1. The simplest and easiest enterprise to organize is the sole
proprietorship.
_________ 2. One of the purposes of the business plan is to entice partners,
investors, bankers to fund a business venture.
_________ 3. The business plan should begin with the concept of the business
name.
_________ 4. One of the mission statements of the enterprise is for the
investors
who need to know what they are getting into.
_________ 5. A limited partner is not personally liable for all the obligations
of
the partnership beyond his or her prorated capital contribution to
the partnership.
SHS
12
DEPARTMENT OF EDUCATION
Region I
Schools Division of Pangasinan II
Binalonan, Pangasinan
27
ENTREPRENEURSHIP
nd
2 Quarter Module 6
• Identify the reasons for keeping business records

1. Understand the benefit keeping the business records.
2. Determine the purposes of each reasons on keeping the business
records.
What is It
KEEPING BUSINESS RECORDS

Good record keeping can help protect the business, measure the performance and
maximize profit.
28
Records are the source documents, both physical and electronic, that specify
transaction dates and
amounts, legal agreements and private customer and business details.
Developing system to log, store and dispose of records can benefit the business. A
systematic recording
allows you to:
A.Plan and work more efficiently
B. Meet legal and tax requirements
C. Measure profit and performance
D.Protect your rights, and
E. Manage potential risks
Why should I keep records?

Everyone in business must keep records. Keeping good records is very important
to your business. Good records will help you do the following:
• Monitor the progress of your business
• Prepare your financial statements
• Identify sources of your income
• Keep track of your deductible expenses
• Keep track of your basis in property
• Prepare your tax returns
• Support items reported on your tax returns
1. Monitor the progress of your business

You need good records to monitor the progress of your business. Records can show
whether your business is improving, which items are selling, or what changes you need to
make. Good records can increase the likelihood of business success.
2. Prepare your financial statements

You need good records to prepare accurate financial statements. These include
income (profit and loss) statements and balance sheets. These statements can help you in
dealing with your bank or creditors and help you manage your business.
• An income statement shows the income and expenses of the business for a given
period of time.
• A balance sheet shows the assets, liabilities, and your equity in the business on a
given date.
3. Identify sources of your income
29
You will receive money or property from many sources. Your records can identify
the sources of your income. You need this information to separate business from
nonbusiness receipts and taxable from nontaxable income.
4. Keep track of your deductible expenses
Unless you record them when they occur, you may forget expenses when you
prepare your tax return.
5. Keep track of your basis in property
Your basis is the amount of your investment in property for tax purposes. You will
use the basis to figure the gain or loss on the sale, exchange, or other disposition of
property, as well as deductions for depreciation, amortization, depletion, and casualty
losses.
6. Prepare your tax return
You need good records to prepare your tax returns. These records must support the
income, expenses, and credits you report. Generally, these are the same records you use to
monitor your business and prepare your financial statement.
7. Support items reported on your tax returns
You must keep your business records available at all times for inspection by the
IRS. If the IRS examines any of your tax returns, you may be asked to explain the items
reported. A complete set of records will speed up the examination.
What ’s More
ACTIVITY 1: ESSAY TYPE (10 pts)

Direction: Make an Essay on the importance and benefits of keeping business records in
your own words.
SHS
Region I
30
ENTREPRENEURSHIP
nd
2 Quarter Module 7
• Perform key bookkeeping tasks

1. Understand the basic concepts of bookkeeping
2. Apply the same by performing bookkeeping tasks.
What is It PERFORM BOOKKEEPING TASKS
A business plan is an effective tool in making your dream business come true. It
reiterates different plans or strategies in Operation and Administration, Marketing,
Production and Logistics, Finance, etc.
31
The operational plan put into details on what business model you are going to
employ and how are you going to start the business. Among others, its also reiterated the
layers pf management, type of skills and employee attitude your business need and the
steps on how to get the government license.
The marketing plan contains valuable strategies as to what product you are going
to produce or sell, what industry you want to enter, group of target customers, or your
target market and the business model or strategies you are going to employ.
The production plan revealed the production processes and the quality control
system of the goods produced for sale. While the logistics provides a channel of
distribution of the goods from production lines down to the whole sellers/retailers or
directly to consumers.
The financial plan talks about monetary requirements before you open the
business. While financial forecast informs the business owners of the expected outcome
of the business in monetary terms.
What is Bookkeeping?
Bookkeeping is the process of recording business transactions in a systematic and
chronological manner.
It is systematic because it follows procedures and principles. On the other hand, it
is chronological because the transactions are recorded in order of the date of occurrence.
Bookkeeping is the starting point of the accounting process. A sound bookkeeping
system is the foundation for gathering the information necessary to answer questions
related to profitability, solvency, and liquidity of the business.
What is a Bookkeeper?
Each business has a bookkeeper who is in charge to record, maintain and update
business records from all sorts of financial transactions using account title that can be
found in the charts of accounts already set up by the Accountant.
The bookkeeping function dictates the bookkeeper to keep track of all financial
transactions of the business. Only transactions that has monetary value will be recorded.
The bookkeeper uses the Book of Accounts to record the business transactions
which is to be consolidated later to help construct financial statement such as the Trial
Balance, Income Statement and Balance Sheet.
What is a Book of Account?
The book of accounts is composed of the Journal and Ledger. It depends on the
type of business, some businesses used special journals when they are engaged
merchandising type of business to records business transactions. This module will cover
and provide example for service-oriented business. Thus, only journal and ledger will be
used in the succeeding examples.
There are two types of books used in recording business transactions. They are
called journals and ledgers.
Journal refers to the book of original entry while the Ledger refers to the
book of final entry.
What is a General Journal?
32
The general journal is the most basic journal which provides columns for date,
account titles and explanations, folio or references and a separate column for debit and
credit entries. Figure 1 below shows a sample format of a general journal:
What is a General Ledger?

