MODULE

3:
4 M’s IN RELATION
BUSINESS OPPORTUNITY,
BUSINESS
IMPLEMATION,
BOOKKEEPING
 FOUR(4) M's OF PRODUCTION

The most serious issues in the whole production system are

the inputs and the transformation process.

■Manpower
■Method
■Machine
■Material
 Manpower - Talks about human labor force
involved in the manufacture of products.

 Material - Talks about raw materials

necessary in the production of a product.
  Machine - Discussed about manufacturing
equipment used in the production of goods or
delivery of services

 Method - Production method is the process or way of

transforming raw materials to finished products.
 PRODUCT DESCRIPTION

It is the promotion that explains what a

product is and why it's worth purchasing?

- To provide customer with details the

features and benefits of the
product so they're obliged to buy.
 PROTOTYPING
A duplication of a product as it will be produced, which may
contain such details as color, graphics, packaging and
directions. One of the important early steps in the inventing
process is making a prototype.

Protesting of the product or services is similar to a sample

of the product or given to the consumer free of cost that he
or she may try the product before committing to a purchase.
 SUPPLIER
It is an entity that offers goods and services to
another business. This entity is supply chain of a
business, which may offer the main part of the
value within it’s product

Suppliers - are your business partners; without them your

business will not live. You need them as much as you want
your customer to be satisfied. You have to choose a
potential supplier that has loyalty and value your partnership.
Value Chain - is a method or activities by which a
company add a value to an item, with
production, marketing and the provision of the
after-sales service.

Supply Chain - is a structure of organizations, people,

activities, data, and resources involved
in moving a product or service from supplier to
customer.
GUIDELINES FOR SUCCESSFUL
BUSINESS PLAN IMPLEMENTATIO

• Objectives
• Tasks
• Time Allocation
• Progress
 The following are basic requirements to start a business in the
Philippines:
● Securities and Exchange Commission (SEC) Registration
● Department of Trade and Industry (DTI) Registration
● Mayor's Business Permit
● Bureau of Internal Revenue (BIR) Registration
● SSS, PhilHealth, and Pag-ibig Fund Registration

Other steps to follow before operating a business are as follows:

1. Set up an accounting system or hire an accountant

2. Advertise the business
3. Secure insurance for the business
 Keeping Business Records
Good record keeping can help protect the business, measure the
performance and maximize profit. Records are the source
documents, both physical and electronic that specify the transaction
dates and amounts.

A systematic recording allows you

to ;
1. Plan and work more efficiently
2. Meet legal and tax requirements
3. Measure profit and performance
4. Protect your rights
5. Manage potential risks
 BOOKKEEPING
What is Bookkeeping?

Bookkeeping is the starting point of the

accounting process. It is the process of recording
business transactions in a systematical and
chronological manner.

It is chronological because the transactions are

recorded in order of the date of occurrence. It
is systematic because it follows procedure and
principles.
 What is a Bookkeeper?
Each business has a Bookkeeper who is in-charge to record,
maintain and update business records from all sorts of financial
transactions using account title.

Bookkeeping function dictates the

bookkeeper to keep track of all financial
transactions of the business.

Bookkeeper uses the Book of

Account to record the business
transactions.
 What is a Book of Account?

The book of accounts are composed of the Journal and Ledger.

It depends on the type of business.

There are two (2) types of books used in recording business

transactions.

• Journal - refers to the book of original entry

• Ledger - refers to the book of final entry.
 What is a General Journal?
The general journal is the most basic journal which provides columns for
date, account titles and explanations, folio or references and a separate
column for debit and credit entries.

Depicted in figure 1 below is a sample format of a general

journal:
 What is a General Ledger?
The general ledger is a grