LESSON 3

CHAPTER ONE: MONEY Two Types of Liabilities

1. Current Liabilities
TALK - Which are short-term liabilities
usually transacted within a month or
so, such as accounts payables
◦ Managing your finances, learning to
2. Long-Term Liabilities
properly allocate them, and minimizing
- Which take longer to pay (mortgages
cost is what keeps a business float.
and bank loans)
◦ It is a way of life.
Balance Sheet
Accounting
◦ Is the accounting document that
◦ Accounting deals with transactions that
shows the balance between these two
are financial in nature.
worlds.
◦ Accounting measures the sales, operating
◦ It is the tool that shows the “financial
expenses, revenues, and net income of a
health” of organization.
business or company.
◦ The balance sheet shows whether you
◦ Accounting is a crucial factor in the
are spending too much or too little.
decisions of business enterprise.
◦ The key word is “balance
Accounting Terminologies (ALBTPI)
1. Assets Transaction
2. Liabilities ◦ Is an activity that involves money in
3. Balance Sheet exchange of goods or services.
4. Transaction
◦ Banks transactions, bills payment
5. Profit
transactions, loan transactions and the
6. Income Statement
Assets like.
◦ are properties, resources, possessions, or Profit
goods that the organization owns
◦ Limited to, land, equipment, money, and ◦ Is also known as income, is the difference
accounts receivables. between what you have earned (revenue)
◦ Accounts receivables are billed and what you have spent (expenses).
transactions in which we expect money to
come in. General Profit Formula:

Two Types of Assets ◦ Profit (Income) = Earnings (Revenue) –

1. Current - which are changing: money, Expenses
accounts receivables. Income Statement
2. Fixed - which constant: land and
equipment. ◦ Is also known as a Profit and Loss
Statement that shows an organization’s
Liabilities operational earnings and expenses.
◦ Entail an organization’s legal and financial
responsibility and obligation.
◦ These are things an organization spends
on – these are, but not limited to, accounts
payable, loan, and mortgages.
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◦ Profit and Loss Statements help
organizations fine out their strategies and
operations in order for them to limit or
cut-on costs that may be unnecessary or at
least look for alternatives in order to
increase their profit.
Investing
is the process of buying a bond, stock,
◦
treasury bills, or real estate in exchange of
financial return or profit over time.
Financial Investments for profit
1. Securities
2. Stocks
3. Insurance
Securities
• These can be in the form of treasury bills,
notes, and bonds
• These are government issued and are sold
by the government to raise funds.
• Through the purchase of securities, you
earn after your security matures and you
receive the money with interest.
Interest
◦ Is the difference between the purchase
price and the actual price.
Stocks
◦ Stocks are another form of investment
that can be purchased through the
Philippine Stock Exchange.
◦ Stocks are “ownerships” in a company.
◦ These are paid out through dividends
when a company is profitable.
◦ You can also earn by buying and selling
stocks during appropriate times.
Insurance
- Insurance protects entities from
imminent downfalls or while also
serving as an investment.
- Insurance and pension plans are
alternative means of earning.
BANKING SERVICE
Banks
- are trusted financial institutions or
businesses, where individuals store their
money for safekeeping.
Banking services:
- Deposits, Loans, Credit Cards, Insurance,
Remittance and Management
Consultation
Deposits
- A bank provides a means to save our
money and grow it.
- We can save money through savings
accounts, checking accounts, and time
deposits.
- The bank pays you a small amount of cash,
technically called as interest.
Savings account
- is “an interest-bearing deposit account
held at a bank or another financial
institution that provides a modest interest
rate.”
Checking account
- let’s you pay bills and make purchases
using a debit card or paper checks instead
of paying cash.
Investopedia.com defines checking account:
- as a “deposit account held at a financial
institution that allows withdrawals and
deposits.”
- A checking account is “very liquid and can be
accessed using checks, automated teller
machines, and electronic debits, among other
methods.”
Time deposit
- earns a fixed interest's rate when it
reaches maturity.
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- Need to pay within the due date or else - Car Insurance

your debts loan will increase - Housing Insurance
Loans - Health Insurance
- According to Investor Words.com a loan - Liability Insurance
“is an arrangement in which a lender gives
money to a borrower”. Remittance
Loan classified - This is means to transfer funds from one
- secured or unsecured. person to another (local or international)
Secured loan via a bank facility.
- requires a borrower to pledge an asset - Remittances include a fee for payment of
(such as land or house) the service.
- if the borrower does not pay the loan
after an agreed period, then the lender Management and Consultation
can claim the asset or property - Banks provide this particular service for
(mortgages and car loans) people who would like the bank to handle
Unsecured loan their investments and funds
- Does not require any collateral from the
borrower
- is based only on the borrower’s
creditworthiness
- that the borrower has the ability to pay
for a high credit rating– as such this loan
is also called as a personal loan or
signature loan (credit )

Different types of loans

- Salary or personal loans
- Auto loans
- Housing Loan
- Business Loans
- Technology or gadget loans
Credit Cards
- are similar to a loan, that is, the bank
allows the cardholder to purchase an item
“on credit” for the cardholder to pay at a
certain time or in given number of
periods.
Insurance
- it is an “agreement in which a person
makes regular payments to a company
and the company promises to pay money
if the person is injured or dies, or to pay
money equal to the value of something
(such as a house or car) if it is damaged,
lost, or stolen”.
Different types of insurance products in the
market:
- General Insurance
- Personal Life Insurance
- Group Life Insurance