The general ledger is a grouping of all accounts directly traceable to
chart of accounts. These accounts will be reflected in the financial statements
as a summary of all financial activities that have taken place as recorded in the
general journal and subsidiary ledgers. Depicted in figure 2 below is a sample
format of a general ledger:
What is a Subsidiary Ledger?

The subsidiary ledger is a group of accounts directly associated from the
general ledger. This record is created to maintain individual accounts for
33
customers and vendors whose cash is not being used as a medium of exchange
when purchasing or selling merchandise. Depicted in figure 3 and 4 below is a
sample format of a subsidiary ledgers Accounts Receivable and Accounts
Payable respectively:
The Rules of Debit and Credit

In the process of journalizing, following the rules of Debit and Credit are
essential part to ensure accurate recording and sound decision making. Debit
is abbreviated as DR while CR for Credit.
It is a requirement that the bookkeeper is able to master the normal
balance of each account title before performing the tasks of bookkeeper.
When to Debit?
When cash or non-cash items are received, the said cash or non-cash
items must be recorded in the
debit column. This means that the debit balance increased. It is called Value
Received.
When to Credit?
34
When cash or non-cash items are given, the said cash or non-cash items
must be recorded in the credit column. This means that the credit balance is
increased. It is called Value Parted With.
The following steps will be undertaken in determining account balances
for every account title such as cash, account receivable, etc.:
1. Add all the debit side to generate total debit.
2. Add all the credit side to generate total credit.
3. Subtract total debit to the total credit.
4. Determine the balance of each account.
Depicted in figure 5 below is a matrix of normal debit and credit
balances of Five Major Accounts:
In order to fully understand the concept of debit and credit balances,

depicted in figure 6 below is a matrix of normal debit and credit
balances under each of the five major accounts:
ACCOUNT TYPE DEBIT CREDIT
Assets
Cash on Hand ✓
Cash in Bank ✓
Accounts ✓
Receivable
Allowance for ✓
Doubtful Accounts
Notes Receivable ✓
Prepayments ✓
35
Inventories ✓
Land ✓
Building ✓
Equipment ✓
Accumulated ✓
Depreciations
Other Assets ✓
Liabilities
Accounts Payable ✓
Notes Payable ✓
Salaries Payable ✓
Mortgage Payable ✓
Unearned Fees ✓
Owner’s Equity
Capital
Drawing ✓
Revenue
Service Income ✓
Other Income ✓
Expenses
Rent Expense ✓
Utilities Expense ✓
Depreciation ✓
Expense
Salaries and Wages ✓
Expense
Other Expenses ✓
Figure 6 - Matrix of Normal Debit and Credit Balances of Sub-
accounts
TRIAL BALANCE
Trial balance is a list of all ledger accounts with closed or final balances on a
certain period arranged according to the rules of debit and credit. The debit and credit
columns must be equal in total amount. This is the first report prior to financial statement
36
preparation. Depicted in Figure 7 below is a sample format of a trial balance report with
peso amount.
As you can observed, the accounts reflected in figure 7 above are

arranged according to the proper placement of the five major accounts. The
Assets, Liabilities, Owner’s Equity, Revenue and Expense accounts. You may
refer to figure 6.
On the other hand, the trial balance report has two phases. The first phase
“Unadjusted trial balance” is a report of all balances after the posting of the general
ledger accounts. The general ledger account balances are extracted to construct the
unadjusted trial balance. Meanwhile, the second phase is the “Adjusted trial balance”.
This phase is a final report of trial balance after all necessary adjustments in journal
entries are posted in the general ledger.
What is an Adjusting Entry?
Making an adjusting entry helps the bookkeeper capture all financial events
happened over a period of time within the accounting cycle. It is essential in keeping the
financial record updated. The bookkeeper is going to look or examine accounts that needs
to be updated. Outlined below are the five basic sources of adjusting entries:
1. Depreciation expense
2. Deferred expenses of prepaid expenses
3. Deferred income of unearned income
4. Accrued expenses of accrued liabilities
37
5. Accrued income or accrued assets
1. Depreciation
This is a method of allocating the cost of an asset to an expense over the
accounting periods that make up the asset’s useful life. Examples of assets subject to
depreciation are: Store, Office, Building, and Transportation equipment. These types of
assets lose their ability to provide useful service as time passes. Depreciation can also be
referred to as the decrease in the usefulness of these types of assets. Take note that Land
is not subject to depreciation because the value of land mostly increases as time passes.
There are several methods or formulas to compute the amount of depreciation. The
simplest is the straight-line method.
The formula:
Annual depreciation = (Acquisition Cost – Salvage or Residual Value)
Useful Life
Where: Acquisition cost – the actual cost of the asset acquired.
• Salvage value – the selling price of the asset upon reaching the useful life.
• Useful life – is the economic or productive life of the asset.
Illustrative problem:
The cost of the equipment is PHP25,000. It was estimated to have a useful
life of five years. It is estimated that after five years, the office equipment can be
sold at a scrap value of PHP1,000. To compute for the monthly depreciation, just
divide the annual depreciation by 12. One year is composed of 12 months.
38
The depreciation expense is an allocated for all sixed assets except land.
Example are building, equipment and or machineries that the business is using
to generate income. It shall be reported as an expense account in the income
statement directly attributable in the said fixed assets. While the accumulated
depreciation is a 16-balance sheet account but treated as a contra-account to
the concerned fixed asset. Refer to the illustration below:
Balance Sheet
As of ____________
Equipment (at cost)

P 25,000
Less: Accumulated Depreciation-Equipment 400
Net Book value of Equipment P 24,600
39
2. Deferred Expenses or Prepaid Expenses
These are items that have been initially recorded as assets but are
expected to become expenses over time or through the operations of the
business. In order to recognize the correct amount of expenses, prepayments
shall be amortized weekly, semi-monthly or monthly, depending on its nature
and purpose.
Purchased P5,000 worth of office supplies on account. By the end
of the month, PHP2,000 worth of these supplies are still unused.
The supplies expense is an income statement account, while the supplies

which is now credited is an asset account. All asset has a normal debit
balance. Considering that the supplies in this record is credited.
This will be deducted to the supplies account in the balance sheet to generate
the remaining balance in supplies.
3. Deferred income of unearned income

These are items that have been initially recorded as liabilities but are
expected to become income over time or through the operations of the
business.
40
On February 15, 2016, Matapang entered into a contract with
Makisig to maintain the computers of Makisig for two months starting
on February 15, 2016 up to April 15, 2016. On the same date, Makisig
paid the total contract amount of PHP40,000 in full. The entries to
record and adjust the books are: In the February 29, 2016 entry above, as
of end of February 2016, Matapang has already earned the service
revenue for the first 15 days, thus an adjusting entry is recorded.
4. Accrued Expenses of Accrued Liabilities

These are items of expenses that have been incurred but have not been
recorded and paid.
On February 29, 2016, Matapang received the electric bill for the
month of February amounting to PHP3,800. Matapang will pay this bill
on March 2016. The electric bill represents the cost of electricity used
(or incurred) for February. Although the said bill is still unpaid and thus
was not recorded, the matching principle and accrual basis of accounting
41
dictates that the same should be recorded in February. Otherwise, your
expense will be understated and thus the company will be reporting an
overstated income (or an erroneous income). Needless to say, erroneous
information may lead to wrong decisions. The entry to record the accrual
of this expense is:
5. Accrued expenses of accrued liabilities

These are income items that have been earned but have not been recorded
and paid by the customer.
In short, these are receivables of the business. Illustrative problem:
On February 28, 2016, Matapang repaired the computer of Pedro
for PHP15,000. Pedro was on an out-of-town trip so he could not pay
Matapang. He told Matapang that he will pay for their services on
March 1, 2016. Matapang has already earned the PHP15,000 but was
not paid as of the end of February 2016. Therefore, an income should be
properly recognized in February 2016 for this transaction. The entry to
record this is:
42
What ’s More
ACTIVITY 1: Let’s Go!!!
Direction: The following listed below are the examples of financial

transaction that recorded by the accountant. Make a journal entry on each
financial transaction.
1. Purchased Php 25, 000 personal computer with cash.

Particulars Debit
Credit
2. The owner invested Php 100, 000 cash in the corporation (stockholders’
equity).
Particulars Debit
Credit
3. Paid June 20xx office rent for Php 25, 000.

Particulars Debit
Credit
43
4. The owner paid office salaries for the month of June 20xx amounting to
Php 150, 000 in total.
Particulars Debit
Credit
5. A company purchased of Php 10, 000 office supplies on credit.

Particulars Debit
Credit
6. A company performed services for a client and received Php 5,000 cash.
Particulars Debit
Credit
7. Borrowed from the bank worth Php 5,000.

Particulars Debit
Credit
8. Paid electric bill for the month of June 20xx amounting Php 3, 000.
Particulars Debit
Credit
9. Paid travel expenses for an employee that attended the required seminar
worth Php 500.
Particulars Debit
Credit
44
10. The company decides to buy an inventory of merchandise or goods
worth Php 10, 000.
Particulars Debit
Credit
11. A customer buys merchandise or goods for Php 8, 000 from your
company.
Particulars Debit
Credit
12. A customer bought merchandise or goods worth Php 5, 000 on

credit.
Particulars Debit
Credit
POST TEST
Multiple Choice
Direction: Read questions carefully and choose the letter of the correct answer.
_____ 1. Which of the following is the role of a bookkeeper?

A. In charge to record, maintain and update business records from all sorts of financial
transactions.
B. To ensure the daily functioning of a department or group of employees.
C. Advise clients on investments, taxes, estate planning, college savings accounts, insurance,
mortgages, and retirement.
D. They are tracking a company's financial performance against a plan, analyzing business
performance and market conditions to create forecasts.
_____ 2. It is the most basic journal which provides columns for date, account titles and explanations,
folio or references and a separate column for debit and credit entries.
A. General Ledger B. Subsidiary Ledger C. General Journal D. Nominal Ledger
_____ 3. This record is created to maintain individual accounts for customers and vendors whose cash is
not being used as a medium of exchange when purchasing or selling merchandise.
45
_____ 4. When cash or non-cash items are received, the said cash or non-cash items must be recorded in
the
__________ column.
A. Debit B. Credit C. Assets D. Liabilities
_____ 5. It is a list of all ledger accounts with closed or final balances on a certain period arranged
according to the rules of debit and credit.
A. Income Statement B. Balance Sheet C. T-Account D. Trial Balance
_____ 6. This is a method of allocating the cost of an asset to an expense over the accounting periods
that make up the asset’s useful life.
A. Appreciation B. Depreciation C. Accrued expenses D. Accrued Income
_____ 7. These are items that have been initially recorded as assets but are expected to become expenses
over time or through the operations of the business.
A. Unearned Income B. Prepaid expenses C. Accrued liabilities D. Accrued assets _____ 8. It
is a grouping of all accounts directly traceable to chart of accounts.
_____ 9. The following are the account type under Expenses EXCEPT:
A. Gas and Oil C. Transportation & Travel
B. Salaries and Wages D. Cash on Hand
_____10. This account type is composed of Accounts payable, notes payable, salaries payable, etc.
A. Assets B. Owner’s Equity C. Liabilities D. Revenues
SHS
Region I
46
ENTREPRENEURSHIP
nd
2 Quarter Module 8 and 9
• Identify where there is a profit or loss for a business; and
• Generate an overall report on the activity

1. Identify whether the business is profitable or not and
2. Generate overall report on the company’s financial status.
What is It
LESSON 1
IDENTIFY WHERE THERE IS A PROFIT OR LOSS FOR A BUSINESS
47
Profitability has always been the overall goal of the business. It is of
great achievement in a successful implementation of strategic, operating and
other plans.
In identifying the profit or loss of a business, the business will record
every detail of all business transactions and translate it into financial report. An
income statement is a financial report that reveals the total revenue or income,
total expenses incurred during the conduct of the business and, most of all the
net profit or net loss as a result of business operations over a specified period
of time.
Below is the basic equation of income statement of a service-concern

business:
Net Income/Loss = Service Income - Total Expenses
LESSON 2
Interpret Financial Statements
(Balance Sheet, Income Statement, Cash Flow Projections and Summary
of Sales and Cash Receipts)
INTERPRETATION OF FINANCIAL STATEMENTS
Financial statements will reveal the outcome of the business operations.

A financial analyst is like a medical doctor who will conduct diagnosis by
reading the financial report and render interpretations on it which will be used
as the basis of a sound economic decision making.
As previously defined, balance sheet reflects the financial position and
condition of the business. The financial position refers to the assets of the
business which will be financed by the liability and owner’s equity. On the
other hand, financial condition refers to the situation wherein assets, liability
and owner’s equity are used to maximize income. Also, assets, liability and
owner’s equity may encounter growth or decline in value.
There are many available financing tools to be used in analyzing and
interpreting financial statements. It depends on the purpose. Most of these
tools are able to evaluate and interpret asset growth of the business,
profitability, liquidity and solvency. In general, it will provide a bird’s eye
view of the overall health of the business.
48
Depicted in figure 14 below is a matrix of financial interpretation with formula
and explanation.
ACCOUNTS FORMULA INTERPRETATION

Profitability ratios Measure the ability of the company to generate
income from the use of its assets and invested capital
as well as control its cost
Operating It measures the percentage of
Operating income ratio Income Net profit earned from each peso of
Sales (Horngren et.al. 2013).
Net Income Measures the peso value of income
Return on asset (ROA) Ave. Assets generated by employing the
company’s assets
Net Income Measures the return (net income)
Ave. Equity generated by the owner’s capital
Return on equity
invested in the business
(ROE)
Financial Health Ratios Refers to the company’s capacity to pay their short-
and long-term obligations as they become due.
Indicates the percentage of the
Total Debt company’s assets that are financed
Debt ratio Total Assets by debt. A high debt to asset ratio
implies a high level of debt.
Indicates the percentage of the
Total Equity company’s assets that are financed
Equity ratio Total Assets by capital. A high equity to asset
ratio implies a high level of
capital.
Indicates the company’s reliance
Total Debt to debt or liability as a source of
Debt to equity ratio Equity financing relative to equity. A high
ratio suggests a high level of debt
that may result in high interest
expense.
Liquidity Measure the company’s ability to pay debts that are
coming due (short term debt).
Solvency Refers to the company’s capacity to pay their long-
49
term liabilities.
Current Assets It seeks to measure whether there
Current ratio Current are sufficient current assets to pay
Liabilities for current liabilities.
Creditors normally prefer a current
ratio of 2.
Quick Assets It does not consider all the current
Quick ratio Current assets, only those that are easier to
Liabilities liquidate such as cash and
accounts receivable that are
referred to as quick assets.
Figure 14 - Matrix of financial interpretation with formula and explanation
3 KINDS OF FINANCIAL STATEMENTS
Income Statement
This statement is one of the major financial report. Also known as profit
and loss statement or statement of comprehensive income. This statement
summarizes the results of company’s operations for a specific period of time. If
the result of operation is positive, then the business earns net income
otherwise, net loss.
Ledger accounts that can be found in the income statement are called
Temporary accounts of Nominal accounts. They are called such because at the
end of the accounting period, balances under these accounts are transferred to
the capital account, thus having only temporary amounts and resulting to zero
beginning balances at the beginning of the following year.(Haddock, Price, &
Farina, 2012) Examples of temporary accounts include revenues, sales, utilities
expense, supplies expense, salaries expense, depreciation expense, interest
expense among others. Depicted in figure 8 below is sample format of an
income statement.
The different parts of income statement are:

• The heading or title of report
• Name of the company
Date or period covered Major parts are:
• Income or revenues - consist of all income received within the period
upon provision of services for service-concern business and sales for
merchandising
50
• Expenses – money spent during the conduct of business operations •
Net income / net loss – the outcome of business operations.
Balance Sheet
Also known as the statement of financial position. This statement summarizes

the total balances of assets, liabilities and owner’s equity. In general, it
provides the financial condition of the business on a specific date.
The balance sheet is composed of Permanent accounts. Permanent in nature
because their balances remain intact and will be forwarded from one period to
another.
Contra asset are those asset account presented under the asset portion of the
balance sheet such as Allowance for Bad debts and Accumulated depreciation.
Depicted in figure 9 below is sample format of a balance sheet of a service
type business presented in as an account format with contra asset account.
The different parts of balance sheet are:

