MODULE 2 ACC11

1. FUNDAMENTAL BUSINESS MODEL

o A successful business needs to develop a better products or services that a customer must be satisfied
and will pay.
o The business requires investments to enable to operate and pay for the infrastructure, equipment and
personnel

o
This illustrates how the business will be structured to operate. The five (5) activities of this model will be
discussed further below:

1. The investors will provide the required capital for business and this will be deposited to the bank.
2. The cash will be used to convert another assets that will be used in business (e.g. equipment and
machineries) or sold (e.g. inventory) or spent on an operating costs such as salaries, rent and utilities.
3. The combination of resources provides a basis for producing the products and services to customers.
4. The sales the product and services will generate an assets called receivables. Then it will be collected
and provides a cash inflow of the business.
5. If the banks lend money to the company, the bank collection will gives an inflow to the debt providers
with the interest. The company will earn profit and then pay taxes to the government. The rest of the
cash or the net profit after tax will be used for the next set of operation of the company or be returned
to the owners as return on investments.

2. TYPES OF BUSINESS

The fundamental business model will not vary there are infinite ways to apply it and provides range of
products and services to customers. The products and services categories are discussed below:

 Service providers are hiring skilled workers and selling their time in return for a fee. ( TALYER, REPAIRE
SHOP)
 Trader are those buying and selling products and made them available directly to the ultimate
customers. (SARI-SARI STORE)
 Manufacturer are those involve is transforming raw materials with the help of labor and overheads into
finished products and sell the finish product to customers. ( GAWAAN NG SASAKYAN)
 Infrastructure this involves in selling utilization and occupying the infrastructure and often it includes
service.
  Raw Materials involves in growing or extracting raw materials such as mining and farming.
 Financial this involves accepting or receiving deposits and lending or receiving money and paying them
interest or the debtors will pay interest.
 Insurance this involves in collecting cash for a pooling of premiums to meet the claims in the future. The
company will invest the money to pay the claims.
The tree main type of business
 Service business – it is a company that provide intangible gods or product that can't be touch- to
their customer. (i.e. airlines, banks, financial insurance and etc.)
 Merchandising business – sells tangible product to their customer and buy tangible products.
They need to tock inventory and constantly tract their customers. (i.e. supermarket and groceries
stores, sari-sari store, and bookstores and etc.)
 Manufacturing business – uses raw materials, labor, and machinery to assemble or create finishes
goods. (i.e. apple, sony, nestly and etc.)

3. FORMS OF BUSINESS ORGANIZATION

There are Four (4) forms of business organizations:

Sole Proprietorship- a business owned by a single person.

Partnerships- business owned and operated by two or more person

Corporations - business owned by its stockholders. artificial being created by the operation of law

Cooperatives - autonomous association of persons united voluntarily to meet their common economic, social,
and cultural needs and aspirations through a jointly-owned enterprise

4. MICRO, SMALL AND MEDUM ENTERPRISES

Republic Act No. 9501 on May 23, 2008

 small enterprises signed into law by President Gloria Macapagal-Arroyo. The law address
problems facing MSMEs
 , banks and lending institutions are now required to allocate 10% of their total loan portfolio to
MSMEs
 micro enterprises - those company with assets before financing of 3 million or less and employ not more
than 9 workers.
- 8%
 small enterprises - are those companies with assets before financing of 3 million to 15 million and
employ 10 to 99 employees.
- 8%
 medium enterprises- those companies having an assets before financing of above 15 million to 100
million and employ 100 to 199 workers
- 2%

5. ACTIVITIES IN BUSINESS ORGANIZATION

three (3) types of business organizational
  Financing activities- activities that the business will obtain financial resources from the financial markets
and how they manage and use it to produce goods and services
 Investing activities - is the transformation of the resources obtained from one form to a different form
that are more valuable to meet the needs of the people.
- also involve selection and management of long-lived assets or long-term
resources that are used to develop, produce and sell goods and services
 Operating activities - those activities that involves the use of resources to design, produce,
distribute and market goods and services

6. PURPOSE AND PHASES OF ACCOUNTING

The Accounting Function
 part of a broader business system that handles the financial operations of the business but also
provides information and advice to other departments
 It processes the business transactions that are economic activities of the business.
 Significant function of accounting is recording to produce report report that are aid of the
management in planning, controlling and decision making to comply with the regulations of the
statutory bodies.

The Phases of Accounting

 Measuring is - the assignment of peso amounts or values to the transactions to be recorded.
 (recognition issue accountant must decide when the transaction occurred
 (valuation issue) what is the value of the place on the transaction
 classification issue) how component of the transactions should be classified
 Classifying - is the process of reducing the numerous transactions into useful groups or categories.
 Summarizing is the process of preparation of financial statements and summarized the effects of
the transactions occurred in the period
 Interpreting - process of analyzing the results of the operations to evaluate the liquidity,
profitability and solvency of the business organization

7. PACIOLI’S DOUBLE-ENTRY BOOKKEEPING SND ITS EVOLUTION

The book of Fra Luca Pacioli three (3) essential things that a successful merchants need.

1. Sufficient cash or credit;

2. A good bookkeeper; and

3. Accounting system.

 The book introduces that every debet dare (should give) there exists a debet habere (should have or
should receive
 three books that are used by the business to record and keep economic events.

1. MEMORANDUM - is the book in which all the transactions are recorded, in the
currency which they are conducted and the time it was conducted and prepared in a
chronological order.
- walay amount nga e record
- dili sya ma measure, walay appropriet nga amount nga ma record
 - narrative description of the business’s economic activities.
2. JOURNAL- is the merchants’ private book and the last book
3. LEDGER - alphabetical listing of all the business accounts along with the running
balance of each particular accounts.

The two main reason why the recording system devised lasted for so long?

1. It provides accurate record of what happened to a business over a period of time.

2. The information from the system will help the owners to operate the business much more effectively.

. The system introduced by Pacioli also adapted the modern business approach that can satisfy the demand
of information from two main sources.

1. From the owners

2. From the managers