Republic of the Philippines

Department of Education
REGION VIII
SCHOOLS DIVISION OF NORTHERN SAMAR
CATARMAN NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL

FUNDAMENTALS OF
ACCOUNTANCY, BUSINESS
AND MANAGEMENT 1
3rd Quarter 2nd Sem 2021-2022
Learning Activity Sheet 1

Reminders:
 Answers will be written on the ANSWER SHEETS provided every week.
 Any markings or writings on the module is prohibited. The modules will be
returned at the end of the quarter.

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 Republic of the Philippines
Department of Education
REGION VIII
SCHOOLS DIVISION OF NORTHERN SAMAR
CATARMAN NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL

Lesson 1: INTRODUCTION TO ACCOUNTING

This lesson was designed and written to introduce accounting to help you understand which
accounting is used in making business decisions by citing specific examples. It helps you solve
exercises and problems on the identification of users of information, type of decisions to be made,
and type of information needed by the users.
This was created so that you will be able to cite users of financial information and identify
whether they are external or internal users (ABM_FABM11-IIIa-1-8).
At the end of this lesson, you are expected to:
a. Define accounting;
b. Describe the nature of accounting;
c. Narrate the history/origin of accounting; and
d. Define internal and external users and give examples.
DOES ANYONE USE AND NEED ACCOUNTING?
Yes, everyone uses and needs accounting information in one form or another. In all walks of
life, its relevance can be seen. It has system and process that help business owners to understand the
flow of their transaction. It truly plays a necessary role in the
business.
IS ACCOUNTING IMPORTANT TO YOU?
Yes, accounting is important both in your personal life as well as in your career, even though
you may not become an accountant.

ACCOUNTING AS THE LANGUAGE OF BUSINESS

ACCOUNTING is the process of gathering financial information about a business and

reporting this information to users.
Accounting is also called the LANGUAGE of BUSINESS. It is important to understand this
language in order to work effectively in the business world. Knowing the language of accounting
helps one understand the impact of economic events on a specific company.
Accounting is a process of identifying, recording, and communicating economic events such
of an organization to related users (Weygandt, 2005). Economic events include purchase of
materials, sale of goods, and acquisition of machinery which are measured in monetary terms and are
recorded in the financial statements.
Identifying – involves in the selection of the economic events which are important to a particular
business transaction. Examples of transactions in a merchandising store are sales of merchandise,
purchases of merchandise, and purchases of delivery truck.
Recording – is the act of keeping a chronological record of events that are measurable in accounting
documents like journals and ledgers.

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 Republic of the Philippines
Department of Education
REGION VIII
SCHOOLS DIVISION OF NORTHERN SAMAR
CATARMAN NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL

Communicating – refers to the process of communicating financial reports to the users of financial
information.

NATURE OF ACCOUNTING
1. Accounting is a service activity. It helps decision makers by giving them financial reports
that will guide them in making sound decisions.
2. Accounting is a process. It refers to the method of performing any specific job step-by-step
according to the objectives. It performs the specific task of collecting, processing, and
communicating financial information.
3. Accounting is both an art and a discipline. It is considered an art because one records,
classifies, summarizes, and finalizes financial data. The way something is done is referred to
as “art”. It is a behavioral knowledge involving an established creativity and skill to help one
achieve distinct objectives.
4. Accounting deals with financial information and transactions. It records financial transactions
and data, categorizes these, and finalizes the results given for a specified period. Accounting
only deals with financial and not with non-monetary or non-financial aspects of an
information.
5. Accounting is known and characterized as a storehouse of information. It collects, processes,
and communicates financial information of any entity.

HISTORY OF ACCOUNTING
In history, accounting is as old as civilization. It was developed in response to various social
and economic needs of men. It started as a simple recording of monotonous exchanges. Its history
shares the similarity with that of finance and business.

