SHS

BUSINESS ETHICS
Module 1
Business Ethics
Grade 12: Module 1
First Edition, 2021

Copyright © 2021
La Union Schools Division
Region I

All rights reserved. No part of this module may be reproduced in any

form without written permission from the copyright owners.

Development Team of the Module

Author: Donna M. Casilla, T II

Editor: SDO La Union, Learning Resource Quality Assurance Team

Illustrator: Ernesto F. Ramos Jr., P II

Management Team:

Atty. Donato D. Balderas, Jr.

Schools Division Superintendent
Vivian Luz S. Pagatpatan, Ph.D
Assistant Schools Division Superintendent
German E. Flora, Ph.D, CID Chief
Virgilio C. Boado, Ph.D, EPS in Charge of LRMS
Lorna O. Gaspar, EPS in Charge of ABM
Michael Jason D. Morales, PDO II
Claire P. Toluyen, Librarian II
 Target

A business is an activity that is part and parcel of human society: it is an

entity in which economic resources or inputs, such as materials and labor, are put
together and processed to provide goods or services or outputs to customers.
Business are usually complex enterprises involving major activities like purchasing,
manufacturing, marketing, advertising, selling, and accounting.

Thus, business make the goods and services you see each day. That includes
the products and services used by

This module will provide you with information and activities that will help you
understand the forms of business organization.

After going through this module, you are expected to:

1.1 differentiate the forms of business organizations in terms of their purpose and
role in socioeconomic development ABM_ESR12-IIIa-d-1.1-3

Before going on, check how much you know about this
topic. Answer the pretest on the next page in a separate
sheet of paper.
 Lesson The Role of Business in Socio-
1 economic Development

Jumpstart

Activity 1: Read me! Understand me!

Directions: Read and analyze each question. Choose your answer from the
given choices. Write the letter only.
____1. A small barber shop is owned and operated by Roy in their barangay.
What form of business organization is owned by Roy?
A. Corporation B. Joint Venture
C. Partnership D. Sole Proprietorship
____2. Which of the following is likely to be the most suitable form of business
organization for a group of three dentists?
A. Corporation B. Joint Venture
C. Joint Stock Company D. Partnership
____3. What is the form of business organization that is authorized to act as
a legal entity regardless of the number of owners?
A. Corporation B. Distributor
C. Partnership D. Sole Proprietorship
____4. Which of the following is NOT an advantage of the corporate form of
business organization?
A. Continuous life
B. Transferability of ownership
C. Limited liability of shareholders
D. Unlimited personal liability for stockholders
____5. How are sole proprietorships taxed?
A. As individual
B. As corporation
C. There is no tax liability
D. Profits are reported separate from personal income
____6. Which is TRUE about partnership form of business organization?
A. Separately legal entity’
B. Enjoys an unlimited life
C. Has a limited liability
D. A common form of organization for service-type businesses
____7. Which is CORRECT about sole proprietorship form of business
organization?
A. Must have at least three owners in most sales
B. Represents the largest number of business in the Philippines
C. Combines the records of the business with personal records of the
owner
D. Characterized by a legal distinction between the business as an
economic unit and the owner
____8. Which of the following shows an advantage of a corporation?
A. Not required to consult with anyone when it comes to making business
decisions.
B. There are no shareholders to pacify and no board of directors to
appease.
C. Owners are not required to consult with anyone when it comes to
making business decisions.
D. In raising capital for the business, it has the ability to raise funds
through the sale of stock.
____9. Which is NOT an advantage of a sole proprietorship?
A. Can retain all the profits
B. Can make all the marketing decisions
C. Can make all hiring decisions
D. Must consult agencies to determine the business location
___10. Rene and Rey have opened a convenience store through a general
partnership agreement. They have been solid friends since college.
However, if times get tough and Rey runs out on the business, is Rene
protected by the partnership arrangement against the partnership
debts?
A. There is no enough information provided to make a determination
regarding Rene’s responsibility for the partnership.
B. No, since partners typically have joint and several liabilities, Rene
can be held responsible for 100% of the partnership debts.
C. Yes, the Uniform Partnership Act guarantees that all bills and debt
are split equally between partners.
D. Yes, since Rene and Mark have entered into a partnership, Rene
would only be held responsible for his share of the partnership
debts.
 Discover
The Role of Each Form of Business Organization in the Socioeconomic
Development
Small businesses owned by sole proprietors are well recognized worldwide as
vital and significant contributors to economic development, job creation, and the
general health and welfare of economies. Microbusinesses (firms that employ fewer
than ten people) form a dynamic, integral part of the market economy, providing
goods and services and a dynamic gateway by which millions enter the economic and
social mainstream of society.

