Business SENIOR

HIGH
Finance SCHOOL

Projected Statement of Income, Self-Learning

Module

Financial Position, and Cash Flow 9

Quarter 3
Business Finance
Quarter 3 – Module 9: Projected Statement of Income, Financial Position, and
Cash Flow
First Edition, 2020

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 Business SENIOR
HIGH

Finance SCHOOL

Self-Learning
Module

9
Quarter 3
Projected Statement of
Income, Financial Position,
and Cash Flow
Introductory Message

For the Facilitator:

Welcome to the Business Finance Self-Learning Module on Projected

Statement of Income, Financial Position, and Cash Flow!

This Self-Learning Module was collaboratively designed, developed and

reviewed by educators from the Schools Division Office of Pasig City headed by its
Officer-in-Charge Schools Division Superintendent, Ma. Evalou Concepcion A.
Agustin, in partnership with the City Government of Pasig through its mayor,
Honorable Victor Ma. Regis N. Sotto. The writers utilized the standards set by the K
to 12 Curriculum using the Most Essential Learning Competencies (MELC) in
developing this instructional resource.

This learning material hopes to engage the learners in guided and independent
learning activities at their own pace and time. Further, this also aims to help learners
acquire the needed 21st century skills especially the 5 Cs, namely: Communication,
Collaboration, Creativity, Critical Thinking, and Character while taking into
consideration their needs and circumstances.

In addition to the material in the main text, you will also see this box in the
body of the module:

Notes to the Teacher

This contains helpful tips or strategies that
will help you in guiding the learners.

As a facilitator you are expected to orient the learners on how to use this
module. You also need to keep track of the learners' progress while allowing them to
manage their own learning. Moreover, you are expected to encourage and assist the
learners as they do the tasks included in the module.
 For the Learner:

Welcome to the Business Finance Self-Learning Module on Projected

Statement of Income, Financial Position, and Cash Flow!

This module was designed to provide you with fun and meaningful
opportunities for guided and independent learning at your own pace and time. You
will be enabled to process the contents of the learning material while being an active
learner.

This module has the following parts and corresponding icons:

Expectations - This points to the set of knowledge and skills

that you will learn after completing the module.

Pretest - This measures your prior knowledge about the lesson

at hand.

Recap - This part of the module provides a review of concepts

and skills that you already know about a previous lesson.

Lesson - This section discusses the topic in the module.

Activities - This is a set of activities that you need to perform.

Wrap-Up - This section summarizes the concepts and

application of the lesson.

Valuing - This part integrates a desirable moral value in the

lesson.

Posttest - This measures how much you have learned from the
entire module.
 EXPECTATIONS

At the end of this module, you are expected to:

1. define financial statement; projected statement of income; financial
position and cash flow;
2. identify the components of financial statements; and
3. illustrate the formula and format of projected statement of income;
financial position; and cash flow.

PRETEST

Directions. Read the questions and encircle the letter of your answer.

1. The following are components of financial statements. Which component

of financial statements also known as the Balance Sheet?
A. Statement of Income C. Statement of Account
B. Statement of Cash Flow D. Statement of Financial Position

2. This is a component of a financial statement that measures the activities of cash

receipts and a cash payment of the business refers to:
A. Statement of Income C. Statement of Account
B. Statement of Cash Flow D. Statement of Financial Position

3. A company disposes of equipment that is no longer needed in the business.

The amount received by the company is more than the amount
the asset is carried in the accounting records. The company will report a(n)
A. Gains C. Profits
B. Loss D. Revenues

4. This is composed of two elements to show whether the company was able to
generate enough revenue to cover expenses for business operations.
A. Statement of Income C. Statement of Account
B. Statement of Cash Flow D. Statement of Financial Position

5. What categories of cash flow involving a company’s receiving cash from a bank
loan?
A. Operating Activities C. Financing Activities
B. Investing Activities D. None of the above
 RECAP
You learned from previous lessons that budgeting is an important and useful
tool in making the company financially secure. What are the steps or things to
consider in formulating the budget?

LESSON

Projected financial statements are a tool of the company to set an overall goal of
what the company’s performance and position will be for and as of the end of the
year. It sets targets to control and monitor the activities of the company.
The following are components of Financial Statements being forecasted or
projected periodically by a typical business:
1. Projected Income Statement is an estimate of the financial results that you will
see how a business profitable in the future. Whether the company was able to
generate enough revenue to the cover expenses of running the business. It reports
on the making and selling activities of a business over a predetermined period,
typically a month, quarter, or a year. This is composed of two elements are:
• Income: What the business has earned over a period. Examples are sales revenue,
dividend income, etc.
• Expenses: Are the cost incurred by the business to generate revenue over a period.
Examples are salaries and wages, depreciation, rental charges, etc.

Sales/Revenue - Expenses =Net Income or Net Loss

Example: Marikit is an online business of mask with headband for P120. The cost
of a mask with headband is P80. Marikit’s revenue is P120, her cost of goods
sold (expense) is P80, and her net income is P40.
Multiple Step Income statement Format:

(Company Name)
Projected Income Statement
For the year Ending Dec. 31, ____
Net Sales xxx
Less: Cost of of Good Sold (xxx)
Gross Profit xxx
Less: Operating Expenses (xxx)
Operating Income xxx
Less: Miscellaneous (xxx)
Income before taxes xxx
Less: Taxes (xxx)
Net Income xxx

XYZ Company
Projected Income Statement
For the year ending Dec. 31,
(all figures in Peso)
2019 2018 2017 2016 2015
Net Sales 5,250,000 4,770,000 4,310,000 3,910,000 3,547,000
Cost of Sales 4,305,000 3,959,100 3,663,500 3,128,000 2,979,480
Gross Profit 945,000 810,900 646,500 782,000 567,520
Operating Expenses 314,750 297,890 246,231 221,500 217,538
Operating Income 630,250 513,010 400,269 560,500 349,982
Interest Expense 250,000 250,000 250,000 450,000 300,000
Income before taxes 380,250 263,010 150,269 110,500 49,982
Taxes 114,075 78,903 45,078 33,150 14,995
Net Income 266,175 184,107 105,191 77,350 34,987

2. Projected Statement of Financial Position, also known as the Balance Sheet,

presents the financial position of an entity at a given date. It is summarized by the
accounting equation which must always be in balance.

Assets = Liabilities + Shareholder’s Equity

Three Categories of Accounts

1. The Asset is a resource with economic value that an individual, corporation,
or country owns or controls with the expectation that it will provide a future
benefit. Examples are Cash, Account Receivable, Land, Equipment, Construction
in Progress, Inventory, Plant and Machinery, Patents, Copyrights, etc.
=
2. Liabilities. A liability is something a person or company owes to its
creditors, usually some of money. Recorded at the right side of the balance
sheet. Liabilities includes Notes Payable, Accounts Payable, Bank Loans,
Unearned Revenue, Mortgages, Unearned Revenues, etc.
3. Owner’s Equity (Stockholder’s Equity or Shareholder’s Equity) is the
define as the proportion of the total value of a company’s assets that can be
claimed by its owner. It is calculated by deducting all liabilities from the total
value of an asset ( Equity = Assets - Liabilities).

(Company Name)
Projected Statement of Financial Position
For the Month of Dec. 31, ______

Asset
Current Assets
Cash xxx
Receivables xxx
Inventories xxx
Other current assets xxx
Total Current Assets xxx
Non-current Assets
Property,Plant, Equipment,net xxx
Other Non Current Asset xxx
Total non Current Asset xxx
Total Assets xxx
Liabilities and Equity
Current Liabilities xxx
Notes payable (external funds needed) xxx
Trade payables xxx
Income taxes payable xxx
Current portion of long-term debt xxx
Other current liabilities xxx
Non-current Liabilities
Long-term debt, net of current portion xxx
Total liabilities xxx
Stockholders’ equity
Capital stock xxx
Retained earnings xxx
Total stockholders’ equity xxx

Total liabilities and stockholders’ equity xxx

 XYZ Company
Projected Statement of Financial Position
As of Dec 31, _____
(all figure in Peso)

2019 2018 2017 2016 2015

Asset
Current Assets
Cash 1,060,000 990,000 770,000 760,000 880,000
Receivables 2,300,500 1,921,000 1,722,000 1,454,000 1,396,000
Inventories 4,850,000 4,500,000 3,797,000 3,290,000 3,350,000
Other current assets 1,050,000 980,000 984,000 735,000 988,000
Total Current
9,260,500 8,391,000 7,273,000 6,239,000 6,614,000
Assets
Non-current Assets
Property,Plant,
2,440,000 2,260,000 1,810,000 1,870,000 1,900,000
Equipment,net
Other Non Current
835,689 925,681 896,842 876,235 827,490
Asset
Total non Current
3,275,689 3,185,681 2,706,842 2,746,235 2,727,490
Asset
Total Assets 12,536,189 11,576,681 9,979,842 8,985,235 9,341,490
Liabilities and
Equity
Current Liabilities
Notes payable
(external funds
needed)
Trade payables 5,050,000 4,756,000 4,130,000 3,300,000 2,870,000
Income taxes
28,520 19,725 11,270.00 8,290 3,750
payable
Current portion of
2,250,000 2,500,000 1,000,000 2,000,000 2,000,000
long-term debt
Other current
85,600 28,700 40,990 30,688 37,890
liabilities
Non-current
Liabilities
Long-term debt, net
2,000,000 1,250,000 0 1,000,000 3,000,000
of current portion
Total liabilities 9,414,120 8,554,425 5,182,260 6,338,978 7,911,640
Stockholders’ equity
Capital stock 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
Retained earnings 2,122,069 2,022,256 3,797,583 1,646,257 439,850
Total stockholders’
3,122,069 3,022,256 4,797,583 2,646,257 1,439,850
equity
Total liabilities and
stockholders’ 12,536,189 11,576,681 9,979,842 8,985,235 9,351,490
equity
3. Projected Statement of Cash Flows defined as a listing of expected activities
involving cash inflows and outflows for an upcoming period (usually a year). The
direct method of forecasting cash flow relies on this simple over all formula:

Cash Flow = Cash Received - Cash Spent

Three Categories of Cash Flows
1. Operating Activities refers to the day-to-day general activities to run the
business. Activities like purchasing inventory for cash, selling inventory for cash,
paying cash for a business license, paying cash for utilities, etc.
2. Investing Activities refers to the purchase and sale of assets that last longer than
one year. Examples are purchasing land for cash, selling property for cash, etc.
3. Financing Activities refers to the cash transactions involving a company’s long-
term creditors or owners. Examples are receiving cash from a bank loan, receiving
cash for dividends, paying cash for the principal on a loan.

(Company Name)
Statement of Cash Flow
For years ending Dec 31, ____
(all figures in Peso)

Cash Flow from Operations

XYZ Company
Net
Projected Statement of Financial Position xxx
Earnings
For the years ending Dec. 31, 2019
Add:

Depreciation(all figure in Peso) xxx

Cash Flow from Operations
Decrease in Accounts Receivable xxx
Net Earnings 2,500,000
Increase in Accounts Payable xxx
Add:
Increase in Taxes Payable xxx
Depreciation 12,000
Less:
Decrease in Accounts Receivable 17,000
Increase in Inventory (xxx)
Increase in Accounts Payable 17,000
Net Cash from Operations xxx
Increase in Taxes Payable 3,000
Cash Flow from Investing
Less:
Equipment (xxx)
Increase in Inventory (35,000)
Cash Flow from Financing
Net Cash from Operations 2,514,000
Notes Payable xxx
Cash Flow from Investing
Cash Flow For the year ending
Less: Equipment xxx(550,000)
Dec. 31, _______
Cash Flow from Financing

Add: Notes Payable 12,000

Cash Flow For the year ending Dec. 31, ______ 1,976,000
 ACTIVITIES

Directions. Prepare a single-step Income Statement For the year ended Dec. 31,
2019, at space provided below.

Malinao Bakey shows the following data:

Sales Revenue 100,000.00

Cost of Good Sold 30,000.00

Utilities Expense 500.00

Salaries 20,000.00

Rent Expense 50,000.00

Advertising 1,500.00

Income tax 1,000.00

Question: How much the is net profit or income of Malinao Bakery for the year 2019?

Answer:
 WRAP-UP

In this lesson, you learned:

1. What is a financial statement?

2. What are the components of financial statements being forecasted?
3. How each component of financial statements presented?

VALUING

1. Why is knowledge of financial statements is important in studying finance?

2. As a student, do you think you need these tools?
 POSTTEST

Directions. Read the questions and encircle the letter of your answer.

1. The amounts earned by a company in its operating activities known as:

A. Gains C. Profits
B. Loss D. Revenues

2. This is one of the categories of account that always recorded at the right side of
the Balance Sheet.
A. Asset C. Owner’s Equity
B. Liabilities D. Stock Holder’s Equity

3. The income statement format the line gross profit will appear in which income
statement format?
A. Single-step C. Multiple-step
B. Double-step D. None of the above

4. Another name for the balance sheet is

A. Statement of Income C. Statement of Cash Flow
B. Statement of Operations D. Statement of Financial Position

5. The purchase of a new delivery van to be used in the business. What

categories cash flow this pertain to?
A. Operating Activities C. Financing Activities
B. Investing Activities D. None of the above
 Malinao Bakery
Income Statement
For the year Ended December 31,
2019
(All amount in Peso)
Sales Revenue 100,000.00
Expenses:
Cost of Good Sold 30,000.00
Utilities 500.00
Salaries 20,000.00
Rent 5,000.00
Advertising 1,500.00
Income tax 1,000.00
Net Profit 42,000.00
Post-Test Pre-Test
1. D 1. D
2. B 2. B
3. C 3. A
4. D 4. A
5. B 5. C
1. D
KEY TO CORRECTION
 References
Business Finance Teachers Guide

https://www.allbusiness.com>u….

https://accountng-simpified.com>...

https://www.investopedia.com>terms

https://www.extension.purdue.edu>…