Entrepreneurship Career Guide

12
Entrepreneurship
Module 1-10
Department of Education ● Republic of the Philippines
PRE-TEST: Instruction: Read the statements carefully then write True if the statement is correct & write False if you think the
answer is not correct.
____true________1. Entrepreneur means “to undertake.”
____true________2. Entrepreneurship is a process of actions of an entrepreneur who is always in search of opportunities.
____true________3. The greatest significance of entrepreneurship is to help identify and develop the managerial
capabilities of entrepreneurs.
____true________4. Entrepreneurship will lead to the creation of organizations.
____true________5. Entrepreneurship can improve the life of the entrepreneur only.
____false________6. Coward people will become successful entrepreneur.
____true________7. An entrepreneur is a “Risk Taker”.
1
____false________8. Entrepreneurship is not an economic activity.
____true________9. Entrepreneurs are innovative.
____true________10. Profit potential is the compensation of the entrepreneur.
____true________11. An entrepreneur can become a business consultant.
____true________12. An entrepreneur can also be a researcher.
____true________13. An entrepreneur can also become a salesman.
____true________14. Entrepreneurship graduates can become a business reporter.
____true________15. The entrepreneur could easily see the results of his efforts.
LESSON 1
Relevance of Entrepreneurship to an organization
1. Development of Managerial capabilities- this means that one of the benefits an entrepreneur gets is to develop his
managerial skills.
2. Creation of Organizations- which means that because of entrepreneurships many organizations will exist.
3. Improving standard of living- this means that entrepreneurship can lift up the economic status of an individual.
4. Means of economic development- this means that not only the life of the entrepreneur is improved but also the
society where the business is located.
Concept of Entrepreneurship
The word “entrepreneur” was derived from the French verb entreprendre, which means “ to undertake” This is
pinpointing to those who ”undertake” the risk of enterprise. The enterprise is created by an entrepreneur and the process is
called
“Entrepreneurship”
Entrepreneurs are innovators, willing to take risks and generate new ideas to make it unique and profitable solutions
to the present-day problems.
Factors Affecting Entrepreneurship

1. Personality Factors which includes:
a. Initiative- which means doing things even before being told
b. Proactive-which means he can classify opportunities and seize it.
c. Problem Solver- which means he can retain good relations with other people
d. Perseverance-meaning he will pursue things to get done regardless of challenges
e. Persuasion- means that he can entice people to buy even if they don’t.
f. A Planner- meaning he makes plan before doing things and do not fail to monitor it.
g. Risk-taker which means that he is willing to gamble but he will calculate it first.
2. Environmental Factors which include political, climate, legal system, economic and social conditions and market
situations.
Common Competencies in Entrepreneurship

1. Decisive- an entrepreneur must be firm in making decisions.
2. Communicator- an entrepreneur must have a convincing power.
3. Leader-an entrepreneur an entrepreneur must have the charisma to be obeyed by his employees
4. Opportunity seeker- an entrepreneur must have the ability to be the first to see business chances.
5. Proactive- controlling a situation by making things to happen or by preparing for possible future problems.
6. Risk Taker- they have the courage to pursue what is their business ideas.
7. Innovative- the entrepreneurs have big business ideas and they do not stop improving and thinking of new
worthwhile ideas for their business.
Core Competencies in Entrepreneurship

1. Economic and dynamic activity- Entrepreneurship is an economic activity because it involves the creation and
operation of an enterprise with a view to creating value or wealth by ensuring optimum utilization of limited resources.
2. Innovative- Entrepreneurs constantly look for new ideas; thus he needs to be creative.
3. Profit Potential- meaning the entrepreneur can be compensated by his profit coming from the operation.
4. Risk bearing –meaning the entrepreneur needs to gamble but wise enough to offset the risk.
Types of entrepreneurs
1. Innovative entrepreneur- they are those who always make new things by thinking of new ideas.
2. Imitating entrepreneurs- they are those who don’t create new things but only follow the ideas of other
entrepreneurs.
3. Fabian entrepreneurs- they are those skeptical. They don’t initiate but follow only after they are satisfied.
4. Drone entrepreneur- they are those who lives on the labor of others. They are die-hard conservatives even ready to
suffer the loss of business.
5. Social entrepreneurs-they are those who initiate changes in the various fields such as education, health, human
rights, environment and enterprise development.
2
Career Opportunities of Entrepreneurship
1. Business Consultant- with the expertise of the entrepreneur he can be a very good source of advices to other
entrepreneurs and would be business man.
2. Teacher- a graduate of an entrepreneurship can be use his knowledge in teaching
3. Researcher- the entrepreneur can be employed as researcher by an enterprise.
4. Sales- the entrepreneurship graduate can apply as salesman
5. Business Reporter- the entrepreneur being expert in the field, he can be employed as business reporter.
Types of Entrepreneurs
1. Innovative entrepreneurs- have the ability to think newer, better and more economical ideas.
2. Imitating- these are people who follow the path show by innovative entrepreneurs
3. Fabian Entrepreneurs- are skeptical about changes to be made in the organization.
4. Drone entrepreneurs- are persons who lives on the labor of other
5. Social entrepreneur- are people who drive social innovation and transformation in various fields including education,
health, human rights and many others
Activity 2 Self- Assessment

Direction: Find out if you have the qualities of an entrepreneur. Put a check mark on the box.
Qualities YES NO
Risk Taker
Communicator
Leader
Opportunity Seeker
Proactive
Innovator
Decisive
Interpretation: If you have more YES than NO, you have the qualities of an entrepreneur.
Assessment
Now, that you are finished accomplishing the module, let us check what you have learned. Answer the questions given
below by encircling the letter of the correct answer.
1. The entrepreneurs who create new ideas are called?

a. Innovative b. imitating c. Fabian d. Drone
2. The entrepreneur who lives on the labor of others is called?
a. Drone b. Fabian c. Imitating d. Innovative
3. These are entrepreneurs who are to follow the path shown by innovative entrepreneur.
a. Innovative c. Social Entrepreneurs
b. Imitating d. Fabian
4. Which of the following is NOT a function of an entrepreneur?

a. Skills management c. Conduct research
b. Risk taking d. Make no changes with his product
5. Entrepreneur means:
a. Risk taker b. To undertake c. To research d. To improve standard living
6. It is a personality factor which means “doing things even before being told”
a. proactive b. perseverance c. persuasion d. initiative
7. It is a personality factor which means convincing customers to buy the product
a. Proactive b. persuasion c. Self-confidence d. risk taker
8. Which of the choices is NOT part of the environmental factors?
a. Political c. climate
b. Weather condition d. family background of the manager
9. All except one does NOT belong to the group?
a. Unfair trade practices c. Political protest
b. Strikes d. Product
3
10. The entrepreneur who is skeptical about the changes in the company is called?
a. Fabian b. social entrepreneur c. Drone d. imitating
11. Which is NOT a career for an entrepreneur?
a. Business consultant c. Research and Development
b. Sales d. Domestic Helper
12. They are entrepreneurs who drive social innovation and transformation in various fields.
a. drone b. social entrepreneur c. Fabian d. imitating
13. Which of the statements below is true?
a. Entrepreneur has limited career opportunities
b. Entrepreneurs are prone to constant high income
c. Entrepreneurs are contributor to the development of the society
d. Entrepreneurs are the reasons for unemployment problem
14. Which of the statement is NOT true?
a. An entrepreneur will patiently wait for his efforts to bear fruit.
b. The profit of the entrepreneur is immediate.
c. All entrepreneurs are successful
d. Entrepreneurs are researchers
15. Which of the following is NOT true?
a. Entrepreneurship create organizations C. entrepreneurs improves the economy
b. Improves the life of the entrepreneur alone d. None of the choices
MODULE 2: RECOGNIZING POTENTIAL MARKET

What I Know
Let’s check first what you already know.
True or False. On the space provided before the number write T if the statement is true and F if the statement is false.
__t___ 1. Entrepreneur enter a business because of its profitability.
__t___ 2. New business ideas provide business opportunities.
__t___ 3. Entrepreneurial process starts with identification of entrepreneurial opportunities.
__t___ 4. Not all changes in the external environment provides business opportunities.
___t__ 5. Discovery and advancement in the use of technology are additional good source of business opportunities.
__t___ 6. Interest and hobbies of the people are possible good source of entrepreneurial ideas.
__t___ 7. Industry environment of business is under technological discovery and advancement sources of opportunities.
__t___ 8. The variables in the physical environment include the economic forces.
__f___ 9. Entrepreneurial heart flame refers to the ability of the entrepreneur to sense without using the five senses.
__t__ 10. Entrepreneurial mind frame permits the entrepreneur to see things in a very positive and optimistic light.
__t___ 11. The business operates in the industry environment.
__f__ 12. Opening a Halo – halo business during summer seasons.
__t__ 13. Environmental scanning is conducted only when a new business is opened.
__f__ 14. When the barriers to the competitive forces are high, the effect to the growth of the business is likewise high.
__t__ 15. Entrepreneurs need not observe and evaluate the priorities of the government.
Entrepreneurial Ideas
The creation of an entrepreneurial ideas leads to the identification of entrepreneurial opportunities, which in turn
results in the opening of an entrepreneurial venture.
The entrepreneurial process of creating a new venture is presented in the diagram below. (Aduana, 2017)
Creation of Opening of
entrepreneurial Identification of entrepreneurial
Ideas entrepreneurial
Opportunities Venture
Figure 1. The Entrepreneurial Process of Creating New Venture

Essentials in Entrepreneur’s Opportunity Seeking
These are the basic foundation that the entrepreneur must have in seeking opportunities:
Entrepreneurial mind frame. This allows the entrepreneur to see things in a very positive and optimistic way in the
midst of difficult situation. Being a risk - taker, an entrepreneur can find solution when problems arise.
Entrepreneurial heart flame. Entrepreneur's driven passion, they are attracted to discover satisfaction in the act and
process of discovery. Passion is the great desire of an entrepreneur to achieve his/her goals.
4
Entrepreneurial gut game. This refers to the ability of the entrepreneur of being intuitive. This also known as intuition. The
gut game also means confidence in one’s self and the firm believes that everything you aspire can be reached.
Sources of Opportunities
There are many ways to discover opportunities. Looking at the big picture some have noticed the emerging trends and
patterns for business opportunities. While others are trying to find out their target market. Some are the following sources of
opportunities:
1. Changes in the environment
Entrepreneurial ideas arise when changes happen in the external environment. A person with an entrepreneurial drive views
these changes positively. External environment refers to the physical environment, societal environment, and industry
environment where the business operates.
1.1 The physical environment includes
a. Climate- the weather conditions.
b. Natural resources- such as minerals, forests, water, and fertile land that occur in nature and can be
used for economic gain.
c. Wildlife- includes all mammals, birds, reptiles, fish, etc., that live in the wild.
1.2 The Societal environment includes the various forces like
a. Political forces- includes all the laws, rules, and regulations that govern business practices as well as
the permits, approvals, and licenses necessary to operate the business.
b. Economic forces- such as income level and employment rate.
c. Sociocultural forces- customs, lifestyles and values that characterize a society.
d. Technological environment- New inventions and technology innovations.
1.3 The industry environment of the business includes:
a. Competitors D. Employees
b. Customers E. Government
c. Creditors F. Suppliers
For example, one factor in the physical environment that can easily change is the climate. The temperature is
very high during summer but very low during the rainy season. An individual with entrepreneurial drive can be extremely
imaginative and inventive in identifying opportunities. He/she can venture a business that responds to the needs of the
people during summer and rainy season.
2. Technological discovery and advancement
A person with entrepreneurial interest sees possibility of business opportunities in any new discovery or because of
the use of latest technology.
For example, an individual with knowledge in repair and installation of a machine engine discovers that additional
engine parts that considerably reduce fuel consumption.
3. Government’s thrust, programs, and policies
The priorities, projects, programs, and policies of the government are also good sources of ideas.
For example, the use of firecrackers to celebrate New Year’s Eve is strictly prohibited. People without entrepreneurial
interest will view the ordinance as a plain restriction. However, for an entrepreneur, it is a business opportunity to come up with
a new product that will serve as a substitute for firecrackers.
4. People’s interest
The interest, hobbies, and preferences of people are rich source of entrepreneurial ideas. Like the increasing number
of Internet Café at present could be lead to the strong attachment of young people to computers.
5. Past experiences
The expertise and skills developed by a person who has worked in a particular field may lead to the opening of
related business enterprise.
For example, an accountant who has learned the appropriate accounting and management skills and techniques in a
prominent accounting firm can start his/her business venture by opening his/her own accounting firm.
FORCES OF COMPETITION MODEL
It is also known as the “five forces of competition,” An industry environment is a competitive environment. Regardless
of what product or services you have, competition is always present.
5
Competition – it is the act or process of trying to get or win something.
For example, the prices are lower when there is a competition among the stores.
These are the five forces competing within the industry:

 Buyers
 Potential new entrants
 Rivalry among existing firms
 Substitute products
 Supplier
1. Buyers
The buyers are the one that pays cash in exchange to your goods and services. For example, the influenced of the
price or in the bargaining strategy. The buyer has a strong and magnified bargaining power. The threat of its bargaining power
will be less if the following factors notice:
a. There are several suppliers available in the market.
b. The buyer has the potential for backward integration.
c. The cost of switching the supplier cost is minimal.
d. The product represents a high percentage of the buyer’s cost.
e. The buyer purchases large portions of the seller’s product or services.
2. Potential New Entrants
A new entrant is defined as the one who enters something. For example, the level of capital requirements, if the
business requires huge capital, new entrants should decline to join the business. This gives a threat to the business. This can
be notice if there is the presence of the following factors:
a. Substantial capital requirement.
b. Strict government policy.
c. Difficulty in accessing distribution channels.
d. Economies of scale.
e. High cost of product differentiation.
f. High switching cost
3. Rivalry among Existing Firms
Rivalry is a state or situation in which people or groups are competing with each other. For example it depends on the
Marketing strategy of your competitor, like giving freebies and special offers. The intensity of rivalry among existing firms is
characterized to the following factors:
a. Diversity of rivals.
b. Number of competing firms.
c. Characteristics of the products or services.
d. Increased capacity.
e. Amount of fixed costs.
f. Rate of industry growth.
4. Substitute Products
Substitute means anything that takes the place or function of another. For example, the consumers decide to use margarine as
a substitute for butter. In case the price of butter increases, preferably the consumer will gradually switch to margarine.
A substitute product can give a big threat in the industry environment if the following factors are notice:
a. Switching cost is low.
b. Preferences and tastes of the customers easily change.
c. Product differentiation is highly noticeable
d. The quality of substitute products dramatically improves.
e. The price of substitute product is substantially lower.
5. Suppliers
The Suppliers are the one that provide something that is needed or wanted. For example, if the supply and services being
offered is unstable or keep. The intensity of the threat is strong in this kind of the competitive force in the industry. This can be
notice if there is the presence of the following factors:
a. The supplier has the ability for forward integration.
b. Suppliers in the industry are few, but the sales volume is high.
c. Substitute products are not readily available in the market
d. The switching cost is very high.
e. The product or service is unique.
ACTIVITY 1. WORD HUNT
6
Think of words or terms related to the topic and find the words in the grid horizontally, vertically, or diagonally. Write the words
or terms on the space provided below.
V E N T U R E A B C D E F A B C D E F S
A B N P O H W Q G S D L O S J E T U E Q
B C T R P R O D U C T S R L R E H R B E
C V R E P G O Y T R E P T G S T V A C N
V H E N O V R F D A B C U D E I O G V T
H K B E R C T K R F G E N H C J R K H R
K I C I T H U L V D E O C E U A T U K E
I D V D U K N S J Y I R Z O Q E U Y I P
D G H G N O U A O F G T U X N X N D R
G L K L I P W L R E P U R E P O J O G E
L H Z H T S P K L I O N H L I O M E L N
H A X Q I M I L G C V R I V A L R Y H E
A D S J E T U R E A B B S T I T U H A U
S S U B S T I T U T E S J E T U R F J R
V T U R E A B Q R S J E T U T U R E A B
1. _______venture_____________ 6. _________entrepreneur___________
2. _______opportunities_____________ 7. _product___________________
3. _______service_____________ 8. __rivalry__________________
4. ________substitute____________ 9. ____gut________________
5. ________employee__________ 10.
___economy_________________
Definition of Terms
Opportunity seeking - Process of considering, evaluating, and pursuing market based activities that are accepted to be
beneficial for the business. Entrepreneurial process - can be defined as the steps taken in order to begin a new enterprise.
It is a step-by-step method; one has to follow to set up a business. Entrepreneurial ideas - an innovative concept that can be
used for financial gain that is usually centered on a product or service that can be offered for money.
Essentials of entrepreneur’s opportunity seeking - These are the basic foundation that the entrepreneur must have in
seeking opportunities, such as entrepreneurial mind frame, heart flame and gut game.
Sources of opportunity - can be attain by assessing and looking at changes in the environment; technological discovery and
advancement; government’s thrust, programs, and policies; people’s interest, and past experiences.
External environment - refers to the physical environment, societal environment, and industry where the business operates.
Government - refers to the local government (municipality, city, or provincial) or the national government and its branches.
Competition – it is the act or process of trying to get or win something.
Substitute – anything that takes the place or function of another.
New entrants – the one who enters something.
Suppliers – are the one that provide something that is needed or wanted.
Buyers – are the one that pays cash in exchange to your goods and services. Rivalry – is a state or situation in which people
or groups are competing with each other.
ASSESSMENT
Direction: Encircle the letter of your choice.
1. It is the process of considering, evaluating, and pursuing market-based activities that are believed to be
advantageous for the firm.
A. Opportunity seeking C. Opportunity screening
B. Opportunity seizing D. Sources of opportunity
2. This is essential to opportunity seeking which allows the entrepreneur to see things in a positive and optimistic light
in the midst of crisis or difficult situations.
A. Entrepreneurial mind frame C. Entrepreneurial heart flame
B. Entrepreneurial gut game D. Entrepreneurial heart frame
3. It is the ability of entrepreneur that can sense without using the five senses, also known as intuition.
7
4. One of the essentials of entrepreneur’s opportunity seeking that refers to the driven passion of an individual.
5. What variable of societal environment includes income level and employment rate?
A. Economic forces C. Political forces
B. Sociocultural forces D. Technological forces
For questions 6 and 7 refer to the following statements:
A. Preferences and tastes of the customers easily change.
B. The buyer has the potential for backward integration.
C. The cost of switching the supplier cost is minimal.
D. Product differentiation is highly noticeable.
6. Which are the factors of the substitute product that pose a great threat in the industry environment?
A. A,B,C,D B. A and C C. A and D D. B and C
7. Which are the factors that influenced the buyer to have a less threats because of the bargaining power?
A. A only B. A and C C. A and D D. B and C
8. They are the one that pays cash in exchange to your goods and services.
A. Buyers C. sellers
B. Competitors D. suppliers
9. The intensity of rivalry among existing firms is characterized to the following factors except one:
A. Diversity of rivals. C. Characteristics of the products or services
B. Number of competing firms. D. Product represents a high percentage of the buyer’s cost
10. The following are the forces competing within the industry except one:
A. Potential new entrants and Substitute Products
B. Buyers and Suppliers
C. Rivalry among existing firms
D. Needs and Wants
MODULE 3: RECOGNIZE AND UNDERSTAND THE MARKET
Before we begin with this module, answer the question below, Let’s see if you already have some idea about Recognizing
Potential Markets.
Write True if the statement is correct and write False if not correct.
____t______1. Value refers to what the product does for customers that they’re prepared to pay.
_____t_____2. Marketing concept that was first proposed as a theory to understand the pattern in successful advertising
called Unique Selling Proposition.
____t______3. In creating value proposition, entrepreneurs will consider the four (4) basic elements.
____f______4. Unique selling proposition is specific, often citing numbers or percentages.
____f_____5. The effective selling using advertising and marketing is part of value proposition.
____t______6. Identify and rank the uniqueness of the product or services character is one tip for the entrepreneur on how to
create an effective unique selling proposition.
____f______7. The Entrepreneurs will not consider the health benefits of the consumers.
____t______8. Consumers have common wants and needs.
____t_____9. The market targeting is a stage in market identification process that aims to determine the set of buyers withf
common needs and characteristics.
____f_____10. Identifying the unique selling proposition will not require marketing research.
____t_____11. Targeting a specific market does not mean that you are excluding people who do not fit your criteria.
____f_____ 12. Demographic segmentation is the total market divided according to geographic location.
____f_____ 13. Knowledge and awareness is one variable to consider in behavioral segmentation.
____t_____ 14. Service requirement is intangible thing or product not able to be touch but feel the fulfillment.
____f_____ 15. Market size is like a world globe measurement.
LESSON 1:
Value Proposition (VP) is a business or marketing statement that summarizes why a consumer should buy a company's
product or use its service. This statement is often used to convince a customer to purchase a particular product or service to
add a form of value to their lives. In creating Value Proposition, entrepreneurs will consider the basic elements:
• Target Customer
• Needs/opportunity
• Name of the product
• Name of the enterprise/company
There are many competitors in the market to establish superiority to them. Entrepreneurs should think some
alternative and how it works better. An important aspect in Value Proposition must be truthful that will establish credibility to the
consumers.
Example: Potential value proposition is most common in small businesses of your locality.
8
Aling Charing Sari-sari Store open only from 6:00 am to 6:00 pm, but Aling Charing noticed that there are customers
who go nearby town to look for a convenience store at around 10:00 pm to 6:00 am. She believes that this is a great
opportunity for her store to operate 24/7. In this example, proposed value proposition: “Charing Sari-sari Store,
opens 24/7”.
The business describes sari-sari store – a basic retail store. The assurance from this value proposition is because of
the phrase “opens 24/7”, Aling Charing Sari-sari Store opens 24/7, which make it different from other competitors.
Unique selling proposition (USP) refers to how you sell your product or services to your customer. You will address the
wants and desires of your customers.
As entrepreneur, you think of marketing concept that persuade your target customers. The following questions you
may ask in doing this, What the customers want? What brand does well? What your competitor does well?
Some tips for the entrepreneur on how to create an effective unique selling proposition to the target customers:
• Identify and rank the uniqueness of the product or services character
• Very Specific
• Keep it short and simple (KISS)
As entrepreneur, present the best feature of your product or services that are different from other competitors.
Identifying the unique selling proposition requires marketing research that you will learn from the other modules. In promoting
your products or services, make sure that it is very specific and put details that emphasize the differentiator against the
competitors. Keep it short and simple and think of a tagline that is easy to remember. Right now, the proposed unique selling
proposition:
“Charing Sari-sari Store, opens 24/7”.
Readers get confused between value proposition and unique selling proposition. The two propositions are used to
differentiate the products from competitors. For example, Jollibee is known to have a Filipino taste burger. This brand has a
unique selling point because of its tagline “Langhap Sarap”
Unique Value Proposition and Value Proposition are two most famous tools used to explain why prospect customers
buy each products and services. Base on each definition, we learn that USP and VP are frameworks of each business
industry. The two propositions are valuable for the entrepreneurs.
After you understand the value proposition and the unique selling proposition, now it’s time to understand the target
market, customers’ requirement and market size.
A. Target Market
Market Targeting is a sage in market identification process that aims to determine the buyers with common needs
and characteristics. Prospect customers are market segment that entrepreneurial venture intends to serve.
In targeting a specific market, it will exclude people even if it will not fit your criteria. Rather, target marketing allows
you to focus your marketing money and brand message on a specific market that is more likely to buy from you than other
markets. Product is more affordable, efficient, and effective way to reach potential clients and generate business.
Commonly used methods for segmenting the market are follows.

1. Geographic segmentation – the total market is divided according to geographical location.
• Variable to consider
a. Climate C. Culture
b. Dominant ethnic group D. Density (either rural or urban)
2. Demographic Segmentation – divided based consumers.
a. Gender f. occupation
b. Age g. education
c. Income h. religion
d. Ethnic group
e. Family size
3. Psychological Segmentation- divided in terms for customers think and believe.

a. Needs and wants e. knowledge and awareness
b. Attitudes f. brand concept
c. Social class g. lifestyle
d. Personality traits
4. Behavioral Segmentation- divided according to customers’ behavior pattern as they interact with a company.
a. Perceptions d. benefits
b. Knowledge e. loyalty
c. Reaction f. responses
B. Customer Requirements
Customer requirements are the specific characteristics that the customers need from a product or a service.
9
There can be two types of customer requirements:
1. Service Requirement
2. Output Requirement Service Requirement:
Intangible thing or product that is not able to be touched but customer can feel the fulfillment. There are elements in service
requirement like on-time delivery, service with a smile, easy-payment etc. It includes all aspects of how a customer expect to
be treated while purchasing a product and how easy the buying process goes.
Output Requirements:
Tangible thing or things that can be seen. Characteristic specifications that a consumer expects to be fulfilled in the product .
Costumer that will avail services as a product, then various service requirements can take the form of output requirements. For
example, if the consumer hires a multi cab, then on-time arrival becomes an output requirement. Customer buys gadgets
(phone speaker), the specification like the loudness and clarity are the output requirements.
C. Market Size
Entrepreneur’s most critical task is to calculate the market size, and the potential value that market has for their startup
business. Market research will determine entrepreneur possible customers in one locality.
What is Market Size?

Market size is like a size of arena where the entrepreneurs will play their business. It is the approximate number of sellers and
buyers in a particular market. Companies are interested in knowing the market size before launching a new product or service
in the area. In determining the market size, entrepreneur will conduct a strategic marketing research from reliable sources
using the following method. First step is to estimate the potential market – approximate number of customers that will buy the
product or avail your services. Second step is to estimate the customers who probably dislike to buy your product or avail the
services. Third step is for the entrepreneur to estimate the market share, that means plotting and calculating of the
competitor’s market share to determine the portion of the new venture. Market size become the most important if you ever
need to raise funding for your business.
ACTIVITY 1
Entrepreneurs will take a look at each customer’s demand in the market. Understanding your market will help reach
your goal to compete with bigger competitors. Building positive relationships with customers required more understanding in
customers purchasing motivations and habits.
_____________and ____________ basically joint hand in hand to promote its product and services. __________is a
sage in market identification process that aims to determine the buyer common need and behavior.
There are four (4) methods for segmentation, __________, __________, __________and __________. There are
two types of customer requirement the __________ and __________, the tangible and intangible things.
Understanding your market will help reach your goal to compete with bigger competitors.
ASSESSMENT
Multiple Choice: Select the best answer.

____1. What is the relationship between unique selling proposition and value proposition?
a. a framework of each business industry
b. meet your competitors needs wants.
c. persuades another to exchange money for a product service’s
d. connected with only one particular thing.
____2. The following variable to consider in behavioral segmentation, except.
a. perception b. brand concept c. reaction d. benefits
____3. What is the function of Value Proposition?

a. use to power up sales
b. convince customer to purchase a particular product or services.
c. customers buying habits
d. provide value to your customers
____4. Give example in promotion using Value Proposition and Unique Selling proposition.
a. with the slogan “Langhap Sarap” c. multinational business
b. ordinary sari-sari store d. fruit shake stand
____5. ________________ will determine entrepreneur possible customers in one locality.
a. Market design c. market research
b. Market strategy d. market size
____6. The term behavioral segmentation refers to:
a. divided based on consumers
10
b. divided in terms for customers think and believe.
c. divided according to geographical location.
d. divided according to customers behavior pattern as they interact with a company.
____7. What is market size?
a. tangible things that can be seen.
b. Size of arena where the entrepreneur will play their business
c. The most important part to the success of the company
d. another variation of segmentation marketing.
____8. Considered favorable indicators for doing business in that particular location.
a. structure of the segment c. size and growth of the segment
b. capability of the business d. segmentation marketing
____9. Select type of customer requirement
a. service requirement c. service responsibility
b. service-oriented d. service fulfillment
____10. This refers to how you sell your products or services to your customer.
a. Value proposition c. Selling proposition
b. Unique selling proposition d. Marketing concept
____ 11. Tips for the entrepreneur on how to create an effective unique selling proposition to the target customers,
except.
a. Identify and rank the uniqueness of the product or services characteristic.
b. Very specific
c. Keep it short and simple
d. Completeness of proportion
____ 12. Geographic segmentation refers to:
a. Divided according to geographical location
b. Divided based consumers.
c. Divided in terms for customers think and believe
d. All of the above
____ 13. Service requirement ___thing or product not able to touch but customer can feel the fulfillment.
a. Tangible b. intangible c. Service d. output
____ 14. Tangible things that can be seen refers to what?
a. Service requirement c. customer requirements
b. Output requirement d. Entrepreneurs output
____ 15. What is the first step in conducting a strategic marketing?
a. Estimate the potential market
b. Estimate the customers who probably dislike buying your product
c. Estimate the market share
d. Estimate business funding.
Additional Activities. Activity 2

Give at least 5 products being advertised or promoted on television. Evaluate each one according to its USP, VP, method
of segmentation used, customer requirements, and who are target customers.
Product Name Method of Customer Target
USP VP Segmentation Requirements customers
Ex. Jollibee Langhap Sarap Filipino taste Service & Output
burger Psychological All people
Finger licken good Filipino taste Psychological Service and All people
1. KFC chicken output
May pa sobra dahil Filipino biscuit Pschological Service and All people
2. Rebisco special ka output
3.
4.
5.
MODULE 4. MARKET RESEARCH
11
Firms and other business companies need to understand their service offerings and their customers to ensure that
their services will be adopted as solutions to consumer needs. In order for the firms to recognize the needs of the market
or the customers, they need to conduct market research.
The Market Research or Marketing Research Process can be defined as the process of gathering, analyzing and
interpreting the information about the products or the services to be offered for sale to the potential consumers in the
market,
There are different ways to collect the data. The most important methods you can consider are surveys, focus group
discussion and interviews.
Students are expected to:
1. Discuss market research
2. Know the meaning of data gathering
3. Identify the different data gathering techniques
PRE-TEST: Before starting with this module, let us see what you already know about market research and data gathering
techniques. Answer the questions below by encircling the letter of the correct answer.
1. It is the most common way to gather primary research with the use of questionnaires or interview schedule.
A. Interview c. survey
B. Focus Group Discussion d. data gathering
2. It is the traditional method of data collection which is normally done on personal manner with the respondents.
A. Personal Interview c. survey
3. A data gathering technique where it can be moderated to group interviews and brainstorming sessions that provide
information on user’s needs and behaviors.
A. Personal Interview c. survey
4. It refers to information gathered directly from the respondents who answered set of questions.
A. Primary Research c. survey
B. Secondary Research d. data gathering
5. A data gathering technique where it can be done via direct mail, over the phone, internet or e-mail.
A. Data Gathering c. focus group discussion
B. Survey d. interview
6. It refers to the process of gathering, analyzing and interpreting the information about the product or the services to be
offered for sale in the market.
A. Primary Research c. data gathering
B. Secondary Research d. market research
7 – 9 In your own opinion what is Market Research?
Market research allows a company to discover the target market and get opinions and other feedback
from consumers about their interest in the product or service.
10 – 15 Give at least three data gathering techniques and explain.
1. Interviews- Interviews are an appropriate method when there is a need to collect in-depth information on people's
opinions, thoughts, experiences, and feelings.
2. Questionares- Questionnaires can be thought of as a kind of written interview. Often a questionnaire uses both open and
closed questions to collect data.
3. Observation- Observation research is a qualitative research technique where researchers observe participants' ongoing
behavior in a natural situation. ... In other words, researchers can capture data on what participants do as opposed to
what they say they do.
LESSON: 1
DATA COLLECTION is the most valuable tool of any type of research study.
Inaccurate data collection may cause mistakes and ultimately lead to invalid results.
TIPS in GATHERING DATA
• Organize collected data as soon as it is available
• Know what message you want to get across and then collect data that is relevant to the message
• Collect more data
• Create more data
• Regularly run experiments or collect data
• Challenge your assumptions
• Set reasonable expectations
12
• Take note of interesting or significant data
In this lesson, we will consider the three different data collection techniques –
SURVEY (Questionnaire), INTERVIEW and FOCUS GROUP DISCUSSION – and
evaluate their suitability under different circumstances
SURVEYS are the most common way to gather primary research with the use of questionnaires or interview
schedule. These can be done via direct mail, over the phone, internet (e.g. Google) or email, face-to-face or on Web (e.g.
Skype or Viber).
When designing or constructing your own research questionnaire, remember the following guidelines. (Edralin,
2016)
• Keep it simple as possible.
• Make sure it is clearly appealing and easy to read.
• Cluster or block related questions.
• Move from complex questions to more specific questions.
• Make sure questions are concise and easily understood.
• Avoid questions that are difficult to answer.
• Make sure any response scales used are consistent with categories that are mutually exclusive.
INTERVIEW is one of the most reliable and credible ways of getting relevant information from target customers. It is
typically done in personal between the researcher/entrepreneur and a respondent where the researcher asks pertinent
questions that will give significant pieces of information about the problem that he will solve. The interview is also helpful
even when the business has already started because the customers’ feedback provides the entrepreneur a glimpse of what
the customers think about the business.
Interviews normally last from 15 to 40 minutes, but they can last longer, depending on the participants’ interest in
the topic.
In a structured interview, the researcher asks a standard set of questions and nothing more.(Leedy and Ormrod,
2001)
• Personal interviews are the traditional method of conducting an interview. It allows the researcher to
establish relationship with potential participants and therefore gain their cooperation. It generates highest
response rates in survey research. They also allow the researcher to clarify indefinite answers and when
necessary, seek follow-up information.
• Telephone interviews are less expensive and less time consuming, but the disadvantages are that the
response rate is not as high as the face-to- face interview, but considerably higher than the mailed
questionnaire.
FOCUS GROUP DISCUSSION (FGD) - is an excellent method for generating and screening ideas and concepts. It
can be a moderated group interviews and brainstorming sessions that provide information on user’s needs and behaviors.
The following are considerations in the use of focus group discussions in market research:
• The length of the session is between 90 and 120 minutes.
• Usually, conduct focus groups discussion with 8 to 10 participants per group.
• Assign an expert moderator / facilitator who can manage group dynamics.
• Use a semi-structure or open-format discussion
• Strive for consistency in the group’s composition (for example, it may not be advisable to have business
customers and retail customers in the same focus group, their needs are very different)
ACTIVITY 1. Identify the following:

