ENTREP Mod5 LESSON2 - Q2W7

Republic of the Philippines
a
Department of Education
Region III - - Central Luzon
Schools Division OF CITY OF MEYCAUAYAN
MEYCAUAYAN NATIONAL HIGH SCHOOL
Camalig, city of meycauayan, Bulacan
Entrepreneurship
MODULE 5: BUSINESS IMPLEMENTATION
(Week 7)
QUARTER 2 - CS_EP11/12BENTREP-IVa-i-2 and CS_EP11/12BENTREP-IVa-i-3
(“The 5 Keys to Successful Business Process (BPM) Implementation”)
Introduction WORDS YOU WILL

ENCOUNTER
Financial statements are nothing but abstraction of
all the business transactions going on in an  Forecast
enterprise. Analyzing or interpreting financial  Incurred
statements can give very powerful insights into how  Incurred losses
an enterprise is conducting itself. One of the most easily  Revenue
understood financial statements is the income statement, also  Income
called the profit and loss statement. Now lets deepend our  profit
understanding about financial statements.
Learning Targets
At the end of this module the learners should,
- identify the reasons for keeping business records;

- start and operate a simple business;
- runs a business according to the business plan and presents a terminal
report of its operation;
MEYCAUAYAN NATIONAL HIGH SCHOOL FLORIE S. ASUNAN 1

SENIOR HIGH SCHOOL Teacher I
a
Lesson 2 Financial Records

(Week 7)
Do this!
Choose the Correct letter of an answer. Write your answer on separate sheet of paper
1. Which one of the following items is not found on a Balance Sheet?

A. Cash B. Gross Profit C. Assets D. Liabilities
2. Which accounting system most accurately reflects profitability?
A. Cash Accounting
B. Flow of Funds Accounting
C. Accrual Accounting
D. All the above
3. An account receivable is:

A. an Asset B. Owner’s Equity C. a Liability D. None of the above
4. Which of the following is most important to the daily operations of a business?

A. Assets B. Retained Earnings C. Cash D. All the above
5. When people speak about the bottom line, they are referring to:
A. Net Profit B. Gross Margin C. Gross Profit D. None of the above

a
Discussion
Financial Statements
 Financial statement or financial report is a formal record of the financial

activities and position of the business. Accounting is subdivided into financial
and management accounting. Financial accounting is generating financial
records and reports based on the documents of the business.
 The objective is to present the status of the business’ profitability and efficiency
in its use to resources. Management accounting assists management in assessing
the status of the company and in finding ways of improving its profitability and
performance.
 Balance Sheet – It is a formal statement that presents the financial condition of
the business as a specific date. It is prepared monthly, quarterly, semi-annually,
or annually. It is composed of two sections: Assets and Liabilities, and Owner’s
Equity. This is represented by the equation:
Assets = Liabilities + Owner’s Equity
Elements of Balance Sheet or Statement of Financial Position

a. Assets - are items of value owned by the enterprise. It includes cash, claims from
customers (account receivables), goods for sale, land, building, machinery, equipment,
and other properties owned by the business. Assets are further classified as:
Classification of Balance Sheet

1. Current assets: cash, marketable securities, accounts receivable, stock or inventories
of raw materials, supplies, finished goods, and pre-paid expenses.
2. Fixed assets: acquired for long-term use such as land, building, machinery,
equipment, furniture and fixtures to be used in the business.
3. Other assets: patents, goodwill, etc. which do not fall under current or fixed assets.

a
b. Liabilities - are amounts owed by the business. These are classified as current and
long-term obligations.
1. Current liabilities refer to obligations that are expected to become due with the
normal operation cycle (raw materials, services, supplies, or other items like taxes and
rents acquired on credit and have not been paid yet).
2. Long-term liabilities refer to money borrowed from banks and financial institutions
that are to be paid for a longer period than the normal accounting cycle (3 years or
more).
3. Owner’s equity refers to amounts invested by the owners of the business including
profits retained.
Gulong ng Palad Vulcanizing