EVOLUTION OF ACCOUNTING
 The Cradle of Civilization (3600 B.C.) – In Mesopotamia, record-keeping was done through
“Clay Tablet” as evidence of recording transactions. From India and China to Central and
South America, the clay tablet records the business transactions like accounts receivable and
accounts payable.
 Double-Entry Bookkeeping (14th Century) - The most relevant event in accounting history is
generally considered to be the dissemination of doubleentry bookkeeping-by Luca Pacioli
(Father of Accounting, in 14th century Italy). Pacioli was much revered in his day, and was a
friend and fellow of Leonardo da Vinci. The Italians of the 14th to 16th centuries are
recognized
as the fathers of modern accounting and were the first to use Arabic numerals than Roman,
and for following business accounts. Summa de Arithmetica was written by Luca Pacioli, the
first book issued that contained a detailed chapter on double-entry bookkeeping.

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 Republic of the Philippines
Department of Education
REGION VIII
SCHOOLS DIVISION OF NORTHERN SAMAR
CATARMAN NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL

 French Revolution (1700s) – In this period, the development of accounting theory has begun
and was influenced by social upheavals.
 The Industrial Revolution (1760-1830) – The focus on this era are fixed assets and mass
production.
 The Beginnings of Modern Accounting in Europe and America (19thCentury) - The modern
and formal accounting profession emerged in Scotland in 1854. Most accountants stayed in
the U.S., establishing accounting practices and becoming the origins of several U.S.
accounting
firms. The first national U.S. accounting society was established in 1887. The American
Association of Public Accountants was the initiator of the current American Institute of
Certified Public Accountants (AICPA).
 The Present (20th Century) – In the present time, accounting standards were established and
practitioners follow the rules of international organizations or groups like AICPA. Modern
accounting standards were given more attention and time.

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 Republic of the Philippines
Department of Education
REGION VIII
SCHOOLS DIVISION OF NORTHERN SAMAR
CATARMAN NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL

EXTERNAL AND INTERNAL USERS OF ACCOUNTING INFORMATION

The basic function of accountants is to provide useful economic information to external and
internal decision makers (users) as explained below:
 External Users –are the individuals or organizations outside the company who are not
involved in operating the business.
1. Creditors – users who need accounting information to determine the credit integrity,
worthiness of the organization, and credit terms.
2. Tax Authorities (Bureau of Internal Revenue) - a government agency that verifies the
accuracy of financial data to ensure the credibility of the tax returns filed by the business.
3. Investors – users who need accounting information to evaluate and examine the feasibility
of investing in a company.

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 Republic of the Philippines
Department of Education
REGION VIII
SCHOOLS DIVISION OF NORTHERN SAMAR
CATARMAN NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
4. Customers – users who evaluate the financial information of its supplier to keep stable
source of supply in the long term.
5. Regulatory Authorities -government agencies like Securities and Exchange Commission
(SEC), Department of Trade and Industry (DTI), Department of Labor and Employment (DOLE)
were
established to supervise if businesses comply with legal requirements in running a business.
 Internal Users – individuals inside the organization who plan, organize, and run the
business. They are directly involved in managing and operating the business. Internal users
are also called as “primary users” of accounting information and some of these users are the
marketing managers, supervisors, finance directors, company officers, and owners.
The following are the internal users of accounting:
1. Management - to know the income/earnings for the period, sales, available cash, and
production cost are the reasons why the management needs the accounting information. They also
analyze the organization's performance and position and take appropriate measures to improve the
company results, sufficiency of cash to pay dividends to stockholders as well as the pricing
decisions.
2. Employees – for job security, they use financial information as factor to consider in staying
employment or to look for other employment opportunities.
3. Owners – they use financial information to know the profit or income for the period, resources,
or assets of the business. Liabilities of the business are needed by the owners. They also use financial
information in considerations regarding additional investment, expanding the business, and
borrowing funds to support any expansion plans.