1. It is an information gathered directly from the respondents who answered set of questions._
_____data gathering________________________
2. It is the traditional method of data collection which is normally done on a personal manner with the
respondents.________Interview__________________
3. It obtains information on general attitudes, understand the circumstances under which customers might require
your product or services, understand their desired outcomes. _______ exploratory________________
4. It is the most common way to gather primary research with the use of questionnaire or interview schedule
Survey
5. It is the most valuable tool of any type of research study.______Data collection_______________.
6. A data gathering technique where it can be done via direct mail, over the phone, internet or e-mail.__
___Data gathering_________________
7. They also allow the researcher to clarify indefinite answers and when necessary, seek follow-up information.
_____personal interview__________________
8. A data gathering technique where it can be moderated group interviews and brainstorming sessions that provides
information on user’s needs and behavior._____focus group discussion_______________.
9. It is typically done in personal between the researcher/entrepreneur and a respondent where the researcher asks
pertinent questions that will give significant pieces of information about the problem that he will solve.
_______interview______________
10. It can be a moderated group interviews and brainstorming sessions that provide information on user’s needs and
behaviors.___________________
11. It normally lasts from 15 to 40 minutes, but they can last longer, depending on the participants’ interest in the
topic._____focus group discussion________________
12. It is a type of interview are less expensive and less time consuming ____telephone interview_______________
13
Give at least one guideline or consideration in the use of the following data gathering techniques in market research:
13. Surveys - __ the survey is done within the relevant sector. For instance, a survey for polio, should be done on
small kids first_________________________________________________
14. Focus Group Discussion _ should be clear that the focus group selected are the correct people who would lead
to reliable results________________________________________
15 Interviews _ should be relevant to job description and nature
ASSESSMENT: Test I. Answer the questions below. Encircle the letter of your choice.
1. It is the process of gathering, analyzing and interpreting the information about the product or the services to be offered
for sale in the market, the market and about past, present and any potential consumers for the products.
a. Data Gathering c. Secondary research
b. Primary Research d. Market research
2. A data gathering technique where it can be moderated to group interviews and brainstorming sessions that provide
information on user’s needs and behaviors.
a. Personal Interview c. Survey
b. Focus Group Discussion d. Data Gathering
a. data gathering c. Focus Group Discussion
b. survey d. Personal Interview
4. It refers to information gathered directly from the respondents who answered set of questions.
a. Primary Research c. Survey
b. Secondary Research d. Data Gathering
5. It is the most common way to gather primary research with the use of questionnaires or interview schedule.
a. Interview c. Survey
6. It is the traditional method of data collection which is normally done on a personal manner with the respondents.
a. Personal Interview c. Survey
a. Data Gathering c. Focus Group Discussion
b. Survey d. Personal Interview
Test II. Explain briefly but in a concise manner.
1. What is Market Research? (3 pts.)
_______________ Market research allows a company to discover the target market and get opinions and
other feedback from consumers about their interest in the product or service.
2. Enumerate and discuss the three data gathering techniques (5 pts.)
Interviews- Interviews are an appropriate method when there is a need to collect in-depth information on people's opinions,
thoughts, experiences, and feelings.
Questionares- Questionnaires can be thought of as a kind of written interview. Often a questionnaire uses both open and
closed questions to collect data.
Observation- Observation research is a qualitative research technique where researchers observe participants' ongoing
behavior in a natural situation. ... In other words, researchers can capture data on what participants do as opposed to what
they say they do.
MODULE 5: THE MARKETING MIX (7P’s MARKETING) IN RELATION TO THE BUSINESS

OPPORTUNITY
PRE-TEST: Multiple Choice
Direction: Encircle the letter of the best answer.
1) It is a set of controllable and interrelated variables composed of product, place, price and promotions that a company
assembles to satisfy a target group better than its competitor.
a. Price b. Marketing Mix c. Product d. Packaging
2) The amount that a customer pays for to enjoy it.
3) An item that is produced to satisfy the needs of a certain group of people.
4) It is a tangible product. It’s example includes tires, MP3 players, clothing and etc.
a. Branding b. Positioning c. Goods d. Place
14
5) It can be intangible or tangible as it can be in the form of services or goods.
6) The way your product or service appears from the outside.
7) A marketing model that modifies the 4Ps model.
a. Packaging b. 7 P’s Model c. Marketing Mix d. People
8) Responsible for every element of your sales, marketing strategies, and activities.
a. Packaging b. 7 P’s Model c. Marketing Mix d. People
9) How a business creates awareness in the market?
a. Place b. Brand Name c. Services d. Promotion
10) It is intangible. Its example includes hair salons and accounting firms
11) The ultimate marketing strategy.
a. 7 P’s Model b. Marketing Mix c. People d. Branding
12) Where your product or service is actually sold.
13) The place occupied by products in the heart and minds of the consumers.
a. Branding b. Positioning c. Goods d. Place
14) A name, symbol, or other feature that distinguishes a seller's goods or services in the marketplace.
a. Brand Name b. Positioning c. Branding d. Place
15) A powerful and sustainable high-level marketing strategy used to create or influence a brand.
a. Brand Name b. Positioning c. Branding d. Place
LESSON 1:
Marketing Mix is a set of controllable and connected variables that a company gather to satisfy a customer better
than its competitor. It is also known as the “Ps” in marketing. Originally, there were only 4Ps but the model has been
continually modified until it became 7P’s. The original 4 P’s stands for product, place, price and promotion. Eventually, three
elements have been added, namely: people, packaging and positioning to comprise the 7 P’s.
The 7 P’s of Marketing Mix
1. PRODUCT
Marketing strategy typically starts with the product. Product refers to any goods or services that are produced to
meet the consumers’ wants, tastes and preferences. An example of goods includes tires, MP3 players, clothing and
etc. Goods can be categorized into business goods or consumer goods. A buyer of consumer goods may not have
thorough knowledge of the goods he buys and uses. An example of services includes hair salons and accounting
firms. Services can be divided into consumer services, such as hair styling or professional services, such as
engineering and accounting.
2. PLACE
Place represents the location where the buyer and seller exchange goods or services. It is also called as the distribution
channel. It can include any physical store as well as virtual stores or online shops on the Internet.
STAGES OF DISTRIBUTION CHANNEL
Channel 1 contains two stages between producer and consumer - a wholesaler and a retailer. A wholesaler typically buys and stores large
quantities of several producers' goods and then breaks into bulk deliveries to supply retailers with smaller quantities. For small retailers with
limited order quantities, the use of wholesalers makes economic sense.
15
Channel 2 contains one intermediary. In consumer markets, this is typically a retailer. A retailer is a company that buys products from a
manufacturer or wholesaler and sells them to end users or customers. In a sense, a retailer is an intermediary or middleman that customers use
to get products from the manufacturers.
Channel 3 is called a "direct-marketing" channel, since it has no intermediary levels.
In this case the manufacturer sells directly to customers.
3. PRICE
The price is a serious component of the marketing mix. What do you think is the meaning of a Price?
In the narrowest sense, price is the value of money in exchange for a product or service. Generally speaking, the price is the
amount or value that a customer gives up to enjoy the benefits of having or using a product or service.
4. PROMOTION
Promotion refers to the complete set of activities, which communicate the product, brand or service to the user. The idea is
to attract people to buy your product over others. Advertising, Personal Selling, Sales Promotion, Direct Marketing,
and Social Media are examples of promotion.
5. PEOPLE
Your team, a staff that makes it happen for you, your audience, and your advertisers are the people in marketing.
This consists of each person who is involved in the product or service whether directly or indirectly.
People are the ultimate marketing strategy. They sell and push the product. People are one of the most important
elements of the marketing mix today. This is because of the remarkable rise of the services industry. Products are
being sold through retail channels today.
Therefore, the right people are essential in marketing mix in the current marketing scenario.
6. PACKAGING
Packaging is a silent hero in the marketing world. Packaging refers to the outside appearance of a product and how
it is presented to the customers. Packaging is highly functional. It is for protection, containment, information, utility of
use and promotion.
7. POSITIONING
When a company presents a product or service in a way that is different from the competitors, they are said to be
“positioning” it. Positioning refers to a process used by marketers to create an image in the minds of a target market.
LESSON 2: BRANDING
Brand Name is a name, symbol, or other feature that distinguishes a seller's goods or services in the marketplace. Your brand
is one of your greatest assets because your brand is your customers' over-all experience of your business. Brand strategy is a
long-term design for the development of a popular brand in order to achieve the goals and objectives. A well-defined brand
strategy shakes all parts of a business and is directly linked to customer needs, wants, emotions, and competitive
surroundings.
Branding is a powerful and sustainable high-level marketing strategy used to create or influence a brand.
Branding as a strategy to distinguish products and companies and to build economic value to both customers and to
brand owners, are described by Pickton and Broderick in 2001.
Commonly Used Branding Strategy
1) Purpose
"Every brand makes a promise. But in a market in which customer confidence is little and budgetary observance is
great, it’s not just making a promise that separates one brand from another, but having a significant purpose," (Allen
Adamson).
How can you define your business' purpose? According to Business Strategy Insider, purpose can be viewed in two
ways:
a. Functional. This way focuses on the assessments of success in terms of fast and profitable reasons. For example the
purpose of the business is to make money.
b. Intentional. This way focuses on fulfillment as it relates to the capability to generate money and do well in the world.
2) Consistency
The significant of consistency is to avoid things that don’t relate to or improve your brand. Consistency aids to brand
recognition, which fuels customer loyalty.
3) Emotion
There should be an emotional voice, whispering "Buy me". This means you allow the customers have chance to feel
that they are part of your brand.
You should find ways to connect more deeply and emotionally with your customers.
4) Flexibility
Marketers should remain flexible to in this rapidly changing world. Consistency targets at setting the standard for
your brand, flexibility allows you to adjust and differentiate your approach from your competition.
According to Kevin Budelmann, "Effective identity programs require sufficient consistency to be identifiable,
but sufficient variation to keep things fresh and human" so if your old tactics don't work anymore, don't be afraid to
change. It doesn’t mean it worked in the past it may still work now.
5) Employee Involvement
It is equally important for your employees to be well versed in how they communicate with customers and represent
the brand of your product
16
6) Loyalty
Loyalty is an important part of brand strategy. At the end of the day, the emphasis on a positive relationship between
you and your existing customers sets the tone for what potential customers can expect from doing business with you.
7) Competitive Awareness
Do not be frightened of competition. Take it as a challenge to improve your branding strategy and craft a better value
in your brand.
ACTIVITY 1. Draw to Survive

Direction: Create a Concept Map for the 7 P’s of Marketing Mix in the box provided.
Rubrics for Scoring

Score Description
15 The illustration of the concept map is clear and complete.
12 The illustration of the concept map is complete.
9 The illustration of the concept map is lacking 1.
6 The illustration of the concept map is lacking 2
3 The illustration of the concept map is lacking 3.
Marketing mix constitutes of the 7P’s in case of products – product, price, place and promotion. In case of services it
constitutes of 3 more P’s – people, packaging and positioning.
All P's should be compatible in marketing mix. The price is compatible with the product's placement. The product must be
consistent with the promotion. In general, all P’s are connected intrinsically.
As a result, when you make a marketing mix, it becomes a chain of strong bonds. Then these connections will lead you to
lengthen the chain.
Branding is absolutely critical to a business because of the overall impact it makes on your company. Branding can change
how people percept your brand, it can drive new business and increase brand awareness.
Activity 1.2 What I Can Do
Paste the P’s

Look for newspapers or magazines. Find and identify pictures related to the P’s in Marketing Mix. Cut out the pictures, sort and
paste them on the box, then write a short description on the line next to the picture.
PICTURE 1
PICTURE 2
17
PICTURE 3
PICTURE 4
Rubrics for Scoring

Score Description
15 The table is complete with pictures and the descriptions are correct.
12 The table is lacking one (1) picture and the descriptions are correct.
9 The table is lacking two (2) pictures and the descriptions are correct.
6 The table is lacking three (3) pictures and the descriptions are correct.
3 The table is lacking one (4) pictures and the descriptions are correct.
ASSESSMENT
Identification : Direction: Write the word or phrase that is being described or completes the
thought of each statement.
__________1. It is a set of controllable and interrelated variables composed of product, place, price and promotions that a
company assembles to satisfy a target group better than its competitor.
__________2. The amount of money that a customer pays for to enjoy it.
__________3. An item that is built or produced to satisfy the needs of a certain group of people.
__________4. It determines your firm’s profit and survival.
__________5. It can be intangible or tangible as it can be in the form of services or goods.
__________6. The way your product or service appears from the outside.
__________7. A marketing model that modifies the 4Ps model.
__________8. Responsible for every element of your sales, marketing strategies, and activities.
__________9. It refers to how a business creates awareness in the market.
__________10. It claims a new space in the mind of the customer different from the spaces occupied by existing products.
__________11. The ultimate marketing strategy.
__________12. Where your product or service is actually sold.
__________13. The place occupied by products in the heart and minds of the consumers.
__________14. A name, symbol, or other feature that distinguishes a seller's goods or services in the marketplace.
_________ 15. A powerful and sustainable high-level marketing strategy used to create or influence a brand.
QUARTER CHALLENGE1
Multiple Choice
Direction: Encircle the letter of the best answer.
O O O O 1. The entrepreneurs who create new ideas are called?
A. Innovative B. Imitating C. Fabian D. Drone
O O O O 2. The entrepreneur who lives on the labor of others is called?
A. Drone B. Fabian C. Imitating D. Innovative
O O O O 3. These are entrepreneurs who are to follow the path shown by innovative entrepreneur.
A. Innovative B. Imitating C. Social Entrepreneurs D. Fabian
O O O O 4. Which of the following is NOT a function of an entrepreneur?
A. Skills management C. Conduct Research
B. Risk taking D. Make no changes with his product
18
O O O O 5. Entrepreneur means:
A. Risk taker B. To undertake C. To research D. To improve standard of living
O O O O 6. It is a personality factor which means “doing things even before being told”
A. proactive B. perseverance C. persuasion D. initiative
O O O O 7. It is a personality factor which means convincing customers to buy the product
A. Proactive B. Persuasion C. Self-confidence D. Risk-taker
O O O O 8. Which of the choices is NOT part of the environmental factors?
A. Political C. climate
B. Weather condition D. family background of the manager
O O O O 9. All except one does NOT belong to the group?
A. Unfair trade practices B. Strikes C. Political protest D. Product
O O O O 10. The entrepreneur who are skeptical about the changes in the company is called?
A. Fabian B. Social entrepreneur C. Drone D. Imitating
O O O O 11. The following are the forces competing within the industry except ONE:
A. Potential new entrants and Substitute Products C. Rivalry among existing firms
B. Buyers and Suppliers D. Needs and Wants
O O O O 12. They are the one that provides something that is needed or wanted.
A. Buyers B. Competitors C. Buyers D. Sellers
O O O O 13. It refers to the physical environment, societal environment, and industry environment where the
business operates.
B. External Environment D. Entrepreneurial heart frame
O O O O 14. They are the one who enters something.
A. Buyers B. new entrants C. Suppliers D. Sellers
For questions 15 to 16 refer to the following statements: A. Substantial capital requirement.
A. Substitute products are not readily available in the market
B. Difficulty in accessing distribution channels.
C. The product or service is unique.
D. Characteristics of the products or services.
E. Increased capacity
O O O O 15. In Potential New Entrants the intensity of its threat will be affected by the presence of the following barriers.
A. A and C C. A only
B. A, B, C and D D. All of the above
O O O O 16. In rivalry among existing Firms the industry is attributable to the following factors.
A. E and F C. A and B
B. A, B, C and D D. All of the above
O O O O 17. Which of the following includes the industry environment of the business?
A. Competitors C. Creditors
B. Customers D. All of the above
O O O O 18. It is the process of considering, evaluating, and pursuing market based activities that are believed to be
advantageous for the firm.
A. Opportunity seeking C. Opportunity screening
B. Opportunity seizing D. Sources of opportunity
O O O O 19. This is essential to opportunity seeking which allows the entrepreneur to see things in a positive and optimistic
light in the midst of crisis or difficult situations.
O O O O 20. It is the ability of entrepreneur that can sense without using the five senses, also known as intuition.
O O O O 21. What is the function of Value Proposition?
A. use to power up sales
B. customers buying habits
C. convince customer to purchase a particular product or services.
D. provide value to your customers
O O O O 22. Give example in promotion using Value Proposition and Unique Selling Proposition.
A. fruit shake stand C. ordinary sari-sari store
B. with the slogan “Langhap Sarap” D. multinational business
O O O O 23. Select type of customer requirement
A. service responsibility C. service requirement
B. service oriented D. service fulfillment
O O O O 24. Considered favorable indicators for doing business in that particular location.
A. structure of the segment C. size and growth of the segment
B. capability of the business D. segmentation marketing
O O O O 25. What is market size?
A. tangible things that can be seen. `
B. The most important part to the success of the company
C. Size of arena where the entrepreneur will play their business
D. another variation of segmentation marketing.
19
O O O O 26. This refers to how you sell your products or services to your customer.
A. Value proposition C. Selling proposition
B. Marketing concept D. Unique selling proposition
O O O O 27. Service requirement _______ thing or product not able to touch but customer can feel the fulfillment.
A. Intangible B. Tangible C. Service D. Output
O O O O 28. Tips for the entrepreneur on how to create an effective unique selling proposition to the target customers,
EXCEPT.
A. Completeness of proportion
B. Identify and rank the uniqueness of the product or services characteristic.
C. Very specific
D. Keep it short and simple
O O O O 29. ________________ will determine entrepreneur possible customers in one’s locality.