Statement of Financial Position
December 31,2019
ASSETS
Current Assets
Cash ₱100,000.00
Accounts Receivable 15,000.00
Supplies 25,000.00
Total Current Assets ₱140,000.00
Non Current Assets

Office & Furniture ₱25,000.00
Office Equipment 15,000.00
Total Non Current Assets ₱40,000.00
Total Assets ₱180,000.00
LIABILITIES AND OWNERS EQUITY

Current Liabilities
Accounts Payable ₱10,000.00
Salaries Payable 15,000.00
Utilities payable 5,000.00
Total Current Assets ₱30,000.00
Non- Current Liabilities

Mortgage Payable ₱ 50,000.00
Owners Equity
Gulong ng Palad Capital ₱100,000.00
Total Liabilities and Owner's Equity ₱180,000.00
Figure 1 Statement of Financial Position or Balance Sheet

a
Income Statement or Statement of Comprehensive Income

Income statement is known as Statement of Profit and Loss.Income Statement has had a simple
presentation of the company’s financial performance during a given period of time or the
traditional report format. You can use “net income or net loss”referring to profit and loss.
Key Features of Statement Comprehensive Income

1. Revenues an increases in assets, or decrease in liabilitiees, that result in increases in equity
other than those relating to contributions from holders of equity claims (Ballada,2019).
2. Expenses is a decreases in assets, or increase in liabilities, that result in decrease in equity,
other than those relating distributions to holders of equity claims.
3. Net Profit /Net Loss- is the result after the deduction expenses to the revenue
Tumangan Accounting Services

Statement of Cpmprehensive Income
For the Year Ended December 31,2019
Professional Fee ₱500,000.00

Less: Operating Income
Representation Expense ₱25,000.00
Salaries Expense 25,000.00
Licenses and permit 5,000.00
Utilities Expense 12,000.00
Office Supplies Expense 13,000.00
Depreciation Expense 18,000.00
Interest Expense 2,000.00 ₱100,000.00
Net Profit ₱400,000.00
Figure 2 Example Format of Statement Comprehensive Income
Statement of Changes in Equity reflect the movements in the elements or components of the
equity.

a
Statement of Changes in Owner's Equity

For the Year Ended December 31,2019
Gabayno Capital Beginning ₱100,000.00

Add: Additional Investment 25,000.00
Net Income 350,000.00
Total ₱475,000.00
Less: Gabayno, Withdrawal 50,000.00
Gabayno Capital End ₱425,000.00
Figure 3 Statement of Comprehensive Income
Cash flow statement, its objective of the standard is to require provision on the historical
changes in cash and cash equivalents of an entity by means of a cash flow statement which
classifies cash flow during the period from operating, investing and financing activities.
Figure 4 Cash Related Activities

a
Sharmaine Esquilla, IT Service

Statement of Cash Flows
For the Period Ended December 31,2019
CASH FLOW FROM OPERATING

ACTIVITIES
Cash receipts from rendering services ₱207,500.00
Cash Payment to suppliers of Goods
and services -₱150,000.00
Net Cash flow from operating
activities ₱57,500.00
CASH FLOW FROM INVESTING

ACTIVITIES
Purvhase of Property, Plant and
Equipment -₱30,000.00
Net Cash flow from Investing
activities -₱30,000.00
CASH FLOW FROM FINANCING
ACTIVITIES
Proceeds from cash investment of
owners ₱1,500,000.00
Proceeds from bank
loans ₱100,000.00
Payment to owners -₱25,000.00
Net Cash flow from financing
activities ₱1,575,000.00
Net Increase in
Cash ₱1,602,500.00
Cash at the beginning of the period ₱250,000.00
Cash at the end of the
period ₱1,852,500.00
Figure 5. Cash Related Activities

a
Apply what you have learned
Activity A. Answer the following questions.

