SHS

Fundamentals of Accountancy,
Business and Management 2
Week 5: Module 6

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ABM • Fundamentals of Accountancy, Business and Management II
Week 5: Module 6
First Edition, 2020

Copyright © 2020
La Union Schools Division
Region I

All rights reserved. No part of this module may be reproduced in any form without
written permission from the copyright owners.

Development Team of the Module

Author: Narciso A. Martin Jr., T-II

Editor: SDO La Union, Learning Resource Quality Assurance Team

Illustrator: Ernesto F. Ramos Jr., P II

Management Team:

Atty. Donato D. Balderas, Jr.

Schools Division Superintendent

Vivian Luz S. Pagatpatan, Ph.D

Assistant Schools Division Superintendent
German E. Flora, Ph.D, CID Chief

Virgilio C. Boado, Ph.D, EPS in Charge of LRMS

Lorna O. Gaspar, EPS in Charge of ABM
Michael Jason D. Morales, PDO II
Claire P. Toluyen, Librarian II
Fundamentals of Accountancy,
Business and Management II
Week 5: Module 6
 Target

After reading these learning materials, the learner must prepare a Cash Flows
Statement. It is worth distinguishing the importance of the components of CFS such
as the Operating Activities (OA), Financing Activities (FA), and Investing Activities (IA)
that help aid in the analyses of the effects of pure cash transactions in the overall
performance of the business for decision-making.

Every business in the corner requires an accurate presentation of its financial

reports, wherein receipts and disbursements that involve the use of pure cash
transactions need to disclose correctly. The Framework of Accounting considers the
objective preparation and presentation of financial reports such as the CFS following
the financial reporting standards.

After going through this information sheet, the learner expects to

Prepare a CFS (ABM_FABM12-If-11).

Pretest. Short Answer!

Directions: Analyze the given business transactions and write PLANG if your
answer is “yes” and write WIZ if your answer is “no.” Provide a short explanation of
each answer. Use one (1) long construction paper for your answers.

Basic CFS Transactions

1. Are initial investments could increase the entity’s market value?

Short Explanation___________________________________________________________
2. Is cash withdrawal the same with Owner’s Drawing?
Short Explanation___________________________________________________________
3. Is there an effect when properties are acquired using Cash?
Short Explanation___________________________________________________________
4. Is “initial investments” the same with “initial deposits” made on the business?
Short Explanation___________________________________________________________
5. Is it advisable to start-up business having with “obligations or payables”?
Short Explanation___________________________________________________________

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6. Are “borrowings” another form of additional business investment?
Short Explanation___________________________________________________________
7. The only basis of Cash Flows is the “Cash Report” in a Balance Sheet date?
Short Explanation___________________________________________________________
8. Is it good to collect “receivables” in a later date?
Short Explanation___________________________________________________________
9. Is it good to pay “expenses” as early as possible?
Short Explanation___________________________________________________________
10. If Cash Outflows (expenses) are higher than Cash Inflows (income), is it advisable
to shutdown or close the business to avoid future losses?
Short Explanation___________________________________________________________

Jumpstart
For you to understand the lesson well, let us have first
an exercise. Have fun and enjoy!

Activity 1: Recapitulation!
Directions: Identify which among the given account titles below will increase (cash
inflows) or decrease (cash outflows) the Net Balances of a CFS. Write CASH INFLOWS
or CI on the blank provided before each number, if you think it will increase the Net
Balances, otherwise write CASH OUTFLOWS or CO. Use a separate sheet for your
answers and give a short interpretation of each answer. (20 points)

____1. Cash Sales ____11. Payment-short-term debt

____2. Freight-Out
____3. Commissions
____4. Payment to supplier of goods
____5. Payment to supplier of services
____6. Payment to employees
____7. Purchase of equipment
____8. Purchase of fixtures
____12. Cash Purchases - merchandise
____13. Payment-long-term debt
____14. Freight-In
____15. Additional investments
____16. Initial investments
____17. Refund to suppliers
____18. Collections of receivables

____9. Refund from suppliers ____19. Drawings

____10. Payment of interest ____20. Bought merchandise

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 Discover

The structure of an SCF generally presents the sources and utilization of the
organization’s economic resources, such as pure cash transactions. It highlights
financial information significant in predicting future cash inflows and cash outflows of
the business.
The ultimate objective of a business cash flow (inflows and outflows) is to provide
users about the company’s possibilities to generate cash and its subsequent utilization
to position it in its most competitive performance.
Let us examine a basic proforma of Cash Flow Statement, as shown below.
New Peoples Hardware Store
Statement of Cash Flows
For the Month of July 31, 20XX