A. Market design C. Market strategy
B. market size D. market research
O O O O 30. The following variable to consider in behavioral segmentation, EXCEPT.
A. perception B. brand concept C. reaction D. benefits
O O O O 31. It is the most common way to gather primary research with the use of
questionnaires or interview schedule.
A. Interview B. FGD C. survey D. data gathering
O O O O 32. It is the traditional method of data collection which is normally done on a face-to-face manner with the
respondents.
A. personal interview B. FGD C. survey D. data gathering
O O O O 33. It refers to a type of focus group discussion where it obtains information on general attitudes, understand the
circumstances under which customers might require your product, or service, understand their desired outcomes.
A. trend explanation C. feature prioritization
B. exploratory D. comparative analysis
O O O O 34. It is a type of FGD where customers go to get similar information, services or products and what attracts them
to those resources.
O O O O 35. A data gathering technique where it can be moderated to group interviews and brainstorming sessions that
provide information on user’s needs and behaviors.
A. personal interview C. survey
B. focus group discussion D. data gathering
O O O O 36. It refers to information gathered directly from the respondents who answered set of questions.
A. primary research C. survey
B. secondary research D. data gathering
O O O O 37. It is a type of discussions in FGD if trade-offs have to be made among various customer needs.
O O O O 38. A data gathering technique where it can be done via direct mail, over the phone, internet or e-mail.
A. data gathering C. focus group discussion
B. survey D. personal interview
O O O O 39. It is the process of gathering, analyzing and interpreting the information about the product or the services to be
offered for sale in the market, the market and about past, present and any potential consumers for the products.
A. data gathering C. secondary research
B. primary research D. market research
O O O O 40. It is an important aspect of any type of research study, it can impact the results of a study and ultimately lead
to valid or invalid results.
A. data collection C. secondary research
B. primary research D. market research
O O O O 41. Which one is not a P in Marketing Mix?
A. Price B. People C. Participant D. Promotion
O O O O 42. Which statement supports Marketing Mix?
A. The marketing mix is also known as the “M’s” in marketing.
B. Marketing Mix is a set of controllable and connected variables that a company gathers to satisfy a target group better
than its competitor.
C. There are only 4 P’s in Marketing Mix.
D. None of the above
O O O O 43. Select the best definition of Product.
A. A product is an item that is built or produced to satisfy the needs of a certain group of people, it can be intangible or
tangible.
B. A product is an item that is built or produced primarily to gain profit; it can be intangible or tangible.
C. A product is an item that is built or produced to compete in the world of business; it can be intangible or tangible.
O O O O 44. Choose the best statement that applies in Consumer Goods.
A. A buyer of consumer goods must have complete knowledge of the goods he buys and uses.
20
B. After-sale service is of paramount importance in the case of all consumer goods.
C. The market for consumer goods is affected by technological changes.
D. A buyer of consumer goods may not have thorough knowledge of the goods he buys and uses.
O O O O 45. What factors would change in the distribution channel if there will be no Intermediary like producer and
consumer?
A. Nothing will take place, since it has no intermediary levels. In this case the manufacturer cannot sell to customers.
B. Direct-marketing will take place, since it has no intermediary levels in this case the manufacturer sells directly to
customers.
C. The company will utilize Technology to reach the customers.
D. All of the above
O O O O 46. What is the advantage of Penetration Pricing?
A. A firm has three options and these are to price lower, price the same or price higher than competitors
B. A firm can create the perception that the products must have a higher value than competing products because the
prices are higher.
C. The company earns more through cross-selling products along with a basic core product.
D. The company will gain market share because the price charged for products and services is set artificially low.
O O O O 47. Promotions refer to the partial set of activities, which communicate the product, brand or service to the user.
The idea is to make people be aware, attract and induce to buy the product, in preference over others. Find the error.
A. partial set of activities
B. which communicate the product
C. idea is to make people aware, attract and induce to buy the product
D. No error
O O O O 48. How would you promote a product?
A. By offering Free Gifts, Free Samples, Free Trial, Customer’s Contests, Special Pricing
B. By offering Brochure, Catalogues, Fliers, Newsletters
C. By offering Post cards, Coupons, Email, Phone calls, Text messages
O O O O 49. The following are interpretation of the word Brand except
A. a legal instrument B. a logo ` C. a business D. a vision
O O O O 50. How can you define your business' purpose?
A. Purpose can be defined in two ways: Functional which focuses on the evaluations of success in terms of immediate
and commercial reasons and Intentional which focuses on success as it relates to the ability to make money and do
well in the world.
B. Purpose can be defined in two ways: National which focuses on the evaluations of success within the country for
commercial reasons and International which focuses on success as it relates to other countries to make money and do
well in the world.
C. All of the above
MODULE 6: 4M’s OF PRODUCTION AND BUSINESS MODEL
PRE-TEST: Directions: Write True if the statement is correct, otherwise write False if the
statement is incorrect on the space provided below.
______1. Output represents the final products from the production process and distributed to the
customers.
______2. The 4M’s in the production operation are the materials, manpower, machine and
money.
______3. Manpower in production operation refers to the workers involved in the production of
goods.
______4. Product description is the marketing copy that explains what a product is and its
benefits.
______5. Prototype is a replica of a product.
______6. Product to produce is one of the factors to be considered in the production method.
______7. Educational qualifications and experience is one of the criteria in considering
manpower.
______8. Skills and expertise is not important in considering manpower.
______9. Benefits are the reasons why customers will decide to buy the products.
______10. Machine refers to the manufacturing equipment.
______11. Supplier is an entity that supplies goods and services to another organization.
______12. Supply chain is a system of organizations, people, activities, data and properties
involved in moving a product or service from supplier or customer.
______13. Business model describes the rationale of how an organization makes, transports, and
captures value in economic, social, cultural or other contexts.
______14. In selecting the type of equipment to purchase, the entrepreneur may consider cost
and capacity of the equipment.
21
______15. Value chain is the process or activities by which a company adds cost to an article,
that includes production, promotion, and providing of after-sales service.
LESSON 1: 4 M’s of Operations in Relation to the Business Opportunity and Developing Business Model
In your previous lesson, you learned about the 7P’s of Marketing Mix; Product, Place, Price,
Promotion, People, Packaging and Positioning in relation to business opportunity, wherein
marketing is about creating and accumulating customers. Marketing plans are intended to capture
a market portion and to setback competitors.
Brand name was also introduced, where it is a name, symbol, or other feature that
distinguishes a seller’s goods or services in the marketplace. Your brand is one of the greatest
assets because your brand is your customers’ over-all experience of your business.
Experts believed that a good brand can result in better loyalty for its customers, a better
corporate image and a more relevant identity.
ACTIVITY 1. GUESS THE PICTURE

Direction: Given with the following pictures, fill in the following blanks below to form a
meaningful word. Two (2) points for each correct word.
M __ __ P __ W __ R M __ __ H __ N __ S
M __ T __ __ I __ __ S M __ __ H __ __ S
The most serious issues in the whole production system are the inputs and the transformation process. Their
quality determines the quality of the output.
The factors involved in the input and the production process are usually referred to as the
Four M’s of production, namely Manpower, Method, Machine, and Materials.
Four M’s
• Manpower
• Method OUTPUT
• Machine
• Materials
Manpower
- Talks about human labor force involved in the manufacture of products.

- It is measured as the most serious and main factor of production. The entrepreneur must
determine, attain and match the most competent and skilled employees with the jobs at
the most appropriate time period.
22
- Educational qualifications and experience, status of employment, numbers of workers
required, skills and expertise required for the job are some of the manpower criteria that
must be highly considered by the entrepreneur. Material
- Talks about raw materials necessary in the production of a product. Materials mainly form
part of the finished product. Just in case the resources are below standard, the finished
product will be of unsatisfactory as well.
- The entrepreneur may consider cost, quality, availability, credibility of suppliers and waste
that the raw material may produce. Machine
- Discusses about manufacturing equipment used in the production of goods or delivery of
services.
- In the process of selecting the type of equipment to purchase, the entrepreneur may
consider types of products to be produced, production system to be adopted, cost of the
equipment, capacity of the equipment, availability of spare parts in the local market,
efficiency of the equipment and the skills required in running the equipment. Method
- Production method discusses the process or way of transforming raw materials to
finished products. The resources undergo some stages before it is finalized and becomes
set for delivery to the target buyers.
- The selection of the method of production is dependent on product to produce, mode of
production, manufacturing equipment to use and required skills to do the work.
Product Description
- Is the promotion that explains what a product is and why it’s worth buying? The purpose
of a product description is to provide customers with details around the features and
benefits of the product so they’re obliged to buy.
- Know who your target market is, focus on the product benefits, tell the full story, use
natural language and tone, use power words that sell, and use good images. These are
guidelines for you to have a good product description; since some customers are very
particular with it since they consider the welfare of their family, if it is safe to use.
Prototyping
A duplication of a product as it will be produced, which may contain such details as color,
graphics, packaging and directions. One of the important early steps in the inventing
process is making a prototype. Benefits are the reasons why customers will decide to buy
the products such as affordability, efficiency or ease of use. The features of the product or
service merely provide a descriptive fact about the product or service.
It is better to test your product prototype to meet customers’ needs and expectations;
and for your product to be known and saleable. Pretesting of the product or service is
similar to a sample of the product or service given to the consumer free of cost in order
that he/she may try the product before committing to a purchase.
Supplier
An entity that offers goods and services to another business. This entity is among of
supply chain of a business, which may offer the main part of the value contained within its
products. Certain suppliers may even involve in drop shipping, where they ship goods directly to
the customers of the buyer.
Suppliers are your business partners, without them your business will not live. You need
them as much as you need your customers to be satisfied. But as an entrepreneur you have to
choose a potential supplier that has loyalty and value your partnership; a supplier that would lead
you to the fulfillment of your business objectives, mission and vision.
Value chain is a method or activities by which a company adds value to an item, with
production, marketing, and the provision of after-sales service. The main goal and benefit of a
value chain, and therefore value chain analysis, is to make or support a competitive benefit.
A supply chain is a structure of organizations, people, activities, data, and resources
involved in moving a product or service from supplier to customer.
The main objective of supply chain management includes management of a varied range
of components and procedures, for instance, storing of raw materials, handling the inventory,
warehousing, and movement of finished product from the point of processing to the point of
consumption.
23
Business model describes the reasons of how an organization creates, delivers, and
captures value in economic, social, cultural or other contexts. The development of business model
construction and variation is also called business model innovation and forms a part of business
plan.
It is a company's plan for how it will make revenues and make a profit. It describes what
products or services the business plans to manufacture and market, and how it plans to do so, as
well as what expenses it will incur.
There are important phases in developing your business model, namely; Identifying the
specific audience; establishing business process; recording a business resources; developing
strong value proposition; determining key business partners; and creating a demand for today’s
generation strategy and be open for innovations.
After developing a business model, we will proceed in developing a business plan. To be
able to successfully complete this module, you need to prepare a business plan and operate your
plan and finally keep records of your business transactions.
Business plan is an important tool for you to have an idea about the future of your
business. Your business plan will be your guide in the moment you will be implementing and
operating your business proposal.
You can also make use of the business plan in securing investment capital from financial
institutions or lenders. It can also be used to influence people to work for your enterprise, to
secure credit from suppliers, and to fascinate potential customers.
Read the stories of Jessie, Mercy and Monna below to fully understand the importance of
having a business plan:
“Jessie is the eldest of five children of Mr. & Mrs. Natividad. The family is having difficulty to support
for their everyday needs. Because of this, Jessie tried to enter selling banana cue and with his dream to
make his business grow, he put up many stalls in the community without considering the advises of his
friends to make a business plan before implementing his decision. After a few months his stalls shutdown.”
“Mercy is the youngest in the family. She found out that she loves to cut hair and apply make up to her
friends. Until such time that her friends introduced her to their friends too for haircut and make up when there
are occasions. Few months after, Mercy was told by her friends to put up a beauty parlor in their place. So
she asks her mother who is also a businesswoman to teach her how to make a business plan and eventually
ended with a successful business.”
“Monna is a diligent student. Because of her knowledge gained from school about business plan
she was able to enhance her skills in business and finally found herself into his laundry shop business.”
Each scenario taught us that business is not just about how much income or profit you
can get but it’s about the life of your business. And in having a business, you also have to
consider technological forces, Social forces, Political forces, Cultural forces, Economic forces and
Legal forces.
The following are the components found in a Business Plan.
• Introduction- this part discusses what is the business plan all about.
• Executive Summary- is part of the business plan which is the first to be presented but
the last to be made.
• Management Section- shows how you will manage your business and the people you
need to help you in your operations.
• Marketing Section- shows the design of your product/service; pricing, where you will sell
and how you will introduce your product/service to your market.
• Financial Section- shows the money needed for the business, how much you will take in
and how much you will pay out.
• Production Section- shows the area, equipment and materials needed for the business.
• Competitive Analysis- is the strategy where you identify major competitors and research
their products, sales and marketing strategies.
• Market- The persons who will buy the product or services
24
• Organizational chart- is the diagram showing graphically the relation of one official to
another, or others of a company.
ACTIVITY 2. General Directions: Answer the following questions based on your learnings about
4M’s of production and Value Chain or Supply Chain. Write your answer on the space provided.
Five (5) points in each correct answer for Problem No.1 and 2 points for each correct answer in
Problem No.2.
Problem No. 1. “In your home, when you want to eat egg sandwich before going to school, your
mother would surely prepare it for you. Your egg sandwich would not be produced without a process.”
1. Who would be your manpower? _______________________________

2. What would be your materials? ________________________________
3. What machines or tools would you use? _________________________
4. What methods are needed to produce the egg sandwich? (Cooking procedures-
enumerate them).
___________________________________________________________
___________________________________________________________
___________________________________________________________
Problem No. 2: With the pictures shown below, identify each picture whether it is Value Chain or
Supply Chain.
1. _____________
2. _______________
3. _______________
25
Assessment
Direction: Encircle the letter of your choice.

1. Which of the following refers to the human workforce involved in the manufacture of products?
A. Materials B. Method C. Machine D. Manpower
2. The 4M’s of production are as follows except ONE.
A. Management B. Manpower C. Method D. Machine
3. Which of the following refers to the marketing copy that explains what a product is and why it is worth
purchasing?
A. Prototype B. product description C. Business Model D. Suppliers
4. It represents the final products from the production process and distributed to the customers.
A. Input B. Supplies C. Output D. Materials
5. It is a replica of a product.
A. Prototype C. Business Model
B. Product description D. Suppliers
6. Which of the following refers to the system of organizations, people, activities, information, and
resources involved in moving a product or service from supplier to customer?
A. Supply chain B. Value chain C. Business model D. Prototype
7. Which of the following is the process or activities by which a company adds value to an article, including
production, marketing, and the provision of aftersales service?
A. Supply chain B. Value chain C. Business model D. Prototype
8. It describes the rationale of how an organization creates, delivers, and captures value in economic,
social, cultural or other contexts.
A. Prototype B. Product description C. Business Model D. Suppliers
9. It is an entity that supplies goods and services to another organization.
A. Prototype B. Product description C. Business model D. Suppliers
10. Which of the following refers to the manufacturing equipment used in the production of goods or delivery
of services?
A. Machine B. Manpower C. Method D. Materials
11. It refers to the process or technique of converting raw materials to finished products.
12. It simply refers to the raw materials needed in the production of a product.
13. Statement I- Skills and expertise is not important in considering manpower. Statement II- Benefits are
the reasons why customers will decide to buy the products.
A. Only Statement I is true. C. Both Statements are true.
B. Only Statement II is true. D. Both Statements are false.
14. Statement I- Educational qualifications and experience is one of the criteria in considering
manpower.
Statement II- Product to produce is one of the factors to be considered in method or production
method.
15. Statement I- In selecting the type of equipment to purchase, the entrepreneur may consider cost and
capacity of the equipment.
Statement II- The purpose of a product description is to supply customers through details around the
features and benefits of the product.
MODULE 7: FORECASTING REVENUES AND COSTS
Now that you have identified what business to undertake and are familiar with the tools and materials needed in the
operation of your business, let us apply what you have learned in the previous module by forecasting the revenues and
costs incurred in your business. You might probably be wondering how profits are computed. This module will help guide
you realize the revenues and profits of your chosen business.
Revenue is a result when sales exceed the cost to produce goods or render the services. Cost on the other
hand simply refers to the amount of money used to produce or manufacture goods/merchandise as well as costs incurred
in selling the goods/merchandise. How much revenues and costs incurred in the operation of the business? How are
these projected? And how are these used to compute profit/loss of the business shall be learned in this module.
This module is divided into two lessons:
26
Lesson 1 – Forecasting the revenues of the business
Lesson 2 – Forecasting the costs to be incurred
To be able to successfully complete this module, previous knowledge in multiplying numbers will best help.
Why forecast? We often watch news as Kuya Kim reports the direction of the typhoon in the next 2 days, what
Kuya Kim is doing is giving us information taken by satellites and gives us the direction of the typhoon. In weather
forecasting, the reporter is giving us advance information that could help us prepare and be ready for upcoming typhoon.
This way, risks such as accidents, devastation of properties and loss of life may be prevented.
Forecasting is a tool used in planning that aims to support management or a business owner in its desire to adjust and cope
up with uncertainties of the future. Forecasting depend on data from the past and present and make meaningful estimates on
revenues and costs. . Forecasting revenues and costs is the same as weather forecasting, though forecasting revenues and
costs is in the context of business. Entrepreneurs use forecasting techniques to determine events that might affect the
operation of the business such as sales expectations, costs incurred in the business as well as the profit that the business is
earning. Making informed estimates reduces risks that might be experienced by the entrepreneur in the future.
In this module, you will be making informed estimates about revenues and calculated estimates involving costs
incurred by the business. Factors affecting forecasting will be discussed to better help you in making projections.
After carefully studying the contents of this module, you should be able to:
• Identify essential factors in forecasting revenues and costs;
• Calculate mark-up and selling price of a product or merchandise;
• Compute projected revenues;
• Compute projected costs.
• Create a table showing projected revenue and costs.
ASSESSMENT
Encircle the letter that bests correspond to your answer.