TYPES OF ACCOUNTING INFORMATION

A. Financial Accounting
Financial Accounting is used by business managers to record transactions of the business,
prepare reports based on those transactions, and thus communicate to owners’ and creditors the
current position of the company and its success.
These reports are all-purpose financial statements such as:
1. Statement of Financial Position or the Balanced Sheet Statement
2. Statement of Profit or Loss and Other Comprehensive Income

3. Statement of Changes of Owner’s Equity

4. Statement of Cash Flows
5. Notes to Financial Statements
B. Managerial Accounting
Managerial Accounting is used to aid business managers in planning and controlling business
operations and in decision making. For example, the decision to open a branch restaurant requires the
use of managerial accounting.
C. Tax Accounting

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 Republic of the Philippines
Department of Education
REGION VIII
SCHOOLS DIVISION OF NORTHERN SAMAR
CATARMAN NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
Tax Accounting is used to prepare tax returns and to examine tax consequences of proposed
business transactions.
D. Not-to-profit Accounting
Not-to-profit Accounting is used by nonprofit organizations (such as NGO’s, civic and
charitable institutions) to measure the success of their activities and to ensure strict compliance with
all the requirements imposed by law, by donors, or by entity’s purposes.
E. Government Accounting
Government Accounting is used by all branches of government and by those who receive
government funds to oversee the complicated business of providing government services or to report
to the government funding in compliance with the imposed regulations.
F. Cost Accounting
Cost Accounting analyzes a business’s costs to help managers control expense. Good cost
accounting records guide managers in pricing their products and services to achieve greater profits. It
also gives information to the management when a product is not profitable and should be dropped.
CAREERS IN ACCOUNTING
Accounting offers many career opportunities. The positions listed below requires varying
amounts of education and experience.
Initial Employment
a. Accounting Clerk – record, sort and file accounting information. They are involved with
only a small portion of the total accounting responsibilities for the firm. They must usually
have at least one year of accounting education.
b. Bookkeeper – generally supervise the work of accounting clerks, help with daily accounting
work, and summarize accounting information. They also help managers and owners interpret
the accounting information. They must usually have one to two years of accounting education
and experience as an accounting clerk.
c. Accountant – design the accounting information system and focus on analyzing and
interpreting information. They also look for important trends in the data and study the impact
of alternative decisions.

Most accountants enter the field with a college degree in accounting. Accountants are
employed in public accounting, private (managerial) accounting, and governmental and educational
institutions.
Professional Level
a. Public Accounting
Public accountants offer services in much the way as doctors and lawyers. The public accountant
can achieve professional recognition as Certified Public Accountant (CPA) by meeting education
and experience requirements, and passing an examination prepared by the Professional Regulatory
Board of Accountancy.
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 Republic of the Philippines
Department of Education
REGION VIII
SCHOOLS DIVISION OF NORTHERN SAMAR
CATARMAN NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
The services of a public accountant are the following:
 Auditing – involves reviewing and testing to be certain that proper accounting policies and
practices have been followed. The purpose of the audit is to provide an independent opinion
that the financial information about a business is fairly presented.
 Taxation – Tax specialists advise on tax planning, prepare tax returns, and present clients
before governmental agencies such as the Internal Revenue Service.
 Management Consulting – businesses seek advice on a wide variety of managerial issues.
b. Private Accounting
Many accountants are employees of private business firms. The controller oversees the entire
accounting process and is considered the principal accounting officer of the company. Private or
managerial accountants perform a wide variety of services for the business.
 Accounting Information Systems – designs and implement manual and computerized
accounting systems.
 General Accounting – prepares various reports and financial statements.
 Cost Accounting – conducts further analysis to determine whether products and services are
produced in the most cost-effective manner.
 Budgeting – helps managers develop a financial plan for the future.
 Tax Accounting – focuses on tax planning, preparing tax returns, and dealing with the
Internal Revenue Service and other governmental agencies.
 Internal Auditing – review the operating and accounting control procedures adopted by
management and to see that accurate and timely information is provided.