On the other hand, the Industrial Revolution brought with it new forms of
machine production that enabled businesses to make massive quantities of goods to
ship and sell in national markets. These changes, in return was the large
organizations to manage the enormous armies of people that had to be mobilized to
process the output of these machines on long assembly lines in huge factories. The
result was the large corporation that came to dominate our economies. These large
businesses, in general, offer better jobs than small businesses, in terms of both
compensation and stability.

Also, corporations provide such benefits as: links with suppliers, increased
consumer spending, the transfer of knowledge from one firm to another, and the
sharing of pools of workers. However, competitive forces sometimes fail to steer
companies in a socially beneficial way and instead, lead them to act in a socially
harmful manner. For example, a company might knowingly pollute a neighborhood
with substance that is not yet illegal, in order to save the costs of reducing its
pollution and thereby be more competitive. This wave of large corporations has
brought with it a host of new ethical issues, including the possibilities of exploiting
the workers who labor at the new machines, manipulating the new financial markets
that finance these large enterprises, and producing massive damage to the
environment.

Thus, those forms of business organizations drive socioeconomic stability and

growth by providing valuable services, products and taxes that directly contribute to
the progress and development of a community. They also provide employment and
strengthens the economic health of each community where a business is put up.
Even a business that is placed elsewhere, employing people at each local business
contributes to the success of that region, as with the wages they earn, people buy
properties, works, shops and otherwise invest in where they live.

Taxes from the different business organizations are used to maintain

infrastructure of a country. In other words, business development and increase of
sales means collecting more taxes, which can directly translate to better maintenance
and offerings of local infrastructure and services that benefit the community.
 Explore

Here are some enrichment activities for you to work on to master and
strengthen the basic concepts you have learned from this lesson.

Activity 1: Match the characteristics of the forms of business organization under

the appropriate heading.

- No board of director to appease - Total undivided authority

- Has a separate legal existence from its owners - Used by large businesses
- Complete control over the company’s finances - Easy and cheap to organize
- Resources are limited to those of the owner - Used by small businesses
- Combines the skills of more the one person - Co-ownership of property
- Shareholders have limited liability - Unlimited liability
- Can obtain large amounts of resources by issuing stock
- Transferable ownership rights
- Subject to numerous government regulations

Sole Proprietorship Partnership Corporation

Assessment 1
Directions: Using the graphic organizers below, cite the role of each form of
business organization in the socioeconomic development.
A.

Sole
Proprietorship

B.

Partnership

C.

Sole
Proprietorship
Activity 2: Answer each question in not less than 5 sentences. (5 points
each)
1. What is the importance of business organizations in the Philippines
socioeconomic development?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
2. What are the forms of business organization? Compare and contrast.
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
3. Explain the difference between those forms of business organization.
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________