1. Refers to the amount added to the cost of a product to determine the selling price –
a. Revenue b. Cost c. Mark Up d. Mark Down
2. Aling Marta sells bibingka in her neighbourhood, every day she can sell 45 pieces of bibingka at 20 pesos
each. How much is her daily revenue?
a. 900.00 b. 450.00 c. 800.00 d. 1000.00
3. It is a planning tool that helps entrepreneur copes up with uncertainties in the future operation of the
business.
a. Revenue b. Selling c. Benchmarking d. Forecasting
4. The selling price of an item or merchandise is computed by adding cost per unit and __________?
a. Revenue b. Mark Up c. Discount d. Number of Items
5. Mang Berting is a fruit vendor selling at the local public market. He gets his mangoes from a supplier at 25
pesos per kilo and sells it at 45 per kilo to his customers. How much mark-up was Mang Berting adding to
his selling price?
a. 25.00 b. 30.00 c. 15.00 d. 20.00
6. Aling Elvie sells t-shirt at 175.00 pesos each. If each t-shirt costs 135.00 pesos, How much is the mark-up?
a. 30.00 b. 45.00 c. 40.00 d. 50.00
7. It is the result when sales exceed the cost to produce goods or render services -
a. Forecasting b. Selling c. Revenue d. Benchmarking
8. It is a tool that allows managers to make educated estimates on revenue and costs of the business in order
to cope up with uncertainties of the future –
a. Estimating b. Guessing c. Forecasting d. Benchmarking
9. Refers to goods and merchandise at the beginning of operation of business or accounting period.
a. Merchandise Inventory, end c. Expenses
b. Merchandise Inventory, beginning d. Freight-in
10. Mang Lito sold 5 pairs of slippers. Suppose Mang Lito purchased the 5 pairs of slippers at P 30.00 each
and pays P120.00 freight. Calculate how much is the cost of goods sold?
a. 220.00 b. 420.00 c. 270.00 d. 200.00
11. Refers to amount paid to transport goods or merchandise purchased from the supplier to the buyer.
a. Merchandise Inventory, end c. Expenses
b. Merchandise Inventory, beginning d. Freight-in
12. Costs incurred through payment of utilities such as electricity and water -
a. Revenue c. Mark-up
b. Operating expenses d. Free
13. Merchandise or goods purchased are referred to as –
a. Purchases c. Costs
b. Operating Expenses d. Loss
14. It is the result when cost to produce goods or render services is greater than the sales –
a. Selling b. Revenue c. Benchmarking
d. Loss
15. Jean purchased 5 baskets for P 30.00 each. According to her calculation, P 10.00 shall be added to the
cost as mark-up. How much is the selling price of each basket?
a. 35.00 b. 40.00 c. 50.00 d. 60.00
27
FORECASTING THE REVENUES
Making informed estimates requires careful considerations on several factors that might affect the outcome
of your travel such as, distance from home to school, the means of transportation you will be taking, the number of
passengers and etc. Traveling from home to school on regular basis had helped you arrive with an estimate that was very
close to the actual time of arrival.
Considering these factors are essential in making informed estimates by the entrepreneur. Since the
business he/she is venturing hasn’t started yet, it is important that these factors affecting forecasting will be determined to
better help him/her in making the best decisions for the business.
The entrepreneur after realizing the potential for profit of his/her business concept, the next step is to
estimate how much the revenue is on daily, monthly and annual basis. Before going to forecasting and projecting the
revenues of the business, let us determine first what revenue is.
Revenue is a result when sales exceed the cost to produce goods or render the services. Revenue is
recognized when earned, whether paid in cash or charged to the account of the customer. Other terms related to revenue
includes Sales and Service Income. Sales is used especially when the nature of business is merchandising or retail,
while Service Income is used to record revenues earned by rendering services.
You have just learned about what revenue is. This time, let us study the various factors to consider in
forecasting revenues.
The entrepreneur would want his/her forecasting for his/her small business as credible and as accurate as
possible to avoid complications in the future. In estimating potential revenue for the business, factors such as external
and internal factors that can affect the business must be considered. These factors should serve as basis in forecasting
revenues of the business. These factors are:
1. The economic condition of the country. When the economy grows, its growth is experienced by the
consumers. Consumers are more likely to buy products and services. The entrepreneur must be able to
identify the overall health of the economy in order to make informed estimates. A healthy economy makes
good business.
2. The competing businesses or competitors. Observe how your competitors are doing business. Since you
share the same market with them, information about the number of products sold daily or the number of
items they are carrying will give you idea as to how much your competitors are selling. This will give you a
benchmark on how much products you need to stock your business in order to cope up with the customer
demand. This will also give you a better estimate as to how much market share is available for you to
exploit.
3. Changes happening in the community. Changes’ happening in the environment such as customer
demographic, lifestyle and buying behaviour gives the entrepreneur a better perspective about the market.
The entrepreneur should always be keen in adapting to these changes in order to sustain the business. For
example, teens usually follow popular celebrities especially in their fashion trend. Being able to anticipate
these changes allows the entrepreneur to maximize sales potential.
4. The internal aspect of the business. Another factor that affects forecasting revenues in the business itself.
Plant capacity often plays a very important role in forecasting. For example, a “Puto” maker can only make
250 pieces
of puto every day; therefore he/she can only sell as much as 250 pieces of puto every day. The number of
products manufactured and made depends on the capacity of the plant, availability of raw materials and
labour and also the number of salespersons determines the amount of revenues earned by an
entrepreneur.
Now that all factors affecting forecasting revenues are identified, you can now calculate and project potential
revenues of your chosen business. The table below shows an example of revenues forecasted in a Ready to Wear
Online Selling Business.
Example: Ms. Fashion Nista recently opened her dream business and
named Fit Mo’to Ready to Wear Online Selling Business, an online selling business which specializes in ready to wear
clothes for teens and young adults. Based on her initial interview among several online selling businesses, the average
number of tshirts sold every day is 10 and the average pair of fashion jeans sold every day is 6.
From the information gathered, Ms. Nista projected the revenue of her it Fit Mo’to Ready to Wear Online Selling
Business.
She gets her supplies at a local RTW dealer in the city. The cost per piece of t-shirt is 90 pesos, while a pair
of fashion jeans costs 230 pesos per piece. She then adds a 50 percent mark up to every piece of RTW sold.
Mark up refers to the amount added to the cost to come up with the selling
price. The formula for getting the mark up price is as follows:
Mark Up Price = ( Cost x desired mark up percentage)

Mark Up for T-shirt = ( 90.00 x .50)
Mark Up for T-shirt = 45.00
In calculating for the selling price, the formula is as follows:
Selling Price = Cost + Mark Up
Selling Price = 90.00 + 45.00
Selling Price for T-shirt = 135.00
28
Table 1 shows the projected daily revenue of Ms. Nista’s online selling business. Computations regarding the
projected revenue is presented in letters in upper case A, B, C, D, and E.
Table 1
Projected Daily Revenue
Fit Mo'to Ready to Wear Online Selling Business
Type of Cost per Mark-up Selling Projected Projected
RTW's Unit 50% Price Volume Revenue
(A) (B) (C) (D) (E)
Average
No. of (Daily)
Items Sold
(Daily)
(A) (B)= (A x .50) (C)= (A+B) (D) (E) =(C x D)
T-Shirts 90.00 45.00 135.00 10 1,350.00
Jeans 230.00 115.00 345.00 6 2,070.00
Total 320.00 160.00 480.00 16 3,420.00
Table 2 shows the projected monthly and yearly revenue of Ms. Nista’s online selling business.
Computations about the monthly revenue is calculated by multipying daily revenues by 30 days ( 1 month).
Example, in table 1 the daily revenue is 3,420.00. To get the monthly projected revenue it is multiplied by 30
days. Therefore,
Projected Monthly Revenue = Projected daily revenue x 30 days
Projected Monthly Revenue = 3,420.00 x 30
Projected Monthly Revenue = 102,600.00
On the other hand, the projected yearly revenue is computed by multiplying the monthly revenue by 12
months. The calculation for projected yearly revenue is as follows.
Projected Yearly Revenue = Projected daily revenue x 365 days
Projected Yearly Revenue = 3,420.00 x 365
Projected Yearly Revenue = 1,248,300.00
Table 2
Projected Monthly and Yearly Revenue
Type of Selling Projected Projected Projected Projected
RTW's Price Volume Revenue Volume Revenue
Average Average No. of
No. of Items Items Sold
Sold (Yearly)
(Monthly) (Yearly)
(Monthly)
(C)= (A+B) F= (D x 30 days) G= (C x F) H= (D x 365 I= (C x H)
days)
T-Shirts 135.00 300 40,500.00 3,650 492,750.00
Jeans 345.00 180 62,100.00 2,190 755,550.00

Total 480.00 480 102,600.00 5,840 1,248,300.00
Table 3 shows the projected monthly revenues covering one year of operation. The table shows an average
increase of revenue every month by 5 percent except June, July to October and December. While the month of June has
twice the increase from previous month, 10 percent. Let us consider that months covering July to October are considered
to be Off-Peak months, therefore sales from July to October are expected to decrease. It is assumed that there is no
increase in revenue from July to August while from August to October the decrease in revenues is 5 percent from
previous month. Since revenues from sales of RTW’s are considered to be seasonal, it assumed that there is 10 percent
increase in revenue from November to December.
Computation for assumed increase of revenue on specific months is as follows:
Projected Monthly Revenue (Increase) = Revenue (January) x 5 % increase
Projected Monthly Revenue (Increase) = 102,600.00 x .05 Projected Monthly Revenue (Increase)
= 5,130.00
Projected Revenue for February = Revenue (January) + Amount of increase

Projected Revenue for February = 102,600.00 + 5,130.00
Projected Revenue for February = 107,730.00
On the other hand, decrease in revenue is computed as follows:

Projected Monthly Revenue (Decrease) = Revenue (August) x 5 % increase
29
Projected Monthly Revenue (Increase) = 144,041.14 x .05 Projected Monthly Revenue (Increase)
= 7,202.06
Projected Revenue for September = Revenue (August) - Amount of decrease

Projected Revenue for September = 144,041.14 – 7,202.06 Projected Revenue for September =
136,839.08
Table 3
Projected Monthly Revenue
Month January February March April May June
Revenue 102,600.00 107,730.00 113,116.50 118,772.33 124,710.94 137,182.04
Month July August September October November December
Revenue 144,041.14 144,041.14 136,839.08 129,997.13 136,496.98 150,146.68
Important Assumptions:
February to May Increase of 5% from previous revenue
June Increase of 10% from previous revenue
July to August The same Revenue
September to October Loss 5% from previous revenue
November Increase 5% from previous revenue
December Increase 10% from previous revenue

The numbers in the last table are very attractive, having revenues that are increasing in numbers is a good
sign that a business is growing. However, an entrepreneur should not be overwhelmed on these revenues as these are
just gross revenue, this is not the final amount of profit or income an entrepreneur will get at the end of every period. Take
note that the amount of net revenue is still subjected to the expenses incurred in the operation of business.
ACTIVITY 1
After learning the calculations presented, you can now compute the projected revenue by day, month and
year based on your business concept.
Aling Minda is operating a buy and sell business, she sells broomsticks (walis tingting) in her stall at a local
market. She gets her broomsticks from a local supplier for 25 pesos each. She then adds 50 percent mark-up on each
broomstick.
Every day, aling Minda can sell 30 broomsticks a day.
Use the template below and fill in the necessary figures based on the scenario. Remember to use the
factors to consider in projecting revenues and refer to tables 1, 2 and 3 as your guide.
Table 1
Projected Daily Revenue
Name of Business ___________________________
Merchandise/ Cost per Mark-up Selling Projected Projected
Products Unit 50_% Price Volume Revenue
(A) (B) (C) (D) (E)
Average No. of
Items (Daily)
Sold (Daily)
(A) (B)= (A x (C)= (A+B) (D) (E) =(C x D)
.50)
Broomstick 25 12.50 37.50 30 1,125
Total 25 12.50 37.50 30 1,125
30
Use the calculations you have made in Table 1 to successfully complete the information in Tables 2 and 3
and calculate the projected monthly and yearly revenue of Aling Minda’s business.
Table 2
Projected Monthly and Yearly Revenue
Name of Business ___________________________
Merchandise/ Selling Projected Projecte d Projected Projected
Products Price Volume Revenue Volume Revenue
Average No. of Average No. of
Items Sold Items Sold
(Monthly) (Yearly)
(Monthly) (Yearly)
(C)= F= (D x 30 days) G= (C x F) H= (D x 365 days) I= (C x H)

(A+B)
Broomstick 37.50 900 33,750 10,950 410,625
Total 37.50 900 33,750 10,950 410,625
For Table 3, use the following assumed increases in sales every month. From January to May, 5 percent increase from
previous sales. For the month of June, 10 percent increase from previous sales. For the months July to December,
record the same sales every month.
Table 3
Projected Monthly Revenue
Name of Business ___________________________
Revenue 33,750 35,437.50 37,209.38 39,069.89 41,023.34 45,125.67

Revenue 45,125.67 45,125.67 45,125.67 45,125.67 45,125.67 45,125.67
LESSON 2: FORECASTING THE COST INCURRED
You have learned in Lesson 1 that the revenue generated by selling RTW’s has a corresponding amount of costs
incurred. This cost was the amount of RTW before adding its mark-up price. Each piece of t-shirt has a corresponding cost of
90.00 pesos, while each pair of jeans has a corresponding cost of 230.00 pesos. These costs are incurred each time
revenues are generated. On the other hand, the business also incurs costs in its operation, these costs are called Operating
Expenses. Operating expenses such as payment on Internet connection, Utilities expense (i.e.Electricity), Salaries and
Wages and Miscellaneous are essential in the operation of the business; this allows the business to continue operate in a
given period of time.
Now that you have learned what cost is, let us identify the costs and
expenses incurred by the business in generating revenues.
ACTIVITY 2
Have you tried recording the amount of money you spend from your daily allowance? You might be experiencing
difficulties in making your allowance meet your daily needs as student. Try to fill in the information below to come up with a
breakdown of your daily allowance.
Breakdown on Daily Allowance

Name: Shela Mae T. Calderon
Daily Allowance: Ᵽ 100.00

Less: Daily Expenses
Food Ᵽ30.00
Fare 18.00
School Supplies 20.00
31
Recreation 20.00
Others 10.00 98.00
Total Ᵽ 2.00
Were you able to get a positive total? You may have spent your daily allowance wisely and saved some of your
daily allowance. Did you spend all your allowance and ended up with a zero total? You may have spent your allowance
on expenses essential to your need as a student.
Considering your expenses as a student, a business also has expenses necessary for its upkeep. It would be
best for any business to arrive with a positive total; this would mean profit for the business. Careful consideration and
projection of these factors could mean success for the business.
You have just learned about what cost is. This time let us identify costs and expenses incurred by the business.
Cost of Goods Sold / Cost of Sales refer to the amount of merchandise or goods sold by the business for a
given period of time. This is computed by adding the beginning inventory to the Net Amount of Purchases to arrive with
Cost of goods available for sale from which the Merchandise Inventory end is subtracted.
Merchandise Inventory, beginning refers to goods and merchandise at the beginning of operation of
business or accounting period.
Purchases refer to the merchandise or goods purchased. Example: Cost to
buy each pair of Jeans or t-shirt from a supplier.
Merchandise Inventory, end refers to goods and merchandise left at the end of operation or accounting
period.
Freight-in refers to amount paid to transport goods or merchandise purchased from the supplier to the
buyer. In this case, it is the buyer who shoulders this costs.
In a merchandising business such as Fit Mo’to Ready to Wear Online Selling Business, the formula to
compute for costs of goods sold is as follows:
Merchandise Inventory, beginning P XX.XX

Add: Net Cost of Purchases XX.XX
Freight-in XX.XX
Cost of Goods Available for Sale P XX.XX
Less: Merchandise Inventory, end XX.XX
Cost of Goods Sold P XX.XX
Let us calculate the cost of goods sold of Ms. Fashion Nista’s online selling business for the month of
January.
Table 4 shows the costs incurred during the first month of operation of Fit
Mo’to Ready to Wear Online Selling Business. Since Ms. Nista get her stocks from an online supplier, there is no need to
order ahead and stock more items. Therefore, there is no Merchandise Inventory, beginning as well as Merchandise
Inventory, end. Ready to wear items purchased online from the supplier are then sold as soon as they arrived.
Cost of goods is calculated by simply multiplying the number of items sold every month (300 t-shirts and 180
pairs of jeans) to its corresponding cost per unit (90.00 pesos for every t-shirt and 230.00 pesos for every pair of jeans). A
cost in transporting the goods from the supplier to the seller (Ms. Nista) or Freight-in is then added to Net Cost of
Purchases.
Table 4
Projected Cost of Goods Sold (Monthly)
Type of Cost per Unit Projected Volume
RTW's
Average No. of
Items Sold Projected Costs of Purchases
(Monthly) (Monthly)
(A) F = (D x 30 days) J = (A x F)
T-Shirts 90.00 300 27,000.00
Jeans 230.00 180 41,400.00
Total 320.00 480 68,400.00
Table 5 shows how freight-in is calculated.