• The heading or title of report
• Name of the company
• Date or period covered
Major parts are:

• Assets (Current and Non-current)
51
Current Assets – Assets that can be realized (collected, sold, used up)
one year after year-end date. Examples include Cash, Accounts
Receivable, Merchandise Inventory, Prepaid Expense, etc. Current Assets
are arranged based on which asset can be realized first (liquidity).
Current assets and current liabilities are also called short term assets and
shot term liabilities
Noncurrent Assets – Assets that cannot be realized (collected, sold, used

up) one year after yearend date. Examples include Property, Plant and
Equipment (equipment, furniture, building, land), Long Term
investments, Intangible Assets etc.
• Liabilities (Current and Non-current)
Current Liabilities – Liabilities that fall due (paid, recognized as

revenue) within one year after year end date. Examples include Notes
Payable, Accounts Payable, Accrued Expenses (example: Utilities
Payable), Unearned Income, etc.
Noncurrent Liabilities – Liabilities that do not fall due (paid,

recognized as revenue) within one year after year-end date. Examples
include Loans Payable, Mortgage Payable, etc. Noncurrent assets and
noncurrent liabilities are also called long term assets and long-term
liabilities.
• Owner’s Equity or Capital
Capital is an item of balance sheet wherein the capital or interest of the

owner of the business is listed. Initial withdrawal of capital will be
recorded in a drawing account of the owner and will be reflected as a
deduction to the capital balance.
52
What is a sales report?
A sales report is a record of all sales transactions. There are two type of
sales transactions - cash sales and credit sales.
The amount received in cash sales transactions will be recorded in the
cash receipt record book bearing the account cash. This will increase cash
inflow. While the credit sales transactions cannot be recorded in the cash
receipt record book because there were no inflows of cash. Instead, it will be
recorded in the account receivable account. This means, that the business has a
collectible account from a customer who bought the merchandise on his/her
account.
What Is Cash Flow Projection?

A cash flow report records all cash inflow or out flow of the business.
Normally, it will report three business activities, namely, the operating,
investing and financing activities.
The operating activities involves the main operations of the business which
the buying supplies (cash outflow) and selling (cash inflow) of its products.
53
The investing activities involves the acquisition of long term or fixed assets
of the business (cash outflow) and selling the old one’s cash inflow).
The financing activities involves the acquisition of capital of the business
thru borrowings or investors (cash inflow) and payments of investors and
creditors (cash outflow).
The cash flow projection is an important task of an accountant to
determine the cash requirement for the next period of business operations. The
business will be guided as to how much cash should be needed in order to pay
operating expenses and how much cash should the business spend for fixed
assets in order to increase sales, cash collection or a market share.
What ’s More
ACTIVITY 1 : Posting journal entries to T- Accounts

In this activity, you are task to post journal entries in the general ledger.
The most convenient and fastest way of posting journal entries to the ledger is
by way of using “T” Account. A T- Account is divided into two sides. The left-
hand side is called the debit side and the right-hand side which is the credit
side. The left -hand or debit side shows the value received while the right-hand
side shows the value parted with.
This is called T account because it resembles capital letter “T.” an
account title is written above the T- account.
After performing the T-accounts, balances for each account under Assets,
Liabilities, Capital, Revenue/Income and Expenses, can now be determined.
Depicted in figure 12 below is a T-account and its description:
54
Direction: The following are the financial transactions for the month of June.
Write the correct amount on T accounts on each number.
1. The owner withdrew Php 10, 000 cash from the owner’s equity.
Cash Owners Equity
Total
Total
2. The owner borrowed a long term debt from the bank amounting to Php
20, 000.
Cash Long term debt
Total Total
3. The owner borrowed a short term debt from the bank amounting to Php
5, 000.
Cash Short term debt
Total Total
4. The owner decides to buy an inventory of merchandise or goods worth
Php 10, 000.
Cash Inventory
Total Total
5. The owner bought some machinery and equipment worth Php 10, 000.
55
Fixed Assets Cash
Total
Total
6. The owner spends money on the permits needed to operate the company
worth Php 5, 000.
Other Assets/Taxes and Licenses Cash
Total
Total
7. The owner decides to sell half of its inventory amounting to Php 5, 000.
Stockholders Equity
Total Total
8. A customer actually buys the goods for Php 10, 000 in credit.
Accounts Receivable Stockholders Equity
Total Total
56
ACTIVITY 2 : Prepare Income Statement
In this activity, you are task to segregate nominal accounts from permanent
accounts. Only nominal accounts will be reflected in the income statement. Determine the
debit and credit balances and deduct all expenses from revenue accounts in order to arrive
at net income/loss.
The net income or loss can be determined upon finalization of income statements.
Net income indicates that the business is profitable.
Direction: Prepare an income statement for MISAKI Company for 20xx.

Net sales revenue 7, 700, 000
Cost of sales 5, 000, 000
Other Income 400, 000
Depreciation 425, 000
Other expenses 100, 000
Selling expenses:
Freight out 175, 000
Salesmen’s commission 650, 000
Administrative expenses:
Officers’ salaries 500, 000
MISAKI Company
Income Statement
Year ended December 31,
20xx
________________________ ______________
________________________ ______________
Gross Income ______________ (1
pt)
________________________ ______________
Total Income ______________ (1
pt)
Expenses:
___________________ _______________
___________________ _______________
Total Expenses: ______________ (1
pt)
Net Income ______________ (1 pt)
57
ACTIVITY 3: Prepare Balance Sheet
In this activity, you are task to segregate permanent accounts from
nominal accounts. Only permanent accounts will be reflected in the balance
sheet. Determine the debit and credit balances and compute for the total assets,
total liabilities and total owner’s equity. The net income generated from the
income statement must be added to the capital to generate total owner’s equity.
If the business incur net loss, it will be deducted.
How much is the assets of the business? The assets of the business can be
computed by adding up all assets accounts and deduct contra asset account.
assets are used to generate income for the business.
As prescribed in the accounting equation, total assets must be equal to
total liabilities and owner’s
equity. Depicted in figure 13 below is the basic accounting equation.
Direction: From the following account balances for ALEX Company on

December 31, 20xx, prepare a balance sheet with proper classification.
Reserves 5, 900, 000

Cash and Cash Equivalents 2, 790, 000
Bonds payable 6, 000, 000
Intangible Assets 10, 110, 000
Trade and other payable 1, 000, 000
ALEX Company
Statement of Financial Position
(Balance Sheet)
December 31,
20xx
Assets Liabilities + Owners Equity
Total:
58
Post test Multiple Choice
Direction: Read questions carefully and choose the letter of the correct answer.
_____ 1. Measure the ability of the company to generate income from the use of its assets
and invested capital as well as control its cost.
A. Solvency ratio B. Liquidity ratio C. Profitability ratio D. Acid-test ratio
_____ 2. The following are financial records of ABC Corporation:
• Revenues – 20,000
• Rent expense – 3,000
• Salaries expense – 4,000
• Utilities expense – 2,000
How much is the total expenses?
A. P 9, 000 B. P10, 000 C. P18, 000 D. P1, 000
_____ 3. How much is the income?
A. P 10, 000 B. P11, 000 C. P16, 000 D. P20, 000
_____ 4. A financial statement that reports the Asset, Liability and Owner’s equity of the
business is called _____.
A. Income Statement B. Balance Sheet C. General Journal D. General Ledger
_____ 5. All of the following is an income statement accounts, except _____.
A. Rent expense B. Accounts receivable C. Service fees D. Insurance expense
_____ 6. A financial statement that reports the Sales or Income received, Expenses and the
Net income of the business is called _____.
A. Income Statement B. Balance Sheet C. General Journal D. General Ledger
_____ 7. Assets that can be realized (collected, sold, used up) one year after year-end date.
A. Current Assets B. Noncurrent Assets C. Current Liabilities D. Noncurrent Liabilities
_____ 8. It is an item of balance sheet wherein the capital or interest of the owner of the
business is listed.
A. Assets B. Liabilities C. Equipment D. Capital
_____ 9. Refers to the company’s capacity to pay their long-term liabilities.
A. Debt Ratio B. Current Ratio C. Solvency D. Liquidity
_____10. Measures the return (net income) generated by the owner’s capital invested in
the business.
A. Return on Asset B. Operating Income
C. Equity Ratio D. Return on Equity
QUARTER 2 MODULE 3 (ANSWER KEY)
What I Know?
1. A 6. A
2. A 7. B
3. B 8. A
4. B 9. C
5. C 10. B
What’s New
59
1. LAYOUT 7. FACTORY
2. MOTIVATION 8. DEPLOYMENT
3. COMPENSATION 9. PEOPLE
4. CUSTOMERS 10. JOB
5. WORKFLOW 11. WORKFORCE
6. OPERATION 12. TECHNOLOGY
What’s More
ACTIVITY 1
1. A 6. C
2. D 7. B
3. B 8. D
4. B
5. A
ACTIVITY 2
Components Mastery 10-9 Accomplished 8-7 Unacceptable 6-0 Score
Layout/Proportion Layout and Majority of the layout is Elements of the

proportion are properly laid-out & but layout are out of
properly the drawing has a few place and/or out of
sketched. Top areas that need further proportion.
view looks refinement in order for
natural & the top view to look
without proportional/natural
distortions.
Post Test
1. A 6. C
2. D 7. A
3. B 8. B
4. B 9. D
5. A 10 C
What I Know?
1. A 6. C
2. D 7. A
3. B 8. B
4. B 9. D
5. A 10 C
What’s New

Designing the business Runs the factory or service shops Manages the logistics of the warehouse
Develop the business plan Converts input into output Obtaining customer feedback
Choosing operations site Recruits the right manpower Provides the connection between
operations and the customers
Acquiring necessary equipment Maintaining the factory Evaluates the output
Manualizing all operating & Continuous improvement of operations Creates better operating templates for
administrative processes and and upgrading facilities future production.
procedures
What’s More
ACTIVITY 1
60
Designing the business Runs the factory or service shops Manages the logistics of the warehouse
Develop the business plan Converts input into output Obtaining customer feedback
Choosing operations site Recruits the right manpower Provides the connection between
operations and the customers
Acquiring necessary equipment Maintaining the factory Evaluates the output
Manualizing all operating & Continuous improvement of operations Creates better operating templates for
administrative processes and and upgrading facilities future production.
procedures
5. A
ACTIVITY 2
Components Mastery Accomplished 4-2 Unacceptable 0-0 Score
5
Explanation Makes a claim Makes a claim Does not make a
that is sufficient to that is sufficient to claim or makes an
answer the question answer the question incoherent claim
and is coherent or is coherent
ACTIVITY 3
Sales 90, 000
Expenses:
Gas & Oil 5, 000
Baking Ingredients 25, 000
Salaries and wages (manpower) 30, 000
Wrapping materials 10, 000
Total Expenses: 70, 000
Profits 20, 000
Post Test
1. TRUE 6. TRUE
2. TRUE 7. TRUE
3. FALSE 8. TRUE
4. TRUE
5. TRUE

