Fundamentals of Accounting, Business and Management

College of Business and Accountancy

 Fundamentals of Accounting, Business and Management
College of Business and Accountancy

TABLE OF CONTENTS
CHAPTER 1: BASIC CONCEPT OF E-COMMERCE AND INTERNET MARKETING
Lesson Objectives
Content
Activity
CHAPTER 2: BRANCHES OF ACCOUNTING
Lesson Objectives
Content
Activity
CHAPTER 3: USERS OF INFORMATION, TYPES AND FORMS OF BUSINESS
Lesson Objectives
Content
Activity
CHAPTER 4: ACCOUNTING CONCEPTS AND PRINCIPLES, IFRS FRAMEWORK
Lesson Objectives
Content
Activity
CHAPTER 5: THE ACCOUNTING EQUATION AND THE DOUBLE ENTRY SYSTEM
Lesson Objectives
Content
Activity
CHAPTER 6: THE SIMPLE T-ACCOUNT
Lesson Objectives
Content
Activity
CHAPTER 7: RECORDING BUSINESS TRANSACTIONS
Lesson Objectives
Content
Activity
CHAPTER 8: WORKSHEET, FINANCIAL STATEMENTS
Lesson Objectives
Content
Activity
CHAPTER 9: ADJUSTMENT ARE JOURNALIZED AND POSTED
Lesson Objectives
Content
Activity
CHAPTER 10: MERCHANDISING OPERATIONS
Lesson Objectives
Content
Activity
 Fundamentals of Accounting, Business and Management
College of Business and Accountancy

CHAPTER 1: ACCOUNTING AND ITS ENVIRONMENT

OBJECTIVES
• Evaluate the given scenario using the Accounting Policies

Accounting

Accounting is a service activity. Its function is to provide quantitative information,

primarily financial in nature, about economic entities that is intended to be useful in
making economic decisions. The accounting function is part of the broader business
system, and does notoperate in isolation. It handles the financial operations of the
business but also providesinformation and advice to other departments.

Let us now discuss the function of accounting in business.

SCENARIO:

Mr. Juan is a retired government employee who is good at baking. One day he
decides to put up a bakery shop in your barangay. He renovates a portion of his house to
serve as the area for the production of bread. He purchases baking equipment and raw
materials to produce five different types of bread. Mr. Juan also hires Jose to help him
with the baking and, at the same time, to be in-charge of sales. Mr. Juan pays Jose on a
weekly basis. Every day, Mr. Juan’s wife deposits the daily cash sales in their bank
account at XY Savings Bank. With the help of accounting, what possible decisions or
questions of Mr. Juan can accounting provide an answer to?
 Fundamentals of Accounting, Business and Management
College of Business and Accountancy

As a business student answer the following questions:

• Is my business earning? (profitability)
Yes, my business is earning.
_____________________________________________________________________
• How much daily or monthly sales do I need in order to recover my fixed cost? (break-
even)
Conservatively, my daily sales must be 2.2 times of my daily of operational expenses.
_____________________________________________________________________
• Do I need to hire additional workers to help me with my production?
It will depend on the number of orders that needs to be delivered per day.
_____________________________________________________________________

• Can I afford to set up a new store in another place? Where do I get the funds?
At the moment, it is not possible to setup a new store in another place.
_____________________________________________________________________
• Can I afford to pay a bank loan?
I will only consider a bank loan if i will be expanding or putting up another store
location. For now, I will not take a bank loan even if I can afford it.

Prepare a reflection paper about the different functions of Accounting.

Accounting plays multiple functions

in the world of finance and business
through accurate measurement and
reporting. Accounting serves to
record transactions, assess
profitability, evaluate financial
position, facilitate decision making,
ensure compliance, support
performance evaluation, external
reporting, auditing, stakeholder
communication, and contribute to
social and environmental
responsibility. Understanding the
diverse functions of accounting is
essential not only for finance or
accounting professionals but also
for individuals in financial
management and decision-making
roles within organizations.
 Fundamentals of Accounting, Business and Management
College of Business and Accountancy

CHAPTER 2- BRANCHES OF ACCOUNTING

OBJECTIVES
• Differentiate the branches of accounting.

Branches of Accounting

Conduct a research and compile at least two transactions in line with each Accounting
Branches
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
_________________________________________________________
1. Financial Accounting:
Transaction 1: ABC Corporation records the sale of goods to a customer on credit
for ₱10,000. The entry in the financial accounting records would be: Accounts
Receivable (Asset) ₱10,000 Sales Revenue (Income) ₱10,000
Transaction 2: XYZ Company issues a bond to raise capital for expansion. The entry
in the financial accounting records would be: Cash (Asset) ₱50,000 Bonds Payable
(Liability) ₱50,000

2. Managerial Accounting:
Transaction 1: The production manager of ABC Manufacturing analyzes the
production costs for a particular product line. The manager calculates the variable
and fixed costs and prepares a cost-volume-profit analysis to determine the
breakeven point.
Transaction 2: The marketing manager of XYZ Retailers analyzes the sales data to
identify the most profitable products and the least profitable ones. Based on this
analysis, the manager decides to allocate more marketing resources to the
profitable products to maximize revenue.

3. Cost Accounting:
Transaction 1: ABC Manufacturing determines the cost of manufacturing a batch of
100 units of a product. The cost accountant calculates the direct materials cost,
direct labor cost, and manufacturing overhead cost for the batch.
Transaction 2: XYZ Construction calculates the cost of a construction project. The
cost accountant considers direct costs like labor, materials, and equipment, as well
as indirect costs like overhead, to determine the total project cost.

4. Tax Accounting:
Transaction 1: ABC Corporation prepares and files its annual income tax return,
calculating its taxable income based on accounting principles and relevant tax
regulations.
Transaction 2: XYZ Enterprises claims tax deductions for eligible business
expenses, such as employee salaries, rent, and business-related travel.

5. Auditing:
Transaction 1: An external audit firm conducts a financial statement audit for ABC
Corporation, reviewing the company's financial records and statements to ensure
accuracy and compliance with accounting standards.
Transaction 2: An internal audit team within XYZ Company performs a risk
assessment and internal control review to identify areas where potential risks and
weaknesses may exist in the organization's processes.
6. Forensic Accounting:
Transaction 1: A forensic accountant investigates allegations of financial fraud at
ABC Corporation. The accountant analyzes financial data and transactions to
identify any irregularities and potential fraudulent activities.
Transaction 2: A forensic accountant assists law enforcement agencies in tracking
and tracing funds related to a money laundering case at XYZ Bank. The accountant
analyzes financial records and transactions to uncover the source and destination
of illicit funds.

7. Fiduciary Accounting:
Transaction 1: The trustee of a trust account manages the assets and investments
on behalf of the beneficiaries. The fiduciary accountant keeps detailed records of
all transactions, income, and expenses related to the trust.
Transaction 2: An executor of a deceased individual's estate manages and
distributes the assets of the estate to the heirs and beneficiaries. The fiduciary
accountant maintains records of all estate transactions and prepares periodic
financial statements.

8. Fund Accounting:
Transaction 1: A nonprofit organization receives donations for a specific program,
such as a scholarship fund. The fund accountant records all contributions and
expenses related to the scholarship program separately from other funds held by
the organization.
Transaction 2: A government agency manages a fund allocated for a public
infrastructure project. The fund accountant tracks all revenues and expenditures
related to the project to ensure compliance with budgetary constraints and funding
restrictions.
 Fundamentals of Accounting, Business and Management
College of Business and Accountancy

Prepare a Venn Diagram that is composed of similarities and differences of each

BRANCHES OF ACCOUNTING.
 Financial Accounting focuses on the
preparation and presentation of
financial statements for external
users like investors and regulators.

Human Resource Accounting involves Management

the measurement and reporting of the Accounting provides
value of human resources and their internal financial
impact on the organization's financial information to aid in
performance. managerial decision-
All branches of accounting involve
making and control
the use of financial data and
within an
information.
organization.
They contribute to decision-making
processes in organizations.
They require adherence to
accounting principles and standards.
They play a role in the overall
financial management and reporting
of an organization.

Social Responsibility Cost Accounting deals

Accounting is concerned with the determination and
with reporting on the social allocation of costs to
and environmental impact products or services to
of an organization's help in pricing and
operations and activities. budgeting decisions.
 Fundamentals of Accounting, Business and Management
College of Business and Accountancy

CHAPTER 3: USERS OF INFORMATION, TYPES AND FORMS OF BUSINESS

OBJECTIVES

• Create a distinct distinction between the users of Accounting Information

• Classify the different types of Business Organization

FORMS OF BUSINESS

Sole Proprietorship
The simplest and most popular form of business. We can call it
an unincorporated company. In this, an individual owns and runs
the business to make profits.

Partnership
It is a business owned by two or more people.A partnership could
be general and limited. In a general partnership, all partners invest
the funds (money, property, and labor) and are 100% liable for all
business debts, collectively as well as individually.

Corporation
A separate entity in the eyes of the law, i.e., separate from
the owners. It also means that the income of the corporation
is taxed independently of the shareholders/owners.
Fundamentals of Accounting, Business and Management
College of Business and Accountancy
 1

Apple Inc. -
Corporations
6 2

Jiejie Posonegro Coca-Cola Company

Services - Sole - Corporations
Prorietorship

5 3

Rica G & V Balut at Deloitte & Touche -

Penoy - Sole Partnership
Prorietorship 4

SGV & Co. -

Partnership
 Fundamentals of Accounting, Business and Management
College of Business and Accountancy

CHAPTER 4: ACCOUNTING CONCEPTS AND PRINCIPLES

OBJECTIVES

• Expound the fundamental of accounting concepts and principles

• State the purpose of conceptual framework

The Accounting Concepts and Principle

GOING CONCERN PRINCIPLE

TIME PERIOD PRINCIPLE

OBJECTIVITY PRINCIPLE

COST PRINCIPLE

ACCRUAL ACCOUNTING PRINCIPLE

MATCHING PRINCIPLE

DISCLOSURE PRINCIPLE

CONSERVATISM PRINCIPLE

MATERIALITY PRINCIPLE

Direction: Enlist all the Accounting Standards that is being used in the Philippines.
______________________________________________________________________
______________________________________________________________________
 Fundamentals of Accounting, Business and Management
College of Business and Accountancy

Directions: Create a RESEARCH PAPER that consist of all the organization and people
who are involved in preparing the Philippine Accounting Standards. As well as the
people behind the Generally Accepted Accounting Principles.
 Fundamentals of Accounting, Business and Management
College of Business and Accountancy

CHAPTER 5: THE ACCOUNT

ING EQUATION AND THE DOUBLE

OBJECTIVES
• Compute the Basic Accounting Equation

ACCOUNTING EQUATION

Direction: Create a table of Effects on your Asset, Liability, and Owner's Equity with its
corresponding amount
1. The owner invested cash of PHP150,000 or the business earned PHP150,000 cash
from providing services.
2. Purchased equipment at PHP20,000 for cash.
3. The owner withdrew cash of PHP112,500 or the business incurred PHP112,500
expenses and paid in cash.
4. The company purchased supplies on account.
5. The owner withdrew cash of PHP15,000 or the business incurred PHP15,000
expenses and paid in cash.
6. Paid liabilities worth PHP53,000.
7. The owner withdrew supplies worth PHP8,000 or the business used supplies worth
PHP8,000.
Fundamentals of Accounting, Business and Management
College of Business and Accountancy
 Fundamentals of Accounting, Business and Management
College of Business and Accountancy

JULY 1, 2022
Directions:
Paolo Reyes started a delivery JULY 2, 2022
Prepare a Chart service on July 1, 2022. The
of Accounts on Reyes borrowed
following transactions occurred
your Asset, PHP100,000
during the month of July. He
cash from PNB
Liability, and invested PHP 800,000 cash
for use in his
Owner's Equity and Cars amounting to PHP
business.
200,000.

JULY 18, 2022 JULY 15, 2022 JULY 7, 2022

JULY 20, 2022 Various equipment Bought tables a
Reyes made a
The account due w nd chairs from
cash withdrawal as purchased on
to Fortune was of PHP5,000 for account from Oro can and
paid in cash. personal use. Fortune for paid
PHP55,000 PHP45,000
 Fundamentals of Accounting, Business and Management
College of Business and Accountancy

CHAPTER 6: THE SIMPLE T-ACCOUNT

OBJECTIVES

• Analyze the account (the Simple T-account) and its uses.

• Apply debit and credit method.
• Prepare a journal entry and a simple T-Accounts

THE T-ACCOUNTS
 Fundamentals of Accounting, Business and Management
College of Business and Accountancy

Mr. Laban Dyer opened his laundry business in Iloilo City on January 2, 2022. The
following transactions occurred during the month of January 2022:
 Fundamentals of Accounting, Business and Management
College of Business and Accountancy

CHAPTER 7: RECORDING BUSINESS

OBJECTIVES

• Analyze and explain in brief the sequential steps in the accounting cycle.
• Apply the revenue and expense recognition principles.

ACCOUNTING CYCLE

Step 1: Identification of events to be recorded.

Step 2: Transaction are recorded in the journal.
Step 3: Journal Entries are Posted to the Ledger
Step 4: Preparation of Trial Balance
Step 5: Preparation of the Worksheet including adjusting
entries. Step 6: Preparation of the financial statements
Step 7: adjusting journal entries are journalized and posted.
Step 8: closing journal entries are journalized and posted.
Step 9: Preparation of a post-closing trial balance
Step 10: Reversing Journal Entries are Journalized and posted.
 Fundamentals of Accounting, Business and Management
College of Business and Accountancy

Directions: Prepare the following: Journal Entry, T– Accounts and Trial Balance

Refer on the sample format attached:

Fundamentals of Accounting, Business and Management
College of Business and Accountancy
 Fundamentals of Accounting, Business and Management
College of Business and Accountancy

CHAPTER 8: WORKSHEET FINANCIAL

OBJECTIVES
•
Prepare accurately and in good form ten-column worksheet.

The Accounting Worksheet

This worksheet is simply about plotting the items in the unadjusted trial balance on
the worksheet. In a manual accounting system, a worksheet is a large columnar sheet
of paper specifically designed to conveniently arrange all the accounting information
required at the end of a period. The body of the worksheet contains five pairs of money
columns. A sample of a worksheet is shown below.
 Fundamentals of Accounting, Business and Management
College of Business and Accountancy

Prepare a 10 For transaction

IT'S TIME FOR column references, refer to
COMPUTATION W ORKSHEET your ACTIVITY 7.

LET'S COMPUTE
MORE
This activity is related to
Be guided with the Activity 8.1
Accounting
Standards

Prepare the following:

-Income Statement
-Statement of Financial
Position
 Fundamentals of Accounting, Business and Management
College of Business and Accountancy

CHAPTER 9: ADJUSTMENT ARE JOURNALIZED AND POSTED

OBJECTIVES
• Prepare accurately and in good form a ten-column worksheet.
• Understand and appreciate the usefulness of financial statements.
• Develop skills in the preparation of financial statements.

Adjusting Entries and Closing Entries

ADJUSTMENT ARE JOURNALIZED AND POSTED

The adjustment process is a key element of accrual basis accounting.
CLOSING ENTRIES ARE JOURNALIZED AND POSTED
The income, expense, withdrawal (equity) accounts are called temporary accounts or
nominal accounts. They are called temporary because they accumulate the transactions
of only one accounting period. At the end of this accounting period, the changes in
owner’s equity accumulated in these temporary accounts are transferred into the owner’s
capital account.

Compute the depreciation expense for the following

independent cases. Use the straight-line method of
depreciation. 1. Pedro Reyes purchased a delivery
vehicle on January 1, 2022 amounting to PHP250,000.
It is estimated that the vehicle will be useful for 10 years.
The vehicle can be sold for PHP10,000 at the end of its
useful life. If the accounting period being reported by
Pedro is one (1) year from January – December 2022,
how much is the depreciation expense?
____________________________________________
____________________________________________
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 Fundamentals of Accounting, Business and Management
College of Business and Accountancy

For each of the following items, write the journal entry first (if one is needed)
to record the transactions; and then the adjusting entry, if any is required, for
the end of the accounting year of Ron Car Rental Company on December
31, 2022. On December 1, borrowed PHP300,000 cash from Nation Bank
by issuing a promissory note with an interest of 12% per annum payable in
three months.
___________________________________________________________
_________________________________________________________
On December 1, paid rental for six months beginning December 1, 2016 to
May 31, 2023, at PHP3,000 per month
___________________________________________________________
___________________________________________________________
On December 31, 2022, received telephone bills for the month December
amounting to PHP5,600. The bill will be paid on January 2023
___________________________________________________________
_________________________________________________________________________._ _______
On December 31, 2016, received telephone bills for the month December amounting to
PHP5,600. The bill will be paid on January 2017
______________________________________________________________________
_______________________________________.
 Fundamentals of Accounting, Business and Management
College of Business and Accountancy

CHAPTER 10: MERCHANDISING OPERATIONS

OBJECTIVES

• Create a general journal. General ledger, Unadjusted Trial Balance, and an

Income Statement

Merchandising
Merchandise (or merchandise inventory) refers to goods that are held for sale to
customers in the normal course of business. This includes goods held for resale.

JOURNALIZING THE TRANSACTIONS IN A MERCHANDISING BUSINESS

STEP 1: Transactions are identified and measured.

STEP 2: The Preparation of Journal Entries (Normalization)

A company had the following transactions during December:

• Sold merchandise on credit for PHP5,000, terms 3/10, n/30. The items sold had a cost
of PHP3,500.
• Purchased merchandise for cash, PHP72
• Purchased merchandise on credit for PHP2,600, terms 1/20, n/30.
• Issued a credit memorandum for PHP300 to a customer who returned merchandise
purchased on November 29. The returned items had a cost of PHP210.
• Received payment for merchandise sold on December 1.
• Received a credit memorandum for the return of faulty merchandise purchased on
December 4 for PHP600.
• Paid freight charges of PHP200 for merchandise ordered last month (FOB shipping
point).
• Paid for the merchandise purchased on December 4, less the portion that was returned.
• Sold merchandise on credit for PHP7,000, terms 2/10, n/30. The items had a cost of
PHP4,900.
• Received payment for merchandise sold on December 24.

Required:
Prepare the general journal entries to record these transactions using a perpetual
inventory system. (Record all purchases initially at the gross invoice amount)