It is assumed that at an average, Ms. Nista pays at least 250.00 pesos for every 12 items delivered successfully by her
supplier through a courier service.
32
Since her average order is 480 pieces every month, she pays:
480 pcs. / 12 pcs. = 40
40 x 250.00 = 10,000.00
Table 5
Freight-in paid by Ms. Nista every month
Type of No. of Items Projected Volume Freight In (January
RTW's Sold (Daily) Average No. of Items Only)
Purchased (Monthly)
(A) F = (D x 30 days) K = (F/12) x 250
T-Shirts 10 300 6,250.00
Jeans 6 180 3,750.00
Total 16 480 10,000.00
Let us now substitute the values from table 4 and table 5. Since there is no Merchandise Inventory,
beginning and end, let us add Cost of Purchases and Freight-in to get the Cost of Goods Sold.
Merchandise Inventory, beginning P 00.00
Add: Net Cost of Purchases 68,400.00
Freight-in 10,000.00
Cost of Goods Available for Sale P 78,400.00
Less: Merchandise Inventory, end 00.00
Cost of Goods Sold P 78,400.00
Now that the cost of goods sold is now calculated, let us now identify expenses that the business incurs in its
operation. Operating expenses such as Internet connection, Utilities like electricity and miscellaneous expense are
important to keep the business running. These expenses are part of the total costs incurred by the business in its day-to-
day operation and are paid every end of the month. The operating expenses and assumed amount are presented below:
Operating Expenses
Add: Internet Connection P 1,299.00
Utilities (Electricity) 800.00
Miscellaneous expense P 300.00
Total Operating Expense P 2,399.00
To calculate the total costs incurred by the business, cost of goods sold and total operating expenses are
then added. The calculation for the costs incurred for the month of January is presented below:
Cost of Goods Sold P 78,400.00

Total Operating Expense P 2,399.00
Cost P 80,799.00
The projected monthly costs covering the first of operation of Ms. Nista’s
Fit Mo’to RTW Online Selling Business is presented in Table 6.
Table 6
Projected Monthly Costs (Year 1)
Cost of Goods
Sold 78,400.00 82,320.00 86,436.00 90,757.80 95,295.69 104,825.26
Expenses 2,399.00 2,446.98 2,495.92 2,545.84 2,596.75 2,648.69

Total Cost &
Expenses 80,799.00 84,766.98 88,931.92 93,303.64 97,892.44 107,473.95
33
Cost of Goods
Sold 110,066.52 110,066.52 104,563.20 99,335.04 104,301.79 114,731.97
Expenses 2,701.66 2,755.70 2,810.81 2,867.03 2,924.37 2,982.85

Total Cost &
Expenses 112,768.19 112,822.22 107,374.01 102,202.06 107,226.16 117,714.82
ASSESSMENT
Now, that you have finished the module, let us check what you have learned. Answer the questions given
1. Profit or Loss in computed by subtracting cost / expenses from –
a. Income/Revenue c. Sales
b. Sales Discount d. Operating expenses
2. Sales is an account title used to describe goods or merchandise sold by a business. What nature of business
uses Sales?
a. Servicing c. Merchandising
b. Barber Shop d. Both Servicing and Merchandising
3. Irene sells fashion bags online. She gets each bag for P 150.00 from a local supplier. She then adds P 100.00
as mark-up for each bag. How much is the selling price of each bag?
a. P 200.00 b. P 250.00 c. P 300.00 d. P 350.00
4. A merchandising business earns through –
a. Rendering services c. Donating products
b. Lending money d. Buys and sells goods
5. It is a tool that allows managers to make educated estimates on revenue and costs of the business in order to
cope up with uncertainties of the future –
a. Estimating b. Guessing c. Forecasting d. Benchmarking
6. Which of the following businesses use Service Income in recording revenues?
a. Beauty Salon b. Sari-sari store c. Movie House d. Hardware
7. Refers to the amount of merchandise or goods sold by the business for a given period of time –
a. Operating Expense c. Deductions
b. Cost of Goods Sold d. Sales
8. Aling Coring sold 5 pieces of rugs. She bought the rugs for 20 pesos and sold it for 35 pesos. How much is the
total cost of goods sold?
a. P 80.00 b. P 90.00 c. P 100.00 d. P 110.00
9. Freight-in refers to the amount paid to transfer goods or merchandise purchased from the _________.
a. Buyer to the supplier c. Buyer to buyer
b. Supplier to the buyer d. Supplier to supplier
10. The costs incurred through payment of utilities such as water, electricity, internet connection is considered as –
a. Costs c. Operating expenses
b. Purchases d. Personal Expense of the owner
11. Nathaniel sells bottled water in a nearby city bus terminal. Every day he can sell 30 pieces of bottled water at 20
pesos each. How much is Nathaniel’ daily sales?
a. P 900.00 b. P 800.00 c. P 700.00 d. P 600.00
12. The amount added to the cost of a product to determine the selling price is called –
a. Mark-up b. Discount c. Mark-down d. Sale
13. Lina sold all ten t-shirts for 1,500.00 pesos. Suppose she added 50.00 pesos as mark-up price for every t-shirt.
How much was the cost for every t-shirt sold?
a. P 80.00 b. P 90.00 c. P 100.00 d. P 110.00
14. Refers to goods and merchandise left at the end of operation or accounting period.
a. Merchandise inventory, beginning c. Freight-in
b. Merchandise inventory, end d. Freight-out
15. The Total Cost and Expenses is calculated by –
a. Adding cost and expenses c. Adding revenue and expense
b. Subtracting expenses from costs d. Subtracting expense from revenue
MODULE 8: COMPUTATION OF GROSS PROFIT
As we all know that profit is a financial gain from a transaction or from a period of investment or business activity,
usually calculated as income in excess of costs or as the final value of an asset in excess of its initial value.
It is a total revenue minus total expenses, profit is the amount of money a business "makes" during a given
accounting period. The more profit you make, the better, as profit can be re-invested into the business or retained by the
34
business owners. Being able to accurately determine your business's profit is an essential part of being able to judge its
financial health. It can also help you decide how to price your goods and services, how to pay your employees, and more.
To make your business gain more profit, begin by adding up all of the money your business has made in a set period
of time (either, quarterly, yearly, monthly, etc. Other sources, like products sold, services rendered, membership payments, or,
in the case of government agencies, taxes, fees, the sales of resource rights, and so on.
Note that you will need to subtract any amount of cash refunded to customers for returns or disputes in order to find
an accurate figure for your total income.
It's easier to understand the process of calculating a business's profit by following along with an example.
Let's say that we own a small publishing business. In the last month, we sold P20,000 worth of books to retailers in
the area. However, we also sold the rights to one of our intellectual properties for P7,000 and received P3,000 from book
retailers for official promotional materials. If these represent all of our revenue sources, we can say that our total income is
P20,000 + P7,000 + P3,000 = P30,000.
This module is divided into two lessons:
Lesson 1 – Compute for profits CS_EP11/12ENTREP-0h-j-16

Create the company’s five (5) year projected financial statements
-CS_EP11/12ENTREP-0h-j-17
To be able to successfully complete this module, previous knowledge in adding & multiplying numbers will best help.
After carefully studying the contents of this module, you should be able to:
• compute for profits
• define profitability, liquidity & solvency
• identify commonly used profitability ratios.
PRE-TEST
Let us see what you already know about forecasting revenues and costs.
Answer the questions below.
Write True if the statement is correct & write False if you think the answer is not correct.
False 1. The gross profit rate of the entrepreneurial venture is computed by dividing the cost of goods sold by net sales.
True 2. The gross profit rate provides information on the cost ratio of the business.
False 3. In evaluating the profitability of the entrepreneurial venture the evaluation must focus on the information reflected
on the face of the balance sheet.
False 4. The operating profit margin rate indicates information on the percentage of operating expenses on the net sales.
True 5. Mr. Q is a practicing Doctor of Medicine. During the month of March 2019 he received Professional Fees
amounting to P 1,000,000 and total expenses of P250,000. The net income of Mr. Q is P 750,000.
False6. Profit is the money received from customer in exchange of products given to customer.
True 8. The gross profit rate provides information on the cost ratio of business.
False 9. One of the objectives in evaluating the gross profit rate of the business is to determine whether the amount of the
gross profit is sufficient to cover the operating expenses.
False 10. The operating profit margin rate indicates information on the percentage of operating expenses to net sales.
False 11 The government is not interested in financial statements since it is not a party to any of the transactions of the
business.
True 12. The net profit margin rate presents the general perspective of the operating performance of the business.
False 13. The amount of income per peso investment can be determined by computing the net profit margin rate.
True 14. In normal situation, it is favorable for the business to have high inventory
False 15. Preparation & presentation of the financial statements of the entity is the primary responsibility of an accountant.
LESSON 1: COMPUTATION OF GROSS PROFIT
Let’s review of what is revenue of the business. This is an important tool and materials needed in the operation of the
business. It is said that revenue is the result when sales exceed the cost to produce or manufacture goods/merchandise as
well as costs incurred in selling.
Forecast is advance information that could help us prepare and ready for any incoming event. Forecasting is the tool
used in planning that aims to support management or a business owner in its desire to adjust and cope up with uncertainties
of the future. If anyone of us can predict that we can be rich so it means all of us will be rich. This fantasy is played out every
day in boardrooms across the globe with the practice of business forecasting.
It is important to have a good organization in the business to easily grow and expand in the future.
Activity 1
Read and understand the given problem.
35
Rodrigo is engaged in a buy-and sell business of perfumes. He bought 10 boxes of perfumes. Each box costs
12,000.00 and contains a dozens of perfume bottles. He is planning to sell one perfume bottle at P1,500. What is his
expected profit on the 10 boxes of perfumes?
The ultimate goal of any business whether a retail or wholesale is to earn a profit. Getting the difference between the
amount of money earned from the selling 10 boxes containing a dozen of perfume bottles and the cost of those 10 boxes
gives the profit.
In the example that I gave, answer the following questions:

1. How much does Rodrigo earned profit?
Rodrigo earned 60,000.00
2. Is it good to engage in a business? Yes or No?
Yes
3. What do you think of Rodrigo’s business? Is it good for a beginner?
Rodrigo’s business is good for a beginners
Solution:
Given of 10 boxes of perfumes contain a dozen of bottles
120 bottles bought by Rodrigo
Cost of each box = P12,000.00
Selling Price of each perfume =P1,500.00
To solve the problem, we compute first the cost of 10 X 12=120 bottles
Since each box costs P12,000.00 & Rodrigo bought 10 boxes, we get
Cost = P12,000.00(10)= P120,000.00
Rodrigo can expect that the net sales he will get upon selling 10
boxes consisting of 120 bottles
Net Sales P180, 000.00

Less: Cost of sales 120,000.00
Gross profit P60,000.00
Compute the Gross Profit
The profitability ratios are a group of financial statement that primarily determine the profitability of the business
operation.
The gross profit rate on a product is computed as:
Net Sales xxxxxxx
Less: Cost of sales xxxxxxx
Gross profit xxxxxxx
By using the formula, the gross of XYZ Trading in the year 2017
Net Sales P 734, 000.00
Less: Cost of Sales 577, 000.00
Gross Profit 157, 000.00
Profit is the gross income. The amount of gross profit provides information to the entrepreneur about revenue earned
from sales.
The term cost refers to the purchase price of the product including of the product including the total outlay required in
producing it.
The gross profit margin is computed as follows:
The gross profit rate measures the percentage of gross profit to sales, indicating the profit that the business realizes
from the sale of the product.
The gross profit rate of XYZ Trading for the year computed as follows:
T The gross profit rate may signal to the entrepreneur that the amount of margin on sales is 21.39%. This rate will be
used to determine whether the amount of gross profit can cover the operating of the business. Since the gross profit rate of
XYZ Trading is 21.39%, the cost ratio to sales will be 78.61%. This information will help the entrepreneur in assessing whether
the cost is too high or too low. Any product with a very high cost will not become competitive in the market.
36
The gross profit rate will also help the entrepreneur set the selling price.
Operating Profit Margin Rate
The operating the profit margin is the excess of gross profit from operating expenses.
Gross profit xxxxx
Less: Operating Expenses xxxxx
Operating profit margin xxxxx
The operating profit margin is the second level of revenue in the income statement. At this stage, not only the cost of
buying or making the product that has been deducted is included but also the operating expenses. These are expenses
incurred during a particular period only, and are not expected to provide benefits to any future period. The operating expenses
are also period costs.
In case there are no financing charges like interest, expenses, and income tax, the amount of the operating profit
margin is equal to the net income.
Gross profit P 157,000.00
Less: Operating expenses 90,000.00
Operating profit margin P 67,000.00
This information that the business realized an income of P 67,000.00 during the year after deducting the cost and
operating expenses from the sales made.
By applying
The operating profit margin of the business measures the percentage of profit available after deducting the cost of
sales & operating expenses of the business. A higher operating profit margin is favorable to the business.
Net Profit Margin Rate
Operating profit margin xxxxxxx

Add: Interest Income xxxxxxx Total
Less: Interest Expense xxxxxx
Income Tax xxxxxx xxxxxx
Net Profit margin xxxxxx
The Income statement.is the net profit margin & the third level in the revenue.
The business is only given consideration like interest expense and income tax.
Operating profit margin P67,000.00
Less: Income tax 20,000.00
Net profit margin P46,900.00 The income statement of XYZ
Trading does not reflect any data on interest expense. Only income tax has been deducted from the
operating profit margin.
By applying the formula, the profit margin of XYZ
XYZ Trading appears to have earned 6.39% of its total sales of P734,000 during the year. This profits rate must be
compared with those of other similar businesses within the industry.
Analyze the Liquidity Status of the Business
Liquidity Ratios
Current ratio = Current assets / Current liabilities
37
Quick ratio =(Current assets – Inventories) / Current liabilities
= (Cash and equivalents + Marketable securities + Accounts receivable) / Current liabilities
The quick ratio measures its short-term obligations with its most liquid assets and therefore excludes inventories
from its current assets.
. Financial statements are important in a company management as a means of communicating past successes as well
as future expectations. The financial statement records all the operating results such as sales, expenses and profits or losses.
Return of Investment (ROI)
The Return of investment (ROI) measures the amount of net income per peso invested to the business.
The formula to compute ROI is as follows
The average total assets are by dividing the sum of the total assets at the beginning and end of the period.
Table 1
Projected Five Year Balance Sheet
Year 1 Year 2 Year 3 Year 4 Year 5
ASSET
Cash
337,398.56 686,417.05 1,052,886.47 1,437,679.36 1,841,711.89
Total Assets
337,398.56 686,417.05 1,052,886.47 1,437,679.36 1,841,711.89
Liability - - - - -
Owners’
equity 337,398.56 686,417.05 1,052,886.47 1,437,679.36 1,841,711.89
Total
Liabilities
and Owner's
Equity 337,398.56 686,417.05 1,052,886.47 1,437,679.36 1,841,711.89
Table 1
Projected Five Year Income Statement
Year 1 Year 2 Year 3 Year 4 Year 5
Revenue 1,545,673.95 1,622,957.64 1,704,105.53 1,789,310.80 1,878,776.34
Cost 1,213,275.38 1,273,939.15 1,337,636.11 1,404,517.91 1,474,743.81

Gross Profit
Before tax 332,398.56 349,018.49 366,469.42 384,792.89 404,032.53
Yearly increase in revenue is assumed at 5%

Yearly increase in cost is assumed at 5%
As a future entrepreneur, one should always remember that nothing is permanent in the field of entrepreneurship.
What is applicable to one entrepreneur may not be applicable to another. Certain things may happen to one entrepreneur but
may not happen to another.
Entrepreneurship should be practiced not as a science but as an art. Creativity should always be applied to
entrepreneur by regularly evaluating the market and the environment and responding to the changes in them.
The owner of an ordinary small business has the freedom to manage and operate. Ideally he/she prefers business
activities which are done easily. However, the entrepreneur has to perform the entrepreneurial activities correctly regardless of
38
whether they are undertaken easily or not. The important in entrepreneurship is that the business activities are performed
correctly.
Compute the Gross Profit
Activity 1.2: Answer the given problem.

1. Annie bought one dozen smartphones for P200,000.00 with a discount of 5%. She sold half dozen at a price of
P18,000.00 per unit. However, a new model of smartphone became available in the market, so she sold the
remaining half dozen @ P12,000.00 each unit. What was her profit or loss?
Compute the following requirements:
a. Gross profit rate
b. Operating profit margin rate
c. Net profit margin rate
d. Return on Investment
Now ask yourself the following questions:

1. Is creativity present in the operation of ordinary small businesses along the streets and highways and in
your neighborhood? Why do you say so?
__________________________________________________________________
__________________________________________________________________
2. Will you consider the daily business practices of the small owner within the concept of entrepreneurship?
Why?
__________________________________________________________
___________________________________________________________
The profitability and ratios are a group financial statement ratios that primarily determine the profitability of the
business operation. They provide information on the efficiency of resource utilization.
The gross profit represents the difference between net sales and cost of sales of the entrepreneurial venture during a
given period. It is computed as follows:
Net Sales xxxxxx

Less: Cost of Sales xxxxxx
Gross Profit xxxxxx
By using the formula, the gross profit of XYZ Co., in the year 2017 is computed as follows:
Net Sales P734,000.00
Less: Cost of Sales 577,000.00
Gross profit P 157,000.00
Profit is determined by:
• the money you get from sales
• the cost of stock – if you're selling a product
• all the expenses you incurred
Income earned by the business are sales & gross profit. Commissions, discounts, fixed expense are business
expenses.
How to Increase your Sales?

❖ Improve profit by looking at the money you earn from sales, and increase:
o The number of customer’s
o The volume of goods or services existing customers to buy
o The sales price
Assessment
How did you understand the lessons that you have studied in this module?
Answer the following questions.
Write True if the statement is correct & write False if you think the answer is not correct.
True 2. The gross profit rate provides information on the cost ratio of the business.
False 3. In evaluating the profitability of the entrepreneurial venture the evaluation must focus on the information reflected
on the face of the balance sheet.
False 4. The operating profit margin rate indicates information on the percentage of operating expenses on the net sales.
True 5. Mr. Q is a practicing Doctor of Medicine. During the month of March 2019 he received Professional Fees
amounting to P 1,000,000 and total expenses of P250,000. The net income of Mr. Q is P 750,000.
False6. Profit is the money received from customer in exchange of products given to customer.
True 8. The gross profit rate provides information on the cost ratio of business.
39
False 9. One of the objectives in evaluating the gross profit rate of the business is to determine whether the amount of the
gross profit is sufficient to cover the operating expenses.
False 10. The operating profit margin rate indicates information on the percentage of operating expenses to net sales.
False 11 The government is not interested in financial statements since it is not a party to any of the transactions of the
business.
True 12. The net profit margin rate presents the general perspective of the operating performance of the business.
False 13. The amount of income per peso investment can be determined by computing the net profit margin rate.
True 14. In normal situation, it is favorable for the business to have high inventory
False 15. Preparation & presentation of the financial statements of the entity is the primary responsibility of an accountant.
Activity 2:
After learning how to compute the gross profit at least you have learned now how to do it by your own. Solve and
compute the following:
1. A watch store owner decided to offer 20% discount for a particular brand of watch that sells at P35,000.00. By doing
so, his average sales increased from 5 watches to 12 watches a day. If he bought one watch at a price of P22,000.00
from the supplier, by how much was his daily profit increased or decreased by offering such discount on the watch?
2. Michelle went to Baguio and bought 20 jars of strawberry jam for P3,500.00 with 1 5% discount. When she got back
to Manila, she sold 10 of the jars for a total of P1,800.00and the rest as P185.00 each. How much profit did Michelle
again?
MODULE 9: BUSINESS IMPLEMENTATION
In this module, you will be able to practically implement your newly developed Business Plan. In which case, will help
your target business most likely to succeed. Because this is where you will actually operate the business. Thus, selling your
product/service to the potential customers.
You are expected to operate your own business and keep your business records to monitor the progress of your
business operation.
This module covers learning competencies:

• Implementing the business plan
• Operating the business
• Selling the product
• Identifying reasons for keeping business records
PRE-TEST
Before starting with this module, let us see what you already know about implementing a business plan. Answer the questions
below.
Instruction: Read the statements carefully then Write True if the statement is correct & write False if you think the
answer is not correct. Write your answer on the space provided before the number.
You go to the office of the Department of Industry (DTI) if you will register your corporation
1.
business.
The office to visit when registering your solely owned business is Securities and Exchange
2.
Commission (SEC)
3. You go to the Bureau of Internal Revenue when you get Tax Identification Number (TIN)
4. Employers are the only one to pay contribution at the Social Security System(SSS)
5. You cannot start your business without a consultant.

6. Record keeping is not necessary in business operation
7. Record keeping is beneficial to the owner
8. The objective of the businessman should be clear
9. Tasks before starting the business should have a time allotment
10. Records are sources of documents
11. Professional advices is necessary before starting the business
12. Professional advice is not needed during the business operation
13. Bookkeeping is only important to the accountant
14. Record keeping can measure the profit and performance of the enterprise
15. Recordkeeping can be both physical and electronics
Before you proceed, let us first recall our previous lesson.
40
Profit is the amount you gain after selling your product. In computing your profit, you just simply follow this formula:
Sales - Cost of Goods Sold = Gross Profit
The gross profit represents the difference between net sales and cost of sales. Variable costs are those things that
change based on the amount of product being made and are incurred as a direct result of producing the product.
Variable costs include:
1. Materials used
2. Direct labor
3. Packaging
4. Freight
5. Plant supervisor salaries
6. Utilities for a plant or a warehouse
7. Depreciation expense on production equipment
8. Machinery
Fixed costs generally are more static in nature. They include:

1. Office expenses such as supplies, utilities, a telephone for the office, etc.
2. Salaries and wages of office staff, salespeople, officers and owners
3. Payroll taxes and employee benefits
4. Advertising, promotional and other sales expenses
5. Insurance
6. Auto expenses for salespeople
7. Professional fees
8. Rent
Activity 1.1
Identify the services offered by the following offices to you as an entrepreneur.
1. Department of Trade and Industry (DTI)_____________________
2. Securities and Exchange Commission (SEC)_________________
3. Bureau of Internal Revenue (BIR)__________________________
4. Mayor’s Office_________________________________________
5. Social Security System (SSS)____________________________
6. Philhealth____________________________________________
7. Pag-ibig Fund_________________________________________
Activity 1.2
Answer the following questions:

1. As an entrepreneur, is it important to know the services offered by the offices mentioned above?
2. If your answer is YES, in what way that their services becomes important to you?
3. If your answer is NO, what makes their services unnecessary to you?
4. Do you think a business can last without availing the services of the said offices? Why? Or why not?
RUBRIC FOR ESSAY

The content was well-thought ,
Content guide questions were thoroughly 4
answered
The paper was well-written with
Organization ideas easily conveyed to readers. 3
Development Points are thoroughly developed 3

TOTAL 10
Guidelines for successful business plan implementation:

1. Objectives- the entrepreneur should have a clear idea on what is his purpose of putting up his enterprise.
2. Tasks- this means that the entrepreneur must know what the tasks are he has to perform in order that his objectives will be
realized.
3. Time allocation- This means that the entrepreneur should have a timetable or a schedule to follow every task, so that it will be
accomplish on time and realize his objective.
4. Progress- This means that the entrepreneur should monitor the development of the tasks and the accomplishment of the
objective.
In Operating a business, the entrepreneur should first consult professional for advices, like accountants or
consultants from small enterprises. In your case, you can consult your teacher in entrepreneurship or anyone you
think that could help you.
41
The following are the basic requirements to start a business in the Philippines:
• Securities and Exchange Commission (SEC) Registration-for partnership or Corporation
• Department of Trade and Industry (DTI) Registration- for your business tradename
• Mayor’s Business Permit- for getting the license to operate in the city or municipality and payment of your local
business taxes.
• Bureau of Internal Revenue (BIR) Registration - for getting TIN, official receipts and invoices, registering your
books of accounts and paying your national Internal revenue taxes
• SSS, PhilHealth, and Pag-Ibig Fund registration- for registering yourself or company as an employer and for
remitting your employees’ contribution together with your employer’s share
Other steps to follow before operating a Business are as follows:
1. Set up an accounting system or hire an accountant. Knowing how the business is doing financially is important
for planning and survival.
2. Advertise the business. No one will buy the products or services if customers do not know that the company exists.
You can make use of the social media.
3. Secure insurance for the business. Liability insurance protects the business in the event of litigation. Consider life
and disability insurance, health insurance and fire insurance when you are leasing an office or storefront.
Keeping Business Records
Good record keeping can help protect the business, measure the performance and maximize profit.
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
Activity 2: Create your own business Plan.
With no less than 10 pages following the format:

- Executive summary
- Marketing plan
- Management plan
- Financial Plan
You are going to implement your business for one and a half month. Following the Business plan, you have
presented.
RUBRICS FOR THE BUSINESS PLAN IMPLEMENTATION
Feasibility The business is operated 50
according to the plan.
Bookkeeping The records are properly kept 40
and accounted for
Profitability
The business is gaining
10
as to its projected financial plan
TOTAL 100
Assessment
Now that you are finished accomplishing the module, let us check what you have learned. Answer the questions given
1. Which office will you go to register your single owned business?
A. SEC C. BIR
B. DTI D. Mayor’s Office
2. Which office do you visit to register partnership or corporation business?
A. SEC C. BIR
3. To secure Tax Identification Number (TIN) , which office will you go?
A. SEC C. BIR
4. SSS, Philhealth and Pag-ibig fund contributions is made by ___
42
A. Employees only C. Both Employees and Employers
B. Employers only D. None of the choices
5. Which of the following is not a step to follow before operating a business?
A. Register your business C. Advertise the business using Facebook
B. Set up accounting system D. Selling the product
6. Which of the following is true?

A. Good record keeping is not important to the business owner
B. Good record keeping is important only to the accountant
C. Good record keeping gives benefits to the enterprise
D. Good record keeping gives no importance at all.
7. Which of the following is NOT a benefit to the enterprise?
A. Plan and work more efficiently C. Can check if the business is doing good
B. Meet legal and tax requirements D. It cannot protect the rights of the owner
8. The objectives of the entrepreneur should be
A. Specific and clear C. Short and blurred
B. Specific and long term D. Long and not specific
9. The tasks before operating the business must be ____
A. Specified to be accomplished by the owner alone
B. In detail so that the owner will know what to do
C. Kept by the owner for future reference
D. None of the choices
10. The tasks to be accomplished before operating the business should have:
A. Design C. Time allotment
B. Decoration D. Measurement
11. Which of the statements is true?
A. Before starting a business, the entrepreneur may not consult a
professional for advice
B. Before starting a business, the entrepreneur should consult a
professional for advice
C. Before starting a business, the entrepreneur must start selling when there are available buyers
D. None of the choices
12. To register your Business Trade name is done in the office of?
A. SEC C. Mayor’s Office
B. DTI D. Philhealth Office
13. The sources of documents are called?
A. Income statement C. Record
B. Balance sheet D. Record Keeping
14. Which of the following is not a benefit of record keeping
A. It will not help in managing potential risks
B. It will measure profit and performance
C. It will protect the rights of the owner
D. It will not let you know how much you are earning
15. Which of the following statements is true?
A. Professional advice is only needed before starting the business
B. Professional advice is needed all throughout the life of the business
C. Professional advice is made only by consultants
D. Professional advice is only a waste of money
MODULE 10: BOOKKEEPING
Welcome to this module. In this module you will learn how to record business transactions, generate financial
information and communicate them to different users. This is your tool to keep track of the operations of your business,
know how much should you collect, determine your capability to meet the currently maturing obligations, know the levels of
your profitability, cash position, and communicate them to management and other interested parties such as the Bureau of
Internal Revenue and Local Government Unit for tax and regulation purposes.
This module is divided into four lessons:

Lesson 1 – Perform bookkeeping tasks
Lesson 2 – Prepare an income statement and a balance sheet,
Lesson 3 – Identify where there is a profit or loss for a business,
Lesson 4 – Interpret financial statements (balance sheet, income statement), cash flow projections, and
summary of sales and cash receipts
To be able to completely learn this module, you need to know and understand the basic concepts of
bookkeeping and apply the same by performing bookkeeping tasks, prepare income statement and balance sheet,
43
interpret financial statements, identify whether the business is profitable or not and most importantly, you will be able
to generate overall report on the company’s financial status.
Before starting with this module, let us evaluate what you already know about bookkeeping by answering
the pre-assessment questions below.
PRE-TEST: Multiple Choice: Identify the correct answer among the given choices. In your answer sheet, write the
letter only.
1. A source document evidencing that orders have been placed by the customer waiting to be served by the
supplier-
A. Purchase request B. Purchase order
C. Purchase invoice D. Purchase check
2. The source document evidencing that goods have been delivered by the supplier to the customer-
A. Supplier’s sales invoice C. Customer’s sales invoice
B. Vale slip D. Customer’s delivery receipt
3. A source document issued by the supplier acknowledging that full payment has been received from the
customer-
A. Official receipt C. Delivery receipt
B. Purchase receipt D. Receiving report
4. Is a statement of the financial position of a business which states the assets, liabilities, and owners' equity at a
particular point in time.
A. Balance Sheet B. Income Statement C. Owner’s Equity D. Assets
5. A source document which accompanies a check when payment is made-
A. Check voucher C. Cash voucher
B. Purchase voucher D. All of the above
6. All of the following are examples of source documents, except-
A. Check B. Invoices C. Contract D. Journal
7. A source document which shows that the customer has already made partial payment to the supplier through
issuance of-
A. Check B. Voucher C. Official receipt D. Sales invoice
8. Are things or properties that the business owns, example includes cash, account receivable and prepaid
expenses.
A. Assets B. Liabilities C. Owner’s Equity D. Revenue
9. It is the obligations of the company, payable in money, goods or services.
10. It is the claim of the owner of the business also known as the capital.
11. Is a record comprising the sales and other income received by the business.
12. The most liquid form of asset that can be used anytime to purchase another assets or pay liabilities.
A. Inventories B. Receivables C. Payable D. Cash
13. An example of asset that can be used in the business for a long period of time.
Usually more than a year.
A. Inventories B. Computer C. Receivables D. Cash
14. A type of business that is purely engage in providing all types of service activities such as medical or legal
services.
A. Service Business C. Manufacturing business
B. Merchandising business D. Trading Business
15. A type of business that is engage in buying and selling of food products such as Grocery/convenient stores.
A. Service Business C. Manufacturing business
B. Merchandising business D. Forex Trading Business
LESSON 1: PERFORM BOOKKEEPING TASK
In the previous lesson, you learned how to make and prepare a business plan, operate the business, know
how to sell the product, and the significance for keeping business records.
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.
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, it’s also reiterated the layer’s of management, type of skills and employee attitude
your business need and the steps on how to get the government license.
44
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
wholesalers/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?
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. Depicted in figure 1 below is a
sample format of a general journal:
Figure 1 – 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:
45
Figure2 – GeneralLedger
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 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:
Accounts Receivable
Buyer/Customer: Veggies Trading 11
Figure 3 – Accounts Receivable Ledger
Figure 4 – Accounts Payable Ledger

The Rules of Debit and Credit
In the process of journalization, 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?
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.
TRIAL BALANCE
46
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 preparation. Depicted in figure 7 below is a sample format of a trial balance
report with peso amount.
Figure 7: Sample format of Trial Balance
–
As you have 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
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:
(Acquisition Cost – Salvage or Residual Value)
Annual Depreciation = 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.
47
(P 25 ,000 – P 1,000)
P 40 0 =
60 months
- (5 yrs x 12 mos. = 60 months) Adjusting entry:

GENERAL JOURNAL PAGE 1
POST.
DATE PARTICULARS REF. DEBIT CREDIT
1 June 30 Depreciation expense 400.00
2 Accumulated depreciation – (equipment name) 400.00

To record the allocation of depreciation expense
3
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 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
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.
Adjusting entry:
POST.
1 June 30 Supplies expense 3,000
2 Supplies 3,000
3 To set up the value of used supplies.
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.
48
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.
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.
POST.
Journal entry:
1 Feb 15 Cash 40,000
2 Unearned service revenue 40,000
To record receipt of full payment for the two-
3 month service contract with Makisig
Adjusting entry:
4 Feb 29 Unearned Service Revenue 10,000
5 Service Revenue 10,000
To record service income earned from Feb 15-
6 29, 2016; P40,000 x (1/2 month /2 months)
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 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:
Adjusting entry:
POST.
1 Feb 29 Utilities Expense 3,800
2 Utilities Payable 3,800
To accrue the cost of electricity
3 incurred for the month of February.
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.
49
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:
Adjusting entry:
POST.
1 Feb 29 Accounts Receivable 15,000

2 Service Income 15,000
To record accrued income for the services already
rendered during the
3 month of February.
LESSON 2: PREPARE INCOME STATEMENT AND A BALANCE SHEET
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
• Expenses – money spent during the conduct of business operations
• Net income / net loss – the outcome of business operations.
Figure 8 – Income statement of a Service Type Business
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.
50
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)
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.
Figure 9 – Balance Sheet of a Service type Business

(Account Form)
LESSON 3: IDENTIFY IF THERE IS PROFIT OR LOSS OF A BUSINESS
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:
51
Net Income/Loss =Service Income - Total Expenses
LESSON 4: 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 analysing 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.
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 income It measures the percentage of profit
ratio earned from each peso of
Operating Income Net Sales (Horngren et.al. 2013).
Return on asset Measures the peso value of income

(ROA) Net Income Ave. generated by employing the
Assets company’s assets.
Return on equity Measures the return (net income)
(ROE) Net Income Ave. generated by the owner’s capital
Equity invested in the business
Financial Health Refers to the company’s capacity to pay their short and long term obligations
Ratios as they become due.
Debt ratio Total Debt Total Indicates the percentage of the

Assets company’s assets that are financed by
debt. A high debt to asset ratio implies
a high level of debt.
Equity ratio Indicates the percentage of the
Total Equity Total company’s assets that are financed by
Assets capital. A high equity to asset ratio
implies a high level of capital.
Indicates the company’s reliance to
Debt to equity debt or liability as a source of financing
ratio relative to equity. A high ratio suggests
Total Debt Equity 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 term liabilities.
Current ratio It seeks to measure whether there are

Current Assets Current sufficient current assets to pay for
Liabilities current liabilities. Creditors normally
prefer a current ratio of 2.
52
Quick ratio It does not consider all the current
assets, only those that are easier to
Quick Assets
liquidate such as cash and accounts
Current Liabilities
receivable that are referred to as quick
assets.
Figure 14 - Matrix of financial interpretation with formula and explanation.
ACTIVITY TIME: Now, let us complete the accounting cycle by recording financial transactions and applying
the concept of bookkeeping which will generate financial statements. Upon completing this activity, you will
be able to know the financial position, profitability and the condition of the business thru financial statement
analysis and interpretation.
Activity 1 : Identifying and recording a business transaction using the General Journal
Below is an example of business transactions of a service type business. You are task to record the said
transactions in the general journal by means of journal entry applying the rules of debit and credit.
Depicted in figure 11 is the standard chart of accounts of Alpha Laundry System.
Figure 11 – Chart of Accounts
Let us begin!
Mr. Denver Ambrose is a retired public school teacher. He started his laundry business in June 2018. He
used all of his savings to start a “coin-operated laundry” business. He named it Alpha Laundry Systems (ALS). The
following are business transactions for the month of June 2018, the first month of business operation:
1. June 1, 2018 - Mr. A invested P 200,000 cash in his newly opened Alpha Laundry System business.
Your Journal Entry:

POST.
1 June 1
2
3 To record the initial Capital investment of Mr. A.
2. June 2, 2018 - Mr. A hired his former classmate Doree Dy to be the laundry operator of ALS for a fixed monthly
salary of P10,000. The operator will be paid every quencina.
3. On June 5, 2018 – Alpha Laundry Systems purchased laundry equipment for cash, P150,000.
Your Journal Entry:

53
POST.
4 June 5
5
6 To record the acquisition of Laundry equipment
4. On June 6, 2018 – Alpha Laundry Systems paid cash in advance for the 1 year insurance coverage of laundry
equipment for the whole year amounting to P6,000.
Monthly insurance expense will be recognized for each month end report.
Your Journal Entry:
POST.
7 June 6
8
9 To record the prepaid Insurance for the Laundry equipment
5. On June 7, 2018 – Alpha Laundry Systems bought supplies for laundry amounting to P10,000. The supplies
bought are laundry consumables such detergent powder, soap bar and fabric softener. Monthly inventory will be
conducted to determine unused supplies and will be recognized for each month end report.
Your Journal Entry:

POST.
10 June 7
11
To record the acquisition of laundry consumables
12
6. On June 15, 2018 – Alpha Laundry Systems paid P4,750 cash for salary of laundry operator.
Your Journal Entry:

POST.
13 June 15
14
To record the payment of Laundry operator’s salary
15
7. On June 16, 2018 – Alpha Laundry Systems received P25,000 cash for laundry services rendered to MZ. Hotel.
Your Journal Entry:

POST.
16 June 16
17
54
To record the payment received from MZ Hotel.
18
8. On June 17, 2018 – Alpha Laundry Systems rendered service to Argon Hotel amounting to P45,000. Argon
promised to pay on June 20 of the same year.
Your Journal Entry:

POST.
19 June 17
20
To record the service rendered to Argon Hotel
21
9. On June 18, 2018, Alpha Laundry Systems purchase office supplies from Ku Enterprises amounting to P2,000
on account. ALS will pay it on June 25 of the same year.
Your Journal Entry:

POST.
22 June 18
23
To record the acquisition of Office
24 Supplies on account from Ku Enterprises
10. On June 20, 2018, Alpha Laundry Systems collected payment of Argon Hotel.
Your Journal Entry:

POST.
25 June 20
26
27 To record the full payment from Argon Hotel
11. On June 25, 2018, Alpha Laundry Systems paid in full the amount owed to Ku Enterprises.
Your Journal Entry:

POST.
28 June 25
29
55
To record the full payment of account to Ku
Enterprises
30
12. On June 27, 2018, Alpha Laundry Systems paid electric bill for the month amounting to P1,000 in cash. The
payment is charged to Utility expense account.
Your Journal Entry:

POST.
31 June 27
32
To record the payment Electricity for the month
33
13. On June 30, 2018, Alpha Laundry Systems paid a month’s transportation expense amounting to P 1,300.
Your Journal Entry:

POST.
34 June 30
35
To record the payment of transportation for the
36 month.
14. On June 30, 2018, Alpha Laundry Systems paid P5,000 cash for salary of laundry operator.
Your Journal Entry:

POST.
37 June 30
38
39 To record the payment Laundry operator’s salary.
15. On June 30, 2018, Alpha Laundry Systems paid P7,500 cash for the month’s rent of laundry space.
Your Journal Entry:

POST.
56
40 June 30
41
To record the payment of rent for Laundry space.
42
Completing the monthly General Journal record will give the owner of the business a financial record of all
business transactions that transpired during the month. It will reflect the inflows and outflows of cash, provisions of
services which generate income.
The debit and credit columns should always be equal. Otherwise, the record will affect overall accuracy of
the entire financial record. The error should be properly corrected before the next step in the recording process takes
place.
Activity 2 : Posting journal entries to the General Ledger using 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:
ACCOUNT TITLE
Lef -Hand Side Rigt -Hand Side
or Debit Side or Credit Side
is for is for
VALUE VALUE
RECEIVED PARTED WITH
Figure 12 : T - account
To strengthen your focus on the posting of journal entries to the general ledger, it is suggested to create T –
account and label them with account title and group them according to Assets, Liabilities, Owner’s Equity, Revenue
and Expense. Given below are T – accounts for all ledger accounts group according to the five major accounts.
ASSETS LIABILITIES
OWNER’S EQUITY
57
REVENUE EXPENSES
Figure 13 - Basic Accounting Equation

What is cash receipt?
Cash Receipts include all of a firm’s inflows of cash in a given financial period. The most common
components of cash receipts are cash sales, collections of accounts receivable, and other cash receipts.
What is a sales report?
A sales report is a record of all sales transactions. There are two type of sales transactions. A cash sales and a
credit sale.
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.
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.
ACTIVITY 3
58
Answer the following fill in blank questions:
1. ___________ is an employee of the company in charge to maintain bookkeeping records of the business.
2. ___________ Is considered the book of original entry.
3. ___________ Is considered the book of final entry.
4. ____________ Is a financial statement that reports the financial position of the business.
5. ____________ Is a financial statement that reports net income or net loss of the business.
6. ____________ Is an entry necessary to update ledger accounts from unadjusted trial balance to adjusted
trial balance.
7. _____________ Is a report summarizing the ledger accounts with updated balances in debit and credit
columns.
8. _____________ Is a statement that reports the cash inflow and cash outflow of the business.
9. _____________ Is a type of sales report that presents cash collection only.
10. _____________ Is a record that report cash inflow of the business.
ASSESSMENT
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 c. Profitability ratio
b. Liquidity ratio d. Acid-test ratio
2. The following are financial records of ABC C
• Revenues – 20,000
• Rent expense – 3,000
• Salaries expense – 4,000
• Utilities expense – 2,000
How much is the total expenses?
a. P9,000 b. P10,000 c. P 18,000 d. P1,000
3. How much is the net income?
a. P9,000 b. P10,000 c. P 18,000 d. P1,000
4. All of the following is an income statement accounts, except.
a. Rent expense c. Accounts receivable
b. Service fees d. Insurance expense
5. All of the following is a balance sheet accounts, except.
a. Cash c. Depreciation expense
b. Equipment d. Accumulated depreciation
6. One of the accounts title below is used in making an adjusting entry.
a. Liability c. Asset
b. Prepayments d. Capital
7. A financial statement that reports the Asset, Liability and Owner’s equity of the business.
a. Income statement c. General journal
b. Balance sheet d. General ledger
8. A financial statement that reports the Sales or Income received, Expenses and the Net income of the
business.
9. Is a book used to record journal entries called the book of original entry.
10. Is a book used to record account balances called the book of final entry.
Mr. Izatsuki Hamida, the bookkeeper of Honda Massage and Spa Services reported the following data for
the month of January to March 2018:
Water expenses ---------------------- P 4,000

Soap expense ---------------------- 7,500
Massage oil expenses ---------------------- 15,000
Light & power expenses ---------------------- 12,000
Rent of the Massage parlor---------------------- 24,000
Salary of staff (4 massage worker)-------- 72,000
Income received from massage service-------- 120,000
Telephone expenses ------------------------ 7,500
59
How much is the net profit or net loss?
Quarter Challenge 2
1. Which of the following is the process or activities by which a company adds value to an article, including
production, marketing, and the provision of after-sales service?
A. 4Ms of production C. Value Chain
B. Supply Chain D. Business Model
2. Benjie is engage in buying and selling shoes in his neighborhood. He gets his stocks from a local shoes dealer.
Suppose each pair costs 1, 200.00 and Benjie add 50% mark-up. How much is the mark-up price?
A. 500.00 C. 700.00
B. 600.00 D. 800.00
3. Assuming no returns outwards or carriage inwards, the cost of goods sold will be equal to:
A. Sales less gross profit
B. Opening stock plus purchases plus closing stock
C. Closing stock less purchases plus opening stock
D. Purchases plus closing stock less opening stock
4. Which section of a business plan is generally first but written last?
A. Business description and vision
B. Appendices
C. Executive summary
D. Description of market
5. Is the process of evaluating risks, performance, financial health, and future prospects of a business by
subjecting financial statement data to computational and analytical techniques with the objective of making
economic decisionsHorizontal analysis.
A. Horizontal analysis C. Ratio analysis
B. Vertical analysis D. Financial statement analysis
6. Statement I- Manpower in production operation refers to the workers involved in the production of goods.
Statement II- Machine refers to the raw materials needed in the production of a product.
A. Statement I is true. C. Both statements are true.
B. Statement II is true. D. Both statements are false
7. Costs incurred through payment of utilities such as electricity and water –
A. Revenue C. Free
B. B. Mark-up D. Operating Expenses
8. Gross profit less expenses is known as:
A. Total drawings C.Net turnover
B. Cost of goods sold D. Net profit
9. What is typical timeframe that a business plan addresses?
A. One year
B. the anticipated life of the business
C. At least three to five years
D. At least five years
10. Is a technique for evaluating a series of financial statement data over a period of time with the purpose of
determining the increase or decrease that has taken place? Also called trend analysis.
11. Which of the following is a replica of a product as it will be manufactured, which may include such details as
color, graphics, packaging and instructions?
A. Prototype C. Supplies
B. Materials D. Outputs
12. Which of the following is a system of organizations, people, activities, information, and resources involved in
moving a product or service from supplier to customer.
A. Business Model C. Supply chain
B. Suppliers D. Value Chain
13. The selling price of an item or merchandise is computed by adding cost per unit and __________?
A. Revenue C. Discount
B. Mark Up D. Number of Items
14. It is a tool that allows managers to make educated estimates on revenue and costs of the business in order to
cope up with uncertainties of the future –
A. Estimating C. Forecasting
B. Guessing D. Benchmarking
15. Net turnover can be calculated as:
A. Sales plus returns inwards
B. Gross profit plus cost of goods sold
C. Sales less returns outwards
D. Purchases plus opening stock less returns outwards
60
16. Which of the following would not appear in the profit and loss account?
A. Drawings C. Cash expenses.
B. Carriage outwards. D. Rent received
17. What is the biggest mistake you can make when preparing a business plan?
A. Not telling a compelling story
B. Forgetting the executive summary
C. Failing to include at least one appendix
D. Misrepresenting facts
E. Failing to have a clear vision of the business
18. This section will discuss information about your business, your goals and the customers you plan to serve.
A. Executive summary
B. Company description
C. Marketing plan
D. Financial projection
19. Is a technique that expresses each financial statement item as a percentage of a base amount. Also called
common-size analysis.
20. Which of the following best describes recruitment?
A. tools to produce goods or to generate services
B. process by which a business seeks to hire the right person for a vacancy
C. marketing copy that explains what a product is and why it's worth purchasing
D. rationale of how an organization creates, delivers, and captures value in economic, social,
cultural or other contexts
21. Which of the following is a set of procedures and instructions?
A. Value chain C. Manpower
B. Supply chain D. Methods
22. Claire is a fish vendor selling at the local public market. He gets his fish from a supplier at 100.00 pesos per
kilo and sells it at160.00 45 per kilo to his customers. How much mark-up did Claire add to his selling price?
A. 40.00 C. 60.00
B. 50.00 D. 70.00
23. Refers to the amount added to the cost of a product to determine the selling price –
A. Revenue C. Mark Up
B. Cost D. Mark Down
24. The correct double-entry to transfer commission received for the year to the profit and loss account is:
The correct double-entry to transfer commission received for the year to the
profit and loss account
is:
Debit Credit
A Trading Commission received
B Commission received Profit and loss
C Profit and loss Commission received
D Commission received Trading
25. What is an entrepreneur?

A. Someone who invests time and money to start a business.
B. Someone who makes a lot of money.
C. Someone who takes a risk to make a profit.
D. Both A & C.
26. This section of your business plan will show that you know the ins and outs of the industry and the specific
market you are planning to enter.
A. Executive summary C. Competitive analysis
B. Marketing plan D. Market Analysis
27. Your rival in the industry is called?
A. Competitor C. lending Firms
B. Suppliers D. Board of Directors
28. Expresses the relationship among selected items of financial statement data. The relationship is expressed in
terms of a percentage, a rate, or a simple proportion.
29. Statement I- A product description is the marketing copy that explains what a product is and why it's worth
purchasing.
Statement II- Educational qualifications and experience is one of the criteria in considering manpower.
a. Statement I is false. C. Both statements are true.
b. Statement II is false. D. Both statements are false.
61
30. Statement I- Value chain is the process or activities by which a company adds value to an article, including
production, marketing, and the provision of after-sales service.
Statement II- A supply chain is a system of organizations, people, activities, information, and resources
involved in moving a product or service from supplier to customer.
A. Both statements are true. C. Statement I is false.
B. Both statements are false. D. none of the above.
31. Merchandise or goods purchased are referred to as –
A. Costs C. Expenses
B. Purchases D. Loss
32. Refers to goods and merchandise at the end of operation of business or accounting period.
A. Merchandise Inventory, end C. Expenses
B. Freight-in D. Merchandise Inventory, beg.
33. Gross profit is the
A. Amount of money you get for profit lab.
B. Amount of money collected from selling products
C. Amount of money your product costs to produce
D. Has nothing to do with money.
34. Net profit is the:
A. Amount of money you get for profit lab.
B. Amount of money collected from selling products.
C. Amount of money your product costs to produce.
D. Has nothing to do with money.
35. The diagram showing your workers in the organization with their job responsibilities is called?
A. Organizational perspective C. Organizational chart
B. Organizational layout D. Organizational diagram
36. Promotional activity is found in which section of your business plan?
A. Management section C. Marketing Section
B. Financial section D. Company description section
37. 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 C. Profitability ratio
B. Liquidity ratio D. Acid-test ratio
38. Statement I- . Output represents the final products from the production process and distributed to the
customers.
Statement II- The 4Ms in the production operation are the materials, manpower, machine and money.
A. Both statements are true. C. Statement I is false.
B. Both statements are false. D. Statement II is false.
39. Which of the following is the marketing copy that explains what a product is and why it's worth purchasing?
A. Production method C. Business model
B. Product description D. Prototyping
40. Mang Antolin sells bottled water in nearby public bus terminal, every day he can sell 30 pieces of bottled water
at 20 pesos each. How much is his daily revenue?
A.900.00 C. 800.00
B. 700.00 D. 600.00
41. 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 c. Profitability ratio
b. Liquidity ratio d. Acid-test ratio
42. The following are financial records of ABC C

• Revenues – 20,000
• Rent expense – 3,000
• Salaries expense – 4,000
• Utilities expense – 2,000 How much is the total expenses?
a. P9,000 b. P10,000 c. P 18,000 d. P1,000
43. How much is the net income?
a. P9,000 b. P10,000 c. P 18,000 d. P1,000
44. All of the following is an income statement accounts, except.
a. Rent expense c. Accounts receivable
b. Service fees d. Insurance expense
45. All of the following is an balance sheet accounts, except.
a. Cash c. Depreciation expense
b. Equipment d. Accumulated depreciation
46. One of the account title below is used in making an adjusting entry.
62
a. Liability c. Asset
b. Prepayments d. Capital
47. A financial statement that reports the Asset, Liability and Owner’s equity of the business.
48. A financial statement that reports the Sales or Income received, Expenses and the Net income of the
business.
49. Is a book used to record journal entries called the book of original entry.
50. Is a book used to record account balances called the book of final entry.
63
64

Entrepreneurship Career Guide

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Entrepreneurship Career Guide

Uploaded by

Copyright:

Available Formats

12

Department of Education ● Republic of the Philippines

Factors Affecting Entrepreneurship

Common Competencies in Entrepreneurship

Core Competencies in Entrepreneurship

Activity 2 Self- Assessment

1. The entrepreneurs who create new ideas are called?

4. Which of the following is NOT a function of an entrepreneur?

MODULE 2: RECOGNIZING POTENTIAL MARKET

Figure 1. The Entrepreneurial Process of Creating New Venture

These are the five forces competing within the industry:

ACTIVITY 1. WORD HUNT

MODULE 3: RECOGNIZE AND UNDERSTAND THE MARKET

Commonly used methods for segmenting the market are follows.

3. Psychological Segmentation- divided in terms for customers think and believe.

What is Market Size?

Multiple Choice: Select the best answer.

____3. What is the function of Value Proposition?

Additional Activities. Activity 2

MODULE 4. MARKET RESEARCH

10 – 15 Give at least three data gathering techniques and explain.

ACTIVITY 1. Identify the following:

2. Enumerate and discuss the three data gathering techniques (5 pts.)

MODULE 5: THE MARKETING MIX (7P’s MARKETING) IN RELATION TO THE BUSINESS

STAGES OF DISTRIBUTION CHANNEL

ACTIVITY 1. Draw to Survive

Rubrics for Scoring

Activity 1.2 What I Can Do

Paste the P’s

Rubrics for Scoring

O O O O 29. ________________ will determine entrepreneur possible customers in one’s locality.

MODULE 6: 4M’s OF PRODUCTION AND BUSINESS MODEL

ACTIVITY 1. GUESS THE PICTURE

- Talks about human labor force involved in the manufacture of products.

1. Who would be your manpower? _______________________________

Direction: Encircle the letter of your choice.

MODULE 7: FORECASTING REVENUES AND COSTS

Encircle the letter that bests correspond to your answer.

Mark Up Price = ( Cost x desired mark up percentage)

Jeans 345.00 180 62,100.00 2,190 755,550.00

Projected Revenue for February = Revenue (January) + Amount of increase

On the other hand, decrease in revenue is computed as follows:

Projected Revenue for September = Revenue (August) - Amount of decrease

Revenue 102,600.00 107,730.00 113,116.50 118,772.33 124,710.94 137,182.04

Month July August September October November December

Revenue 144,041.14 144,041.14 136,839.08 129,997.13 136,496.98 150,146.68

June Increase of 10% from previous revenue

July to August The same Revenue

September to October Loss 5% from previous revenue

November Increase 5% from previous revenue

December Increase 10% from previous revenue

(C)= F= (D x 30 days) G= (C x F) H= (D x 365 days) I= (C x H)

Total 37.50 900 33,750 10,950 410,625

Month July August September October November December

LESSON 2: FORECASTING THE COST INCURRED

Breakdown on Daily Allowance

Daily Allowance: Ᵽ 100.00

Merchandise Inventory, beginning P XX.XX

T-Shirts 90.00 300 27,000.00

Jeans 230.00 180 41,400.00

Total 320.00 480 68,400.00

Table 5 shows how freight-in is calculated.