4. Explain the role of each business organizations in the socioeconomic

development.
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
 Rubric for Scoring
Score Completion Accuracy Comprehensi Organizatio Conventions
on n
5 The answer is All Content Content is No major
complete. informatio demonstrates well- grammatical or
n provided a deep organized spelling errors.
is understanding and easy to No more than two
accurate. of, and read. Points minor errors.
engagement follow a
with, the logical
text(s). progression.
4 The answer is All Content Content is No major
missing slight informatio demonstrates well- grammatical or
details n provided understanding organized spelling errors.
is of, and and easy to No more than five
accurate. engagement read. Points minor errors.
with, the follow a
text(s), logical
progression.
3 The answer is Most Content Content is Some major and
missing informatio demonstrates organized minor errors that
multiple n provided basic and easy to don’t necessarily
details. is understanding read. Points impair
accurate. of the text(s). follow a communication.
mostly logical
progression.
2 Content Some Content Content may Major and minor
suggests lack informatio demonstrates be errors
of preparation n provided less than basic unorganized significantly
or is understanding and difficult weaken quality of
comprehensio accurate. of the text(s). to read. communication,
n. Points do not although still
follow a comprehensible.
solidly logical
progression.
1 Content only A small Content Content is Communication
marginally amount of demonstrates unorganized, seriously
related to the the a lack of illogical, and impaired by
question/ informatio understanding difficult to multitude of
prompt. n is of the text(s). read. spelling/grammat
accurate. ical errors.

Assessment 2
Directions: Write T if the statement is TRUE. If the statement is FALSE,
underline the word or phrase that makes the statement incorrect, then make
the statement or sentence true.
___________ 1. The forms of business organizations drive socioeconomic stability and
growth.
___________ 2. Small businesses offer better jobs than large businesses, in terms of
both compensation and stability.
___________ 3. Taxes from the different business organizations are used to maintain
infrastructure of a country.
___________ 4. Corporations provide benefits as: links with suppliers, increased
consumer spending, the transfer of knowledge from one firm to
another, and the sharing of pools of workers.
___________ 5. They also provide employment and strengthens the economic health
of each community where a business is put up.
___________ 6. Business development and increase of sales means collecting less
taxes.
___________ 7. Competitive forces always succeed to steer companies in a socially
beneficial way and lead them to act in a socially harmful manner.
___________ 8. Small businesses owned by sole proprietors are not recognized
worldwide
___________ 9. Microbusinesses form a dynamic, integral part of the market economy,
providing goods and services.
___________ 10. Business that are placed elsewhere, employing people at each local
business contributes to the success of that region.

Great job! You have understood the lesson. Are you now
ready to summarize?

Deepen

Direction: Make a graphic organizer showing the difference between the

forms of business organizations in terms of their purpose and role in
socioeconomic development. Be guided by the rubrics below.

Rubric for Scoring the Graphic Organizer

Excellent Good Fair Poor
4 points 3 points 2 points 1 point
Completeness Graphic Graphic At least 1/2 of Less than 1/2 of
Contains ALL Organizer Organizer is the assignment the assignment
information as labeled as labeled. was attempted. was attempted
requested. directed. Definitions are Some and/or
Definitions, if mostly definitions are complete. Most
used, are complete. There missing. definitions are
complete. are good Examples are missing.
Examples are examples on not complete. Examples are
given as most of the The concept incomplete. The
directed. The subjects. The shows one or concept shows
concept is clear. concept is two more than two
adequate. misconceptions. misconceptions
 Legibility All writing is Majority of the Writing is Writing is not
Is the student's legible and writing is somewhat legible and
writing legible? graphic legible and legible and the graphic
organizer is most of the assignment is a organizer is not
neat. graphic bit messy. neat. Shows a
organizer is lack of
neat. understanding
or carelessness.
Accuracy All of the Most of the At least 1/2 of Less than 1/2 of
Did the student assignment is assignment the assignment the assignment
recheck the correct and (more than 1/2) is correct. is accurate.
assignment? neat. is complete but graphic
Definitions are the definitions organizer is not
accurate and and/or graphic accurate
complete. organizer is not
accurate.
Requirements Goes beyond More than 1/2 At least 1/2 of Less than 1/2 of
Did the student the of the the the
follow the requirements of requirements requirements requirements
directions the assignment. are met. are met. are met.
given? Information are
written in detail.
Grammar There are no There are 1-2 There are 3-4 There are more
Did the student grammatical grammatical grammatical than 4
check spelling? and/or and/or and/or grammatical
mechanical mechanical mechanical and/or
mistakes on the mistakes on the mistakes on the mechanical
graphic graphic graphic mistakes on the
organizer. organizer. organizer. graphic
organizer.

Gauge
Directions: Read each statement carefully. Write the letter of the correct
answer before each number.

_____ 1. Which of the following describes a sole proprietorship?

I. Not required to consult with anyone when it comes to making
business decisions
II. All partners are responsible for making decisions that will impact
the business
III. Can maintain complete control over all aspects of the business
IV. It has the ability to raise funds through the sale of stock
A. I and II B. I and III C. II and IV D. I and IV

_____ 2. What is corporation form of business?

A. Owned by its stockholders

B. Terminates when of its original shareholders’ dies
 C. Not a separate legal entity in most states
D. Requires that shareholders be personally liable for the debts of the
business

_____ 3. What are the advantages of a sole proprietorship form of business?

I. Unlimited liability
II. Limitation on size
III. Low organizational cost and license fees
IV. Tax savings
A. I and II B. II and III C. III and IV D. IV and I

_____ 4. Which situation shows a partnership form of business?

A. Anita owns a sari – sari store in the barangay.

B. ABC Company opens three branches in San Fernando City.
C. Grace, Ana, and Karen decided to put up a computer shop that opens
24 hours.
D. Lala owns a food stall in the market.
_____ 5. Deny and Dane are friends since high school, after a graduating in college
they decided to put up a fashion boutique. What form of business
organization did Dane and Deny put up?

A. Corporation B. Joint Venture

C. Partnership D. Sole Proprietorship

_____ 6. Which of the following is INCORRECT about the role of business
organizations?

A. It provides employment to people.

B. It gives massive damage to the environment.
C. It strengthens the economic health of a community.
D. It contributes to the progress and development of a country.
_____ 7. What are the importance of business organizations in the socioeconomic
development?

I. It stimulates local economy.

II. Business organizations help stimulate socioeconomic development
by providing jobs to people.
III. It pays high taxes that helps generate more infrastructure.
IV. It provides a lot of improvement in living standards, and expanding
existing markets and opening new ones.

A. I and II B. II and III C. I, II, and III D. I, II, III, and IV

_____ 8. Which is CORRECT about the comparison of sole proprietorship and
partnership?
 sole proprietorship partnership
A. Unlimited liability Limited liability
B. Association of Owned by an individual
individuals
C. Tax savings Taxed as separate entity
D. Co- ownership of No restrictions on type
property of business

_____ 9. Which is TRUE about the role of a corporation in the socioeconomic

development?

A. It pollutes the environment.

B. It only gives harmful substance from companies.
C. It offers a lot of goods and services only in the locality.
D. It provides better jobs in terms of both compensation and stability.
_____ 10. Which is FALSE about the comparison of the forms of business
organization?

A. Corporation offers better jobs than in sole proprietorship.

B. Partnership pays more taxes than a sole proprietorship.
C. Sole proprietorship helps more in the socioeconomic stability than a
corporation.
D. Corporation provides more benefits as: link with suppliers and
increased consumer spending than a partnership business.

References:
Printed Materials:

Department of Education, (2014). K to 12 Senior High School Accountancy, Business, and Management
Strand, Curriculum Guide in Business Ethics, Pasig City, Philippines

Racelis, Aliza (2017). Business Ethics and Social Responsibility, Samploc, Manila, Philippines: Rex
Bookstore, Inc.
 Answer Key

Jumpstart
Activity 1
1. D
2. D
3. A
4. D
5. D
6. D
7. D
8. D
9. D
10. C
Explore
Assessment 2
1. T
2. F
3. T
4. T
5. T
6. F
7. F
8. F
9. T
10. T
Gauge
1. B
2. A
3. C
4. C
5. C
6. B
7. D
8. C
9. D
10. C