A managerial accountant can achieve professional status as a Certified Management

Consultant (CMA) by passing a uniform examination offered by the Institute of Management
Accountants. An Internal Auditor can achieve recognition as a Certified Internal Auditor (CIA) by
passing the uniform examination offered by the Institute of Internal Auditors.
c. Government and Nonprofit Accounting
d. Practice in Education / Academe

References:
 Cabrera, Elenita & Anthony. 2019-2020 Edition. Fundamentals of Accountancy, Business
and Management 1 Volume 1; GIC Enterprises.
 Anastacio, Ma. Flordeliza. 2011. Financial Management (With Industry Based Perspective).
Manila: Rex Book Store.
 Deped K To 12 Curriculum Guide, Fundamentals of Accountancy, Business and
Management 1. 2016.
 Gilbertson, Claudia. 2010. Fundamentals of Accounting. 8th ed. Australia: Cengage
Learning.
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 Republic of the Philippines
Department of Education
REGION VIII
SCHOOLS DIVISION OF NORTHERN SAMAR
CATARMAN NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
Teaching Guide for Senior High School, Fundamentals of Accountancy, Business and
Management 1. 2016. Quezon City: Commission on Higher Education.
 Pefianco, Erlinda C. 1996. The Accounting Process: Principles and Problems. Makati:
Goodwill Trading.
 Padillo, Nicanor, Jr. 2011. Financial Statements Preparation, Analysis and Interpretation.
Manila: GIC Enterprises.
 Young, Felina C. 2008. Principles of Marketing. Manila: Rex Book Store.

MICHELLE A. LARGO
Subject Teacher

Fundamentals of Accountancy, Business & Management 1

Answers Sheet
Learning Activity Sheet 1

Name: _______________________________________________ Grade Level / Section________

Learning Task #1
Directions: Identify whether the given is A PROCESS OR NATURE of accounting. Write your
answers on the ANSWER SHEET provided for you.
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 Republic of the Philippines
Department of Education
REGION VIII
SCHOOLS DIVISION OF NORTHERN SAMAR
CATARMAN NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
____________1. Accounting is a storehouse of information.
____________2. Accounting deals with financial information.
____________3. Recording events in a chronological order.
____________4. Communicating the financial reports to the users.
____________5. Accounting is a process.
____________6. Accounting is a service activity.
____________7. Identifying the economic events.
____________8. Accounting is both an art and a discipline.
____________9. Recording the sale of merchandise.
____________10. Recording the purchase of merchandise
Learning Task #2
Directions: Read each statement below and choose your answers from the box.

_____________1. This involves selecting economic events that are relevant to a particular business
transaction.
_____________2. This occurs through the preparation and communicating of financial and other
accounting reports.
____________ 3. This nature of accounting refers to the method of performing any specific job
step-by-step according to objectives.
_____________4. This nature of accounting tells accounting is known and characterized as a
storehouse of information.
____________ 5. During this period, thorough study and development of theory of accounting
began. Social upheavals affect the government, finances, laws, customs, and business which greatly
influenced the development of accounting.
_____________6. During this period, the Modern Accounting Standards and Commerce were
developed. The accounting profession developed the requirements for financial statement audits
around the states.
___________ 7. This user analyzes the organization’s performance and position and take appropriate
measures to improve the company’s results.
____________8. These users need accounting information to know the profit or income for the
period as well as the assets and liabilities of the company.
___________9. These users need accounting information to determine the credit integrity,
worthiness of the organization, and credit terms.
___________10. These are the users of accounting information that need to assess the financial
position of its suppliers which is necessary for them to maintain a stable source of supply in the long
term.
Learning Task #3

Directions: Classify each of the following as either external user (E), or internal user (I).
__________1. Creditor __________6. Customer/Client
__________2. Employees __________7. Potential Investor
__________3. Academe __________8. Management
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 Republic of the Philippines
Department of Education
REGION VIII
SCHOOLS DIVISION OF NORTHERN SAMAR
CATARMAN NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL
__________4. Government __________9. General Public
__________5. Stockholders __________10. Owners

___________________________________ _______________
Parent’s Name & Signature Date

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