OPERATING ACTIVITIES
Cash Sales P 10,000.00
Collection of Receivables 2,000.00
Refund to Customers (100.00)
Refund from Suppliers 350.00
Payment to Suppliers (6,000.00)
Payment of Expenses (300.00)
Supplies Bought (800.00)
Cash Purchases of Merchandise (2,400.00)
Freight-In (900.00)
Net Balance - OA P 1,850.00

INVESTING ACTIVITIES
Acquisition FFE/Equipment P (3,500.00)
Net Balance - IA P (3,500.00)

FINANCING ACTIVITIES
Initial Investments P 0.00
Drawings/Withdrawals (2,500.00)
Mortgage Payable 0.00
Net Balance - FA P (2,500.00)

Net Changes in Cash Flow P (4,150.00)

Add: Cash Bal, Beg 5,000.00
Cash Bal, End P 850.00
Checking:
Cash, 31July P 850.00
Figure1. Simple CFS Proforma
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 Explore
Let us check how well you have understood the
lessons by working on some of the enrichment
activities below. Good luck!

Enrichment Activity 1: Roadmap!

Directions: Think of a business you want to start in the future. Supply all the possible
transactions and classifies them whether part of the CASH INFLOWS (CI) or part of
the CASH OUTFLOWS (CO). Reflect on each item on what will be the best possible
decisions to achieve positive (Net Income) business performance. Use a separate sheet
for your answers.

Net Income!
(Positive Performance)

Cash Outflows
Payments/Expenses

Cash Inflows
Receipts/Income

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 Deepen

Enrichment Activity 1: I can do it!

Directions: Interview one of your family members or friends (through social media) with
a Sari-Sari store or an owner of simple business and provide the necessary information
using the simple CFS proforma. Reflect on the significance of pure cash information
into their business operations. Use one (1) long construction paper for your answers.

CFS Proforma (Pure Cash)

Great job! You have understood the lesson well! Are you
now ready to take the final assessment?

Gauge

Posttest. Prepare A Cash Flows Statement

Directions: Due to the prevailing health crisis (COVID-19), many persons have
engaged in online selling as the safest way of doing business. Based on your personal
or family experiences in doing business using social media, prepare the CFS of your
online business by supplying the amount to each of the following account titles. Provide
2-3 written explanations discussing how CFS helped you in your online selling. There
is a provided rubric on the next page for the assessment of your outputs. Use one (1)
long construction paper for your answers.

Prepare A Cash Flows Statement (Online Business)

Cash Sales
Collection of Receivables
Refund to Customers
Refund from Suppliers
Payment to Suppliers
Payment of Expenses
Supplies Bought
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 Cash Purchases of Merchandise
Freight-In
Acquisition of FFE
Acquisition of Equipment
Initial Investment/Capital
Drawings/Withdrawals
Short term payments

You’re done on this part. Great job! Congratulations!

Rubric

3 2 1 0 0
90%+ 80%+ 70%+ 60%+ Less than 60%
Approaching
Mastered Exceeded Attained Unattained
Attainment
The learner The learner Learner meets Learner Learner
presents a clear, presents a clear, written works’ knowledge of the knowledge of the
specific specific expectations. topic is subject is not
understanding understanding understood but shown.
of the of the The learner at a minimum Steps through
competency. All competency. demonstrates level of the process were
notes, All notes, new knowledge competency. The not followed.
assignments, assignments, learned in oral written works Notes and
tests, work tests required participation are occasionally written works
completed on are completed on and or written incomplete and lack neatness,
time, exemplary time, organized, tasks. The work could organize organization,
well-organized, and answered is well-organized better. detail, and
and questions accurately. and complete. evidence of new
are answered The learner Some resources knowledge.
accurately. The learner understood the have been used, Work does not
has used more assignments. but it is not clear meet the
High interest resources what the learner requirements.
and excitement then required The learner understood. Parts are
have led the and used the missing.
learner to reach demonstrates resources The learner does
far beyond the new knowledge required and most of what is Participation is
requirements. in written work organized required, but weak, or learner
and uses information in nothing more. is often not
The learner has this knowledge all written Some of the participating.
used his/her in his/her works, carefully work may not be
new knowledge assignments done finished. Tasks The learner has
when and oral and the learner are not carefully failed to grasp
participating in participation. meets just above done, and the new concepts
making the minimum information covered in the
assignments All tests are requirements from the competency.
and written beyond the and resources is not
work. standard level of expectations. used. The level of
achievement achievement is
between 80%. All tests, below
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 The learner participation Written works 60%.
obtained the and are at a level of
highest level of assignments achievement
achievement meet the between
above 90%. standard level of 60% to 69%.
achievement
between
70% to 79%.
https://www.uky.edu/ie/sites/www.uky.edu.ie/files/uploads/Assessment/Accounting.pdf

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References

Books
Department of Education - Curriculum Guide (2013). Fundamentals of
Accountancy, Business and Management II for Grade 12. K to 12 Senior High
School ABM Specialized Subject. Second Semester. Pp 1-6. December 01, 2013.
Pasig City, Manila.

