Republic of the Philippines

Department of Education
National Capital Region
Schools Division Office – Muntinlupa City
MUNTINLUPA BUSINESS HIGH SCHOOL-MAIN
Espeleta St., Buli, Mutinlupa City

SPECIAL PROGRAM IN TECHNICAL VOCATIONAL EDUCATION (SPTVE)

BUSINESS MATHEMATICS 10 – ACCOUNTING II
Quarter 4 – Week 3

I. Topic: Balance Sheet

II. Objectives:
At the end of the session, the students are expected to:
1. define balance sheet.
2. determine different components of the balance sheet, and
3. value the importance of preparing a balance sheet in business operation.

III. Brief Introduction of the Lesson

A. Balance Sheet
▪ The balance sheet summarizes a business’s assets, liabilities, and shareholders
‘equity.
▪ A balance sheet is like a photograph; it captures the financial position of a
company at a particular point in time.
▪ The balance sheet is sometimes called the statement of financial position.
▪ The balance sheet shows the accounting equation in balance. A company's assets
must equal its liabilities plus shareholders' equity.

B. Balance Sheet Formats

Standard accounting conventions present the balance sheet in one of two formats:
1. the account form (horizontal presentation) and
2. the report form (vertical presentation).
C. Components of the Balance Sheet
The balance sheet contains statements of assets, liabilities, and shareholders’ equity.
1. Assets have value because a business can use or exchange them to produce the services or
products of the business.
2. Liabilities are the debts owed by a business, often incurred to fund its operation.
3. A company’s equity represents retained earnings and funds contributed by its shareholders.

Key Terms
1. Liabilities: Probable future sacrifices of economic benefits arising from present obligations
to transfer assets or providing services because of past transactions or events.
2. Assets: A resource with economic value that an individual, corporation, or country owns or
controls with the expectation that it will provide a future benefit.
3. Equity: Ownership interest in a company, as determined by subtracting liabilities from
assets.

Assets = Liabilities + Equity

MUNTINLUPA BUSINESS HIGH SCHOOL

Address: Espeleta St., Buli, Muntinlupa City
Telephone Number: 8-850-9479 / 8-772-2949
Email Address: mbhsmun@gmail.com
 Republic of the Philippines
Department of Education
National Capital Region
Schools Division Office – Muntinlupa City
MUNTINLUPA BUSINESS HIGH SCHOOL-MAIN
Espeleta St., Buli, Mutinlupa City

▪ This formula, also known as the balance sheet equation, shows that what a company
owns (assets) is purchased by either what it owes (liabilities) or by what its owners
invest (equity).
▪ As a company's assets grow, its liabilities and/or equity also tend to grow for its
financial position to stay in balance.
▪ How assets are supported, or financed, by a corresponding growth in payables, debt
liabilities, and equity reveals a lot about a company’s financial health.

IV. Activities:
Activity 1
Directions: TRUE or FALSE: Write T if the statement is true and F if the statement is wrong.
Write your answer on a separate sheet of paper.

1. The balance sheet can be prepared at any time, it is mostly prepared at the end of
the accounting period.
2. An income statement is a financial statement that shows the assets, liabilities, and
owner's equity of a business at a particular date.
3. A report form balance sheet is a balance sheet that presents asset, liability, and
equity accounts in a vertical format.
4. Liabilities are obligations to parties other than owners of the business.
5. Owner’s equity is the obligation of the business to its owners.

Activity 2
Directions. Choose your answer on the box and write it on a separate sheet of paper.
1. Another name for the balance sheet is___________.
Statement of operations Statement of financial positions

2. Which of the following is an asset account?

Accounts Payable Prepaid Insurance Unearned revenue

3. What is the normal balance for an asset account?

Debit Credit

4. On December 1, ABC Co. hired Johina Perez to begin working on January 2 at a monthly
salary of P24,000. ABC's balance sheet of December 31 will show the liability of

P24,000 P4,000 no liability

5. This refers to a financial statement format where the assets are reported on the left side
and the liabilities and equity are reported on the right side.
Account form Balance Sheet Report Form Balance Sheet

MUNTINLUPA BUSINESS HIGH SCHOOL

Address: Espeleta St., Buli, Muntinlupa City
Telephone Number: 8-850-9479 / 8-772-2949
Email Address: mbhsmun@gmail.com
 Republic of the Philippines
Department of Education
National Capital Region
Schools Division Office – Muntinlupa City
MUNTINLUPA BUSINESS HIGH SCHOOL-MAIN
Espeleta St., Buli, Mutinlupa City

Activity 3
Directions: Determine the normal balance of the following accounts. Write your answer on a
separate sheet of paper.

ACCOUNTS NORMAL BALANCE

1. Prepaid Expenses 1.
2. Equipment 2.
3. A. Tongko withdrawals 3.
4. Depreciation 4.
5. Accounts payable 5.
6. Merchandise Inventory 6.
7. Unearned revenue 7.
8. A. Rodrigo, Capital 8.
9. Interest expense 9.
10. Mortgage payable 10.

V. Assessment:
Directions: Write the letter of the correct answer in your answer sheet.

1. Which of the following is NOT a component of a balance sheet?

A. assets B. liabilities C. Capital D. expenses
2. Shows the relationship among assets, liabilities, and owners’ equity. It is most often
stated as Assets = Liabilities + Owners Equity
A. accounting equation C. accounting statements
B. accounting records D. accounting net losses
3. Which of the following components of the balance sheet consist of debts owed by a business,
often incurred to fund its operation?
A. asset B. liability C. equity D. expense
4. The basic accounting equation is Assets = Liabilities + __________
A. asset B. liability C. equity D. expense

5. What is the owner’s equity of TDC Company if they have a total of P500,000 assets and
P145,000 liabilities?
A. P345,000 B. 645,000 C. 340,000 D. 640,000

MUNTINLUPA BUSINESS HIGH SCHOOL

Address: Espeleta St., Buli, Muntinlupa City
Telephone Number: 8-850-9479 / 8-772-2949
Email Address: mbhsmun@gmail.com
 Republic of the Philippines
Department of Education
National Capital Region
Schools Division Office – Muntinlupa City
MUNTINLUPA BUSINESS HIGH SCHOOL-MAIN
Espeleta St., Buli, Mutinlupa City

VI. Reflection:
Directions: Answer the following questions on a separate sheet of paper.

1. What is a healthy balance sheet?

________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
_______________________________________________________________________________________

2. What happens if the balance sheet doesn’t balance?

________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
.

References:
https://www.mccc.edu/~horowitk/documents/Chapter12.pdf

Writer: MARVIN N. VIÑALON

Validator: DR. LEONAIDA L. GUTIERREZ

MUNTINLUPA BUSINESS HIGH SCHOOL

Address: Espeleta St., Buli, Muntinlupa City
Telephone Number: 8-850-9479 / 8-772-2949
Email Address: mbhsmun@gmail.com