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Module 2: Introduction To Business and Accounting

This document provides an overview of Module 2: Introduction to Business and Accounting for the BA 2001 Accounting for Non-Accountants course. The key topics covered include defining a business, classifying different types of businesses as manufacturing, merchandising, or service, identifying forms of business organization such as sole proprietorship, partnership, and corporation, discussing stakeholders of a business, explaining the role of accounting in communicating business information to stakeholders, and introducing the importance of business ethics. The overall goal is to illustrate basic accounting concepts that will help students make personal and business decisions.

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Darwin Aniar
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0% found this document useful (0 votes)
41 views7 pages

Module 2: Introduction To Business and Accounting

This document provides an overview of Module 2: Introduction to Business and Accounting for the BA 2001 Accounting for Non-Accountants course. The key topics covered include defining a business, classifying different types of businesses as manufacturing, merchandising, or service, identifying forms of business organization such as sole proprietorship, partnership, and corporation, discussing stakeholders of a business, explaining the role of accounting in communicating business information to stakeholders, and introducing the importance of business ethics. The overall goal is to illustrate basic accounting concepts that will help students make personal and business decisions.

Uploaded by

Darwin Aniar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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BA 2001 Accounting for Non-Accountants

1st Semester, AY 2021-2022


September 27 to October 7, 2021

Module 2: Introduction to Business and Accounting

Overview

Do you use accounting? Yes, we all use accounting information in one form
or another. For example, when you think about buying a phone, you use
accounting information to determine whether you can afford it. Similarly, when
you decided to enroll in college, you considered the costs (school fees, load
allowance, gadgets, and so on). Most likely, you also thought about the benefits
(the ability to obtain a good-paying job or starting your own business).

Is accounting vital to you? Yes, accounting is essential in your personal


life and career, even if you become an accountant. For example, you may become
a manager of a pizza business who is deciding to buy new delivery vehicles.
Accounting information about that pizza business will be a significant factor in
your decision to acquire the cars and the bank's decision to finance the
purchase.

The primary objective of this module is to illustrate the basic accounting


concepts that will help you make personal and business decisions.

Learning Outcomes

After studying this lesson, you should be able to:


1. describe the nature of a business (LO1);
2. classify different types of business (LO2);
3. differentiate forms of business organizations (LO3);
4. Identify different groups of business and discuss their need for
information (LO4);
5. explain the role of accounting in business (LO5); and
6. discuss the importance of business ethics (LO6);

This material has been prepared and communicated to you by or on behalf of


Palawan State University - Narra for educational purposes only.
DO NOT REPRODUCE OR COMMUNICATE.

Prepared by Darwin O. Aniar, MA, FIM PSU – Narra| 1/7


BA 2001 Accounting for Non-Accountants
1st Semester, AY 2021-2022
September 27 to October 7, 2021

Let Us Explore

Nature of Business (LO1)

Name an example of a business. Your example might be a large company


such as Apple, Google, or McDonald's. It might be a local company, such as
Jollibee, SM Mall, or Palawan Pawnshop. These examples are all businesses, but
what do they have in common that identifies them as businesses?

In general, a business is an organization where basic resources (inputs),


such as materials and labor, are assembled and processed to provide goods and
services (outputs) to customers. Business come in all sizes, from local coffee
house to a Samsung, which sells several billions of dollars worth of mobile
phones each year. The customers of a business are individuals or other
businesses who purchase goods and services in exchange for money or other
items of value.

The objective of most businesses is to maximize profits. Profit is the


difference between the amounts received from the customers for goods or
services provided and the amounts paid for the inputs used to produce goods or
services.

Types of Businesses (LO2)

There are three types of businesses that are operated for profit:
manufacturing, merchandising and service business. Each type of business has
unique characteristics.

Manufacturing businesses change basic inputs into products that are sold to
individual consumers. Examples of manufacturing businesses and some of their
products are shown below:

Manufacturing Business Product


Ford Cars
Nestle Breakfast Cereals
Krispy Kreme Doughnuts
Unilab Medicines
This material has been prepared and communicated to you by or on behalf of
Palawan State University - Narra for educational purposes only.
DO NOT REPRODUCE OR COMMUNICATE.

Prepared by Darwin O. Aniar, MA, FIM PSU – Narra| 2/7


BA 2001 Accounting for Non-Accountants
1st Semester, AY 2021-2022
September 27 to October 7, 2021

Merchandising businesses also sell products to customers. However, they do


not make products but purchase them from other businesses (such as
manufacturers). In this sense, merchandisers bring products and customers
together. Examples of merchandising businesses and some of the products they
sell are shown below.

Merchandising Business Products


Robinson’s Department Store General Merchandise
Mercury Drug Medicines

Service businesses provide services rather than products to customers.


Examples of service businesses and the type of services they offer:

Service Businesses Service


Disney Entertainment
Philippine Airlines Transportation
GCash Mobile Financial Services
Smart Telecommunication

It's your turn:

Identify five businesses in your immediate community that is classified as:

Manufacturing Merchandising Service

Forms of Business Organization (LO3)

A business is normally organized in one of the different forms: sole


proprietorship, partnership, or corporation. In the following paragraphs, a brief
description is presented below.

One individual owns a sole proprietorship. A great majority of businesses in the


Philippines is a sole proprietorship.

This material has been prepared and communicated to you by or on behalf of


Palawan State University - Narra for educational purposes only.
DO NOT REPRODUCE OR COMMUNICATE.

Prepared by Darwin O. Aniar, MA, FIM PSU – Narra| 3/7


BA 2001 Accounting for Non-Accountants
1st Semester, AY 2021-2022
September 27 to October 7, 2021

A partnership is owned by two or more persons who bind themselves together to


contribute money, property, or industry to a common fund with the intention of
dividing profit among themselves.

A corporate is a legal form of business created by the operation of law.

Business Stakeholders (LO4)

A business stakeholder is a person or entity that has an interest in the economic


performance of the business.

The following are the different stakeholders of a business:

Owners. They have invested resources in the business and are therefore
interested in how the business performs. They want to get the most economic
value for their investment; thus, they want the business to be profitable.

Managers. They are the individuals who the owners have authorized to operate
the business. They are evaluated based on the economic performance of the
business.

Employees. They provide services to the business in exchange for payment. They
have an interest in the economic performance of the business because their jobs
depend upon it.

Customers. They have an interest in the continued success of a business. For


example, if Apple Computer were to fail, customers might not get hardware and
software for their computers.

Creditors. They invest resources in the business by extending credit. They are
interested in the industry, mainly how well the company must generate enough
cash to pay them.

Government. The government regulates the conduct of the business. It issues


permits and licenses and collects taxes. In performing those functions, they need
financial information from the company.

This material has been prepared and communicated to you by or on behalf of


Palawan State University - Narra for educational purposes only.
DO NOT REPRODUCE OR COMMUNICATE.

Prepared by Darwin O. Aniar, MA, FIM PSU – Narra| 4/7


BA 2001 Accounting for Non-Accountants
1st Semester, AY 2021-2022
September 27 to October 7, 2021

The Role of Accounting in Business (LO 5)

You may think of Accounting as the "language of business." This is because


accounting is how business information is communicated to the users.

In providing information to stakeholders, accounting follows specific steps:


1. Identify stakeholders. Who needs information is the question to be
answered in this stage?
2. Assess stakeholders' information needs. At this point, the kind of
information needed by the stakeholders will be identified.
3. Design Accounting Information System. The information system will be
designed based on stakeholders' needs.
4. Record Economic Data about business activities and events. The system
will now process economic activities and events.
5. Prepare Financial Statement for intended users. Financial statements are
means by which financial information is communicated to the users. There
are different types and forms of financial statements prepared to depend
on the users' needs.

Business and Ethics (LO 6)

Ethics are the moral principles that guide the conduct of individuals. Regardless
of differences among individuals, proper ethical conduct implies behavior that
considers the impact of one's actions on society and others. In other words,
proper ethical conduct means that you not only think about what's in your best
interests but also what's in the best interest of others.

Ethical conduct is good for business. Business people should work within an
ethical framework. Although an ethical framework is based on individual
experiences and training, there are a number of sound principles that form the
foundation for ethical behavior.

1. Avoid small lapses. Minor ethical lapses may appear harmless in and of
themselves. Unfortunately, such lapses can compromise your works.
Minor ethical lapses can build up and lead to a more significant
consequence at a later point in time.
2. Focus on your long-term reputation. One characteristic of an ethical
dilemma is that it places you under severe short-term pressure. The moral
dilemma is created by the stated or unstated threat that the failure to "go
along" may result in undesirable consequences. You should respond to
ethical dilemmas by removing focus from the short-term pressures and

This material has been prepared and communicated to you by or on behalf of


Palawan State University - Narra for educational purposes only.
DO NOT REPRODUCE OR COMMUNICATE.

Prepared by Darwin O. Aniar, MA, FIM PSU – Narra| 5/7


BA 2001 Accounting for Non-Accountants
1st Semester, AY 2021-2022
September 27 to October 7, 2021

instead focusing on long-term reputation. Your reputation is precious. You


will lose your effectiveness if your reputation becomes tarnished.
3. Expect to suffer adverse personal consequences for holding to an ethical
position. In some unethical organizations, managers have endured career
setbacks for not budging to their moral jobs. Some managers have
resigned from their positions because they could not support management
in what was perceived as unethical behavior.

Let Us Wrap Up

Businesses are organizations that are operated primarily for profit. There
are three major types of business organizations, manufacturing, merchandising,
and the service business. As to legal form, we have the sole proprietorship,
partnership, and corporation. There are different stakeholders, namely the
owners, the managers, employees, customers, and the government. An
accounting information system is designed to provide stakeholders timely and
relevant information; thus, the following steps are undertaken to ensure that
purpose is served. Identification of stakeholders, determining the needs of the
stakeholders, designing the information system, recording economic
transactions and events, and preparing financial statements. Ethics plays a vital
part in business because it sets the framework that guides the conduct of people
in the organization.

This material has been prepared and communicated to you by or on behalf of


Palawan State University - Narra for educational purposes only.
DO NOT REPRODUCE OR COMMUNICATE.

Prepared by Darwin O. Aniar, MA, FIM PSU – Narra| 6/7


BA 2001 Accounting for Non-Accountants
1st Semester, AY 2021-2022
September 27 to October 7, 2021

Let Us Assess

Answer the following questions using your own words (and not from the
Google).

1. Describe a business. (5 points)


2. Give one example of a business from each type. (3 points each)
3. Differentiate sole proprietorship, partnership and corporation. (10
points)
4. Give two stakeholders of a business and explain their interest in the
business. (5 points each)
5. What is the relation of accounting in business? (10 points)
6. Why is ethics important in business? (5 points)

Write your answer on the Google Form uploaded in the assessment section
of the topic.

References

Fees, Philip E., Reeves, James M., Warren C.S, ACCOUNTING 19e, 2016,
United States of America, Southwestern College Publishing (pp. 1-9)

This material has been prepared and communicated to you by or on behalf of


Palawan State University - Narra for educational purposes only.
DO NOT REPRODUCE OR COMMUNICATE.

Prepared by Darwin O. Aniar, MA, FIM PSU – Narra| 7/7

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