Balance Sheet Question
Question 1: Categorize the following accounts as to whether they’re Asset, Liability, of
Owners’ Equity accounts.
 Common Stock:
 Accounts Receivable:
 Retained Earnings:
 Cash:
 Notes Payable:
Question 2: For each of the following assets or liabilities, state whether it is current or
non-current:
 Accounts Payable:
 Cash:
 Property, Plant, and Equipment:
 Note Payable:
 Inventory:
Question 3: Categorize the following cash flows as to whether they are operating,
investing, or financing activities:
 Taxes paid
 Dividends paid to shareholders
 Interest paid on loans

a
 Dividends received on investments

 Cash sales
 Purchase of new office furniture
WorkSheet 1
The Income Statement
Question 1: Given the following information, calculate TVL Corp’s Net Income:
 Sales: 360,000
 Cost of Goods Sold: 200,000
 Salaries and Wages: 30,000
 Rent Expense: 25,000
 Advertising Expense: 45,000
 Cost of repairs resulting from fire: 60,000
Question 2: Using the above information, calculate TVL Corp’s Operating Income.
Question 3:Using the above information, calculate TVL Corp’s Gross Profit
The Cash Flow Statement

Question 1: Calculate cash flow from operating activities using the following information:
 Cash sales: 20,000
 Credit sales: 25,000
 Cash received from prior credit sales: 9,000
 Rent paid: 4,000

a
 Inventory purchased: 7,000

 Wages paid: 6,000
WorkSheet 1.1
Calculate the given problem:
1. If a business owns a piece of real estate worth 250,000 and they owe 180,000 on a
loan for that real estate what is owners’ equity in the property?
2. ICT Co. has current assets of 50,000 and total assets of 150,000. ICT has current
liabilities of 30,000 and total liabilities of 80,000. What is the amount of ICT’s owner’s
equity?
Assessment
Direction: Read and understand the following statements. Choose the
letter of the correct answer. Write it on the space provided.
________1. It is a formal statement that presents the financial condition of the
business as a specific date.
A. Balance Sheet C. Income Statement
B. Financial Statement D. Cash Flow Statement
________2. A formal record of the financial activities and position of the business.

a
________3. These are items of value owned by the enterprise.

A. Liabilities B. Assets C. Expenses D. Profit
________4. CASH, ACCOUNT RECEIVABLE, SUPPLIES are list of what

classification of balance sheet.
________5. These are amounts owed by the business. These are classified as
current and long term obligation.
________6. LAND, BUILDING, MACHINER are examples of _________ assets.

________7. It refers to obligations that are expected to become due with the
normal operation cycle.
A. Net Profit/Net Loss C. Income Statement
B. Long-term liabilities D. Current liabilities
________8. It refers to money borrowed from banks and financial institutions that
are to be paid for a long period that the normal accounting cycle.
________9. It is known as Statement of Profit and Loss.

________10. The result after the deduction expenses to the revenue.


a
Reflection
Self-Check
The final section of the lesson would be a self-check or self-evaluation of the

learner to see if he/she has understood the unit enough to see it working in their own
lives. It is also a way of closing out the unit by reiterating the objectives and seeing
whether these were met upon completion of the unit by the learner. In the skills column,
you can state here the competencies the learners’ should have achieved at the end of the
unit.
Check As an Entrepreneur, I can…
Reflect
Finding solution to the problem...
Today I have learned that ________________________________________________________.
I find __________________________ the most interesting because ______________________.
I got ____ checks because _______________________________________________________.
I need to improve on _______________________because _____________________________.
I need to practice _________________________ because _____________________________.

a
I plan to _____________________________________________________________________ .
Reference:
Website:
---. ProcessMaker, www.processmaker.com/blog/the-5-keys-to-successful-bpm-implementation/.
“How Long Should You Keep Financial Records? | Eversign.” Eversign Blog, 7 Nov. 2018,
blog.eversign.com/how-long-to-keep-financial-records/. Accessed 16 Aug. 2020.
Book:
Guzman, I. D. (2016). The Young Entrepreneur. Quezon City: Golden Cronica Publishing.
Jr., E. M. (2016). Entrepreneurship . Manila: Rex Book Store.
Macatangay, L. (2015). Entrepreneurship. Makati: Don Bosco Press.