Department of Education - Teacher’s Guide (2016). Fundamentals of Accountancy,

Business and Management II. Teaching Guide for Senior High School – Academic
ABM. The Commission on Higher Education in collaboration with the Philippine
Normal University. Pp 1-187. EC-TEC Commercial. Quezon City.

Cabrera, Ma. Elenita B. (2019). Financial Accounting. ISBN 9789719919414. Volume

3. GIC Enterprises and Co. Inc., Manila.

Valix, Conrado T., Peralta, Jose F. and Valix, Christian Aris M. (2010). Financial
Accounting – First Edition. ISBN 9710489688. Volume 1. Pp 1-1289. GIC
Enterprises and Co. Inc., Manila.

Electronic Sources
https://www.google.com/amp/s/slideplayer.com/amp/4210102/

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 12
Explore
Sample Business: Milktea Shop
Receipts/Income
Sales paid via cash P 5,000
Payments/Expenses
Licenses and Registrations P 3,000
Rental 5,000
Payment of utilities (power, light and electricity) 1,000
Wage - Store Assistant 9,500
Products needed e.g., milk, soy, pearl 50,000
Packaging e.g., cups, plastic cup/trash bags, straw 30,000
Repair and Maintenance i.e., store aesthetics 10,000
Reflection
:.The business must ensure that the monthly expenses are under control to
maximize the income for the period. The owner must study both “fix and variable”
expenses carefully. The Internal Control System must execute to safeguard assets.
Pretest
1. DDS - Yes, because of additional resources in the entity.
2. DDS – Yes, because accounts are of the same nature of transactions.
3. PNOY – No, because the affected accounts are both Current Assets.
4. DDS – Yes, because accounts are of the same nature of transactions.
5. DDS – Yes, because it will serve as a motivation to steer business operations.
6. DDS – Yes, because it is an additional source of cash inflows.
7. DDS – Yes, because CFS is for pure cash transactions.
8. PNOY – No, because it is a lost opportunity for the business.
9. PNOY – No, because it losses the chance to use the money in circulation.
10. PNOY – No, because the decision will still depend on the following factors, such
as stability, liquidity, and profitability analyses.
Jumpstart
1. CI 11. CO
2. CO 12. CO
3. CO 13. CO
4. CO 14. CO
5. CO 15. CI
6. CO 16. CI
7. CO 17. CO
8. CO 18. CI
9. CI 19. CO
10. CO 20. CO
Key Answer
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Deepen
Nanny's Sari-Sari Store
Statement of Cash Flows
For the Month of August 31, 20XX
OPERATING ACTIVITIES
Cash Sales P 15,000.00
Collection of Receivables 10,000.00
Refund to Customers 0.00
Refund from Suppliers 0.00
Payment to Suppliers (20,000.00)
Payment of Expenses (3,000.00)
Supplies Bought 0.00
Cash Purchases of Merchandise 0.00
Freight-In (1,500.00)
Net Balance - OA P 500.00
INVESTING ACTIVITIES
Acquisition FFE/Equipment P 0.00
Net Balance - IA P 0.00
FINANCING ACTIVITIES
Initial Investments P 15,000.00
Drawings/Withdrawals 0.00
Mortgage Payable 0.00
Net Balance - FA P 15,000.00
x Net Changes in Cash Flow P 15,500.00
Add: Cash Bal, Beg 3,000.00
Cash Bal, End P 18,500.00
Checking:
Cash, 31Aug P 18,500.00
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Gauge
RTW Online Business
Statement of Cash Flows
For the Month of August 31, 20XX
OPERATING ACTIVITIES
Cash Sales P 5,000.00
Collection of Receivables 7,500.00
Refund to Customers 0.00
Refund from Suppliers 500.00
Payment to Suppliers (10,000.00)
Payment of Expenses (300.00)
Supplies Bought (300.00)
Cash Purchases of Merchandise 0.00
Freight-In (1,000.00)
Net Balance - OA P 1,400.00
INVESTING ACTIVITIES
Acquisition FFE/Equipment P 0.00
Net Balance - IA P 0.00
FINANCING ACTIVITIES
Initial Investments P 5,000.00
Drawings/Withdrawals (2,500.00)
Mortgage Payable 0.00
Net Balance - FA P 2,500.00
Net Changes in Cash Flow P 3,900.00
Add: Cash Bal, Beg 6,000.00
Cash Bal, End P 9,900.00
Checking:
Cash, 31Aug P 9,900.00
Reflection
:.The CFS report helped me to understand how “Cash” circulated throughout
the operation. It helped me minimize my expenses while thinking of better ways or
strategies to increase sales during these challenging times.