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Module 3 - Org and Management

The document discusses accounting concepts, principles, and standards. It provides an overview of key accounting concepts like the business entity concept, going concern principle, and time period principle. It also discusses accounting principles such as objectivity, cost, and accrual. Finally, it mentions that accounting standards like GAAP and PFRS are used to ensure consistency and comparability in financial reporting. The overall purpose is to establish the foundational rules and guidelines that govern the accounting process.

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Alvin Dairo
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31 views3 pages

Module 3 - Org and Management

The document discusses accounting concepts, principles, and standards. It provides an overview of key accounting concepts like the business entity concept, going concern principle, and time period principle. It also discusses accounting principles such as objectivity, cost, and accrual. Finally, it mentions that accounting standards like GAAP and PFRS are used to ensure consistency and comparability in financial reporting. The overall purpose is to establish the foundational rules and guidelines that govern the accounting process.

Uploaded by

Alvin Dairo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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FUNDAMENTALS OF

ACCOUNTANCY, BUSINESS and


MANAGEMENT 1
Name: _______________________________
Grade and Section: ____________________

Module 3: Accounting Concepts, Principles, and Standards


(3rd Quarter, 2nd Semester)
Accounting concepts, principles, and assumptions are essential in the practice of accountancy. Financial
statements become more comparable and more useful to users if these concepts, principles, and assumptions are
followed by businesses. We can look at these as a set of rules that govern the accounting process.
Accounting concepts, principles, and assumptions serve as the foundation of accounting in order to
avoid misunderstanding and enhance the understanding and usefulness of the financial statements.

From this module, you will find the following lessons:

Lesson 1: Accounting Concepts and Principles


Lesson 2: Accounting Standards

LEARNING OBJECTIVES
Upon successful completion of this module, you will be able to:
1. explain the varied accounting concepts and principles (DepEd-MELC, DICES); and
2. solve exercises on accounting principles as applied in various cases. (DepEd-MELC,
DICES)

PRE-ASSESSMENT

Directions: Read the text below carefully and answer the question that follows.

Petness First Petshop

Juan dela Cruz opens his pet shop business called Petness First Petshop. He opens a bank account for his
business and deposits PHP500,000. The business earns PHP50,000 but he has doubts about the recorded
expenses. He is not sure if he should include the following items as expenses:

Salary expense 20,000


Rent expense 10,000
Utilities expense (at home) 15,000
Utilities expense (at the store) 10,000
Insurance expense 5,000
Withdrawals 10,000
TOTAL 70,000
What do you think are the items which should not be listed as expenses of the business? Explain your answer.
FUNDAMENTALS OF
ACCOUNTANCY, BUSINESS and
DAY 1 MANAGEMENT 1
Lesson No.: 1
Lesson Title: The Accounting Concepts and Principles
Learning Target: The learners will be able to explain the varied accounting concepts and
principles. (DepEd-MELC, DICES)
Values/Graduate Attribute: The learners will become critical thinkers and wise in balancing
daily expenditures against limited earnings and resources with God’s creation, good followers of
the rules given and better understand the concepts of accounting as well as its limitation.
References: Florendo, J. G. (2016). Fundamentals of Accountancy, Business and Management 1 ;
Frias, S. A. & Pefianco, E. C. (2016). Fundamentals of Accountancy, Business and Management:
A Textbook in Basic Accounting 1; and Teaching Guide for Senior High School

Concept Notes:

Accounting Principles
 Business Entity – A business enterprise is separate and distinct from its owner or
investor.
 Going concern principle – Business is expected to continue indefinitely.
 Time period principle – Financial statements are to be divided into specific time
intervals.
 Monetary unit principle – Amounts are stated into a single monetary unit.
 Objectivity principle – Financial statements must be presented with supporting evidence.
 Cost principle – Accounts should be recorded initially at cost.
 Accrual Accounting Principle – Revenue should be recognized when earned regardless
of collection, and expenses should be recognized when incurred regardless of payment.
 Matching principle – Cost should be matched with the revenue generated.
 Conservatism principle – It is also known as prudence. In case of doubt, assets and
income should not be overstated, while liabilities and expenses should not be understated.
 Materiality principle – In case of assets that are immaterial, the company should instead
record it as an expense.

Examples:

1. Philippine companies are required to report financial statements annually. (Time Period)
2. Jollibee should report financial statements in pesos even if they have a store in the United
States. (Monetary Unit)
3. When the business pays rent in advance for two years. (Going Concern)
4. If the owner has a barber shop, the cash of the barber shop should be reported separately
from personal cash. (Business Entity)
5. When you provide tutorial services to a customer, and there is a transportation cost
incurred related to the tutorial services, it should be recorded as an expense for that period.
(Matching)
6. When the customer paid Jollibee for their order, Jollibee should have a copy of the receipt
to represent as evidence. (Objectivity)
7. When you are in doubt if the expenses totaled P50,000, you should record it higher than
P50,000. (Conservatism)
FUNDAMENTALS OF
ACCOUNTANCY, BUSINESS and
8. When the barbershop MANAGEMENT 1
receives an electricity bill, it should be recorded it as an expense even if it is unpaid.
(Accrual)
9. When Jollibee buys a cash register, it should be recorded as the cash register at its price
when it was bought. (Cost)
10. A school purchased an eraser with an estimated useful life of three years. Since an eraser
is immaterial relative to assets, it should be recorded as an expense. (Materiality)

DAY 2

Lesson No.: 2
Lesson Title: Accounting Standards
Learning Target: The learners will be able to solve exercises on accounting principles as applied in
various cases. (DepEd-MELC, DICES)
Values/Graduate Attribute: The learners will become critical thinkers and wise in balancing daily
expenditures against limited earnings and resources with God’s creation, good followers of the rules given
and better understand the concepts of accounting as well as its limitation.
References: Florendo, J. G. (2016). Fundamentals of Accountancy, Business and Management 1; Frias,
S. A. & Pefianco, E. C. (2016). Fundamentals of Accountancy, Business and Management: A Textbook in
Basic Accounting 1; and Teaching Guide for Senior High School

Concept Notes:

GAAP (Generally Accepted Accounting Principle) consists of principles, standards, rules, and
guidelines that companies follow to achieve consistency and comparability in their financial statements.

PFRS (Philippine Financial Reporting Standards) are the standards used in the Philippines
issued by the PFRSC (Philippine Financial Reporting Standards Council) which corresponds to IFRS
(International Financial Reporting Standards) and PAS (Philippine Accounting Standards) that
corresponds to IAS (International Accounting Standards).

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