What’s More
Components Mastery Accomplished Unacceptable 0 Score
2 1
Explanation Makes a claim Makes a claim Does not make a
that is sufficient to that is sufficient to claim or makes an
answer the question answer the question incoherent claim
and is coherent or is coherent
Post Test
Part 1 Part 2
1. General Partnership 1. TRUE
2. Close Corporation 2. TRUE
3. Sole Proprietorship 3. FALSE
4. Partnership 4. TRUE
5. Corporation 5. TRUE
61
What’s More
IDEAS 5 4 3 2 1 Weight
Value
IDEAS The essay is fully The essay is The essay is The essay is The essay
focused and contains consistently focused sufficiently minimally shows
*Controlling a wealth of ideas and contains ample focused and focused. The little or no
idea and examples. The ideas and examples. contains provided focus and
*Supporting writer uses rhetoric The writer may some ideas examples are the ideas
ideas *Use of al strategies and employ rhetorical and vague or are unclear,
details addresses strategies or address examples. general and irrelevant,
*Awareness of counterarguments. counterarguments. The response the response or 2X
purpose *Sense is demonstrates repetitive.
of generally minimal The
completeness appropriate to awareness. response is
the persuasive incomplete
purpose. or too
brief.

What’s More
1.
Debit Credit
Office Supplies 25, 000
Cash 25, 000
2.
Debit Credit
Cash 100, 000
Owner’s Equity or Common Stock 100, 000
3.
Debit Credit
Office Rental 25, 000
Cash 25, 000
4.
Debit Credit
Salaries and Wages 150, 000
Cash 150, 000
5.
Debit Credit
Office Supplies 10, 000
Accounts Payable 10, 000
6.
Debit Credit
Cash 5, 000
Service rendered 5, 000
7.
Debit Credit
Cash 5, 000
Loans payable 5, 000
8.
Particulars Debit Credit
Light and Water 3, 000
62
Cash 3, 000
9.
Transportation and Travel 500
Cash 500
10.
Inventory 10, 000
Cash 10, 000
11.
Cash 8, 000
Sales 8, 000
12.
Accounts Receivable 5, 000
Sales 5, 000
Post Test
1. A 6. B
2. C 7. B
3. B 8. A
4. A 9. D
5. D 10. C
What’s More
Activity 1: Posting journal entries to T-account

1. The owner withdrew Php 10, 000 cash from the owner’s equity.
Cash Owners Equity
10 , 000 000 10,
Total 10, 000 Total 10, 000
2. The owner borrowed a long term debt from the bank amounting to Php 20, 000.
Cash Long term debt

, 000 20,
20 000
Total 20, 000 Total 20, 000
3. The owner borrowed a short term debt from the bank amounting to Php 5, 000.
Cash Short term debt

63
, 000 5 5, 000
Total 5, 000
Total 5, 000
4. The owner decides to buy an inventory of merchandise or goods worth Php 10, 000.
Cash Inventory
10, 000
10, 000
Total 10, 000 Total

10, 000
5. The owner bought some machinery and equipment worth Php 10, 000.
Fixed Assets Cash
10 , 000 000
10,
Total 10, 000 Total 10,

000
6. The owner spends money on the permits needed to operate the company worth Php 5, 000.
Other Assets/Taxes and Licenses Cash

, 000 5 5, 000
Total 5, 000 Total 5, 000

7. The owner decides to sell half of its
inventory amounting Php 5, 000.
Stockholders Equity Inventory

000
, 0005 5,
Total 5, 000 Total

8. A customer 5, 000 actually buys the goods
for Php 10, 000 in credit.
64
Accounts Receivable Stockholders Equity
000
, 10 000 10,
Total 10, 000 10, 000 Total
Activity 2: Prepare Income Statement
MISAKI Company
Income Statement
Year ended December 31, 20xx
Net sales 7, 000, 000
Cost of sales (5, 000, 000)
Gross Income 2, 700, 000 (1 pts)
Other Income 400, 000

3, 100, 000 (1 pts)
Total Income
Expenses:
Selling expenses 825, 000
Administrative expenses 500, 000
(1, 325, 000) (1 pts)

1, 775, 000 (1 pts)
Net Income
Activity 3: Prepare Balance Sheet
ALEX Company
Statement of Financial Position
(Balance Sheet)
December 31, 20xx
Assets Liabilities + Owners Equity
Cash & Cash Equivalents 2, 790, 000 Trade & other payable 1, 000, 000
Intangible Assets 10, 110, 000 Bonds payable 6, 000, 000
Reserves 5, 900, 000
Total: 12, 900, 000 12, 900, 000
65
Answer Key:
1. C 6. A
2. A 7. A
3. B 8. D
4. B 9. C
5. C 10. D
References:
A. Books
1. Morató,E Jr. (2016). ENTREPRENEURSHIP pp. 141-142. REX Bookstore
B. Online and Other Sources
1. https://st-process-production.s3.amazonaws.com/61daf7f3-ddbc-44ce-
bef7ff2b353da18d/hZ5hb_mg3gUgngoHR_hJ9w.png
2. https://cdn-images-1.medium.com/max/909/0*d3MRXSA9HJd7qRPl.png
3. https://www.conceptdraw.com/How-To-Guide/picture/Building-Plans-Office-LayoutPlan.png
References:
A. Book
1. Morató,E Jr. (2016). ENTREPRENEURSHIP pp. 89-97. REX bookstore
References:
A. Online and Other Sources

a. https://c8.alamy.com/comp/T6H83T/writing-note-showing-record-keeping-business-conceptfor-the-activity-or-occupation-of-
keeping-records-or-accounts-color-tablet-smartphone-withscree-T6H83T.jpg
b. https://www.irs.gov/businesses/small-businesses-self-employed/why-should-i-keep-records
References:
A. Books
a. Ronaldo S. Batisan, DIWA Senior High School Series: Entrepreneurship Module. Diwa Learning Systems Inc.
b. Angeles A. De Guzman. Entrepreneurship (For Senior High School, Applied subject,ABM Strand. Lorimar Publishing,
Inc 2018, 25 – 26.
c. Edralin, Divina M. Entrepreneurship. Quezon City: Vibal Group, Inc. 2016, 80 – 83.
d. Leedy, P. and Ormrod, J. Practical Research: Planning and Design 7th Edition. (Merrill Prentice Hall and SAGE
Publications, 2001),
e. Nick L. Aduana, Entrepreneurship in Philippine Setting (for Senior High School), 2017
f. Dr. Eduardo A. Morato Jr., Entrepreneurship, 2016
g. Valix C. T. (2011). FINANCIAL ACCOUNTING VOL. 1 pp. 107-146. GIC ENTERPRISES & CO., INC.
a. https://articles.bplans.com
b. https://smartasset.com
c. https://www.scirp.org/(S(351jmbntvnsjt1aadkposzje))/reference/ReferencesPapers.aspx?Refe renceID=2026950
d. http://www.accounting-basics-for-students.com/journal-entries-and-ledger-question-andanswer.html
References:
A. Books
a. Lopez, Jr. Rafael M. Fundamentals of Accounting, 2014-2015 Edition
b. Morato, Eduard, Jr. A. Entreprenuership, Rex Bookstore 2016
c. Teaching Guide for Senior High School, Fundamentals of Accountancy, Business, & Management 1, CHED in
collaboration with PNU
d. Teaching Guide for Senior High School, Fundamentals of Accountancy, Business, & Management 2, CHED in
collaboration with PNU
e. Teaching Guide for Senior High School, Business Finance, CHED in collaboration with PNU
f. Valix C. T. (2011). FINANCIAL ACCOUNTING VOL. 1 pp. 107-146. GIC ENTERPRISES & CO., INC.
a. http://www.accounting-basics-for-students.com/journal-entries-and-ledger-question-andanswer.html
b. Katie Jensen, “Factors Considered in Financial Forecasting.” Chron. Hearst Newspapers. Acessed December 10, 2018.
https://smallbusiness.chron.com/factorsconsidered-financialforecasting-80716.html
c. https://www.slcbookkeeping.com/blog/bid/207078/Bookkeeping-Tasks-for-Every-Partofthe-year
d. https://www.thebalancesmb.com/steps-to-increase-small-business-profits-1200720
e. https://www.wikihow.com/Calculate-Profit
66
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What I Need to Know?

MULTIPLE CHOICE. Directions: Read and analyze the statements

_____5. These are “engineered methods”.

_____7. Every step in the transformation process must be measured,

The Nine Critical Sub-Processes Or Sub-Systems in the Transformation Process

A. Production Programming and Scheduling

1. The OWF must be very efficient in terms of time, movement, and

For service shops, people are everything. No customer will patronize a

Gaps in the competency or skills and attributes of people must be

The operating work flow must translate into an appropriately-designed

The layout should follow four principles:

3. The layout should capture the physical and psychological atmosphere

ACTIVITY 1 : CHOOSE ME!!!

_____3. Which of the following is NOT belong in Layouting?

12 Republic of the Philippines

What I Need to Know?

Pre-Operations Operations Post-Operations

The Nine Critical Sub-Processes Or Sub-Systems in the Transformation Process

Operations Management, Supervision, and Control

Operations managers and supervisors orchestrate and control the entire

Pre-operations management is concerned with: (a) designing and

Post-operations unit manages the logistics of warehousing, distributing,

Efficiency measurements relate the output produced to the input

Effectiveness measures the results or the outcomes realized by the

Methods included are the operating systems, technologies, practices, and

The proper mix of Men, Machines, and Materials maximizes and

The enterprise managers and technicians must understand how the

The technology provider should be tasked to transfer all the relevant

The operations Function cannot perform well without soliciting and

ACTIVITY 1: CHALLENGE YOURSELF!!!

ACTIVITY 2: EXPLAIN IT!

ACTIVITY 3: LET’S SEE!!!

What I Need to Know?

After going through this module, you are expected to:

Introduction to Busines s Implementation

After much seeking and screening of entrepreneurial opportunities, the critical

The enterprise must state its mission statement clearly for:

• the sake of the customers being wooed;

A Very Good Business Plan

The purposes of a business plan are:

1. Entice partners, investors, and bankers to fund a business venture.

Organizing and Structuring the Enterprise

There are four types of corporations, which are follows:

ACTIVITY 1: GETTING STARTED

Direction: Answer the following questions below.

Direction: Identify the correct answer for each question below.

What I Need to Know?

After going through this module, you are expected to:

KEEPING BUSINESS RECORDS

Why should I keep records?

1. Monitor the progress of your business

2. Prepare your financial statements

ACTIVITY 1: ESSAY TYPE (10 pts)

What I Need to Know?

After going through this module, you are expected to:

What is It PERFORM BOOKKEEPING TASKS

What is a General Ledger?

What is a Subsidiary Ledger?

The Rules of Debit and Credit

In order to fully understand the concept of debit and credit balances,

As you can observed, the accounts reflected in figure 7 above are

Equipment (at cost)