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Republic of the Philippines

(“The 5 Keys to Successful Business Process (BPM) Implementation”)

Introduction WORDS YOU WILL

- identify the reasons for keeping business records;

MEYCAUAYAN NATIONAL HIGH SCHOOL FLORIE S. ASUNAN 1

Lesson 2 Financial Records

1. Which one of the following items is not found on a Balance Sheet?

2. Which accounting system most accurately reflects profitability?

3. An account receivable is:

4. Which of the following is most important to the daily operations of a business?

MEYCAUAYAN NATIONAL HIGH SCHOOL FLORIE S. ASUNAN 2

 Financial statement or financial report is a formal record of the financial

Assets = Liabilities + Owner’s Equity

Elements of Balance Sheet or Statement of Financial Position

Classification of Balance Sheet

MEYCAUAYAN NATIONAL HIGH SCHOOL FLORIE S. ASUNAN 3

Gulong ng Palad Vulcanizing

Non Current Assets

Total Assets ₱180,000.00

LIABILITIES AND OWNERS EQUITY

Non- Current Liabilities

Total Liabilities and Owner's Equity ₱180,000.00

Figure 1 Statement of Financial Position or Balance Sheet

MEYCAUAYAN NATIONAL HIGH SCHOOL FLORIE S. ASUNAN 4

Income Statement or Statement of Comprehensive Income

Key Features of Statement Comprehensive Income

Tumangan Accounting Services

Professional Fee ₱500,000.00

Figure 2 Example Format of Statement Comprehensive Income

MEYCAUAYAN NATIONAL HIGH SCHOOL FLORIE S. ASUNAN 5

Statement of Changes in Owner's Equity

Gabayno Capital Beginning ₱100,000.00

Figure 3 Statement of Comprehensive Income

Figure 4 Cash Related Activities

MEYCAUAYAN NATIONAL HIGH SCHOOL FLORIE S. ASUNAN 6

Sharmaine Esquilla, IT Service

CASH FLOW FROM OPERATING

CASH FLOW FROM INVESTING

Figure 5. Cash Related Activities

MEYCAUAYAN NATIONAL HIGH SCHOOL FLORIE S. ASUNAN 7

Apply what you have learned

Activity A. Answer the following questions.

MEYCAUAYAN NATIONAL HIGH SCHOOL FLORIE S. ASUNAN 8

 Dividends received on investments

The Cash Flow Statement

MEYCAUAYAN NATIONAL HIGH SCHOOL FLORIE S. ASUNAN 9

 Inventory purchased: 7,000

MEYCAUAYAN NATIONAL HIGH SCHOOL FLORIE S. ASUNAN 10

________3. These are items of value owned by the enterprise.

________4. CASH, ACCOUNT RECEIVABLE, SUPPLIES are list of what

________6. LAND, BUILDING, MACHINER are examples of _________ assets.

________9. It is known as Statement of Profit and Loss.

________10. The result after the deduction expenses to the revenue.

MEYCAUAYAN NATIONAL HIGH SCHOOL FLORIE S. ASUNAN 11

The final section of the lesson would be a self-check or self-evaluation of the

Check As an Entrepreneur, I can…

Finding solution to the problem...

Today I have learned that ________________________________________________________.

I find __________________________ the most interesting because ______________________.

I got ____ checks because _______________________________________________________.

I need to improve on _______________________because _____________________________.

I need to practice _________________________ because _____________________________.

MEYCAUAYAN NATIONAL HIGH SCHOOL FLORIE S. ASUNAN 12

6. LAND, BUILDING, MACHINER are examples of _ assets.

I find ____ the most interesting because .

I got checks because ___________________________________________________.

I need to improve on _because _______.

I need to practice _ because _____.