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Most of the information needed to prepare the financial statements are available from the worksheet.
Kindly refer to our previous module on the preparation of Worksheet for your reference. Note that
financial statements shall be presented at least annually.
Income Statement
The Income Statement is a formal statement presenting the performance of the enterprise for a given
period of time. It provides a summary of the revenues earned and expenses incurred for a period of
time.
Revenues
Lawn Cutting Revenues Php 42,250
Expenses
Salaries Expense Php 5,600
Supplies Expense 500
Rent Expense 7,000
Insurance Expense 2,000
Gas Expense 1,500
Advertising Expense 1,750
Depreciation Expense - Vehicles 4,500
Depreciation Expense - Equipment 1,000
Interest Expense 1,400
Total 25,250
The statement of changes in Equity summarizes the changes that occurred in the owner’s equity.
Additional investment / contribution made by the owner and the profits for the period increases
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LICEO DE LA SALLE SENIOR HIGH SCHOOL
FIRST SEMESTER | QUARTER 2
AY 2020 – 2021 | FUNDAMENTALS OF ACCOUNTANCY,
BUSINESS, AND MANAGEMENT 1
to owner’s equity. Decreases in owner’s equity, on the other hand, result from withdrawals by
the owner and losses during the period.
Important things to remember when preparing the Statement of Changes in Owner’s Equity:
1. This statement should only include Capital-related accounts such as Owner’s Capital,
additional investments, net profit / loss, and withdrawals.
2. The Profit will be taken from the Income Statement.
3. Follow the standard header as depicted in the example.
4. The currency (Php) should be placed on the first numerical value of each column.
5. Double rule the Ending Capital.
Balance Sheet
The Balance Sheet shows the financial position or condition of an entity by listing the assets,
liabilities, and owner’s equity as at specific date. The balance sheet can be presented either in
report or account format. For this semester, we will only cover the report format.
The report format simply lists the assets, followed by the liabilities then by the owner’s equity
in vertical sequence.
Classification
It is proper to present a classified balance sheet; that is, the assets and liabilities are separated
into various categories. Assets are sub-classified as current and non-current assets; while
liabilities as current and non-current liabilities. You may refer to our previous module on the
elements of the financial statements and typical account titles used for the differentiation of
current and non-current asset / liability.
Important things to remember when preparing the Statement of Changes in Owner’s Equity:
1. This statement should only include Assets, Liabilities, and Capital (Ending Balance
computed from the Statement of Owner’s Equity).
2. Classify assets into Current and Non-current.
3. Classify liabilities into Current and Non-current.
4. Follow the standard header as depicted in the example.
5. The currency (Php) should be placed on the first numerical value of each column.
6. Double rule the Total Assets and Total Liabilities and Owner’s Equity. Both should be
balanced, having equal values.
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LICEO DE LA SALLE SENIOR HIGH SCHOOL
FIRST SEMESTER | QUARTER 2
AY 2020 – 2021 | FUNDAMENTALS OF ACCOUNTANCY,
BUSINESS, AND MANAGEMENT 1
Assets
Current Assets
Cash Php 182,250
Accounts Receivable 10,000
Supplies 500
Prepaid Rent 14,000
Prepaid Insurance 22,000
Total Current Assets Php 228,750
Non-Current Assets
Vehicles Php 300,000
Less: Accumulated Depreciation - Vehicles 4,500 295,500
Equipment 54,000
Less: Accumulated Depreciation - Equipment 1,000 53,000
Total Non-Current Assets 348,500
Liabilities
Current Liabilities
Notes Payable 100,000
Accounts Payable 1,000
Salaries Payable 1,600
Interest Payable 1,400
Unearned Revenues 11,250
Total Current Liabilities 115,250
Owner’s Equity
Del Mundo, Capital, 11/20/2019 462,000
Total Liabilities and Owner’s Equity Php 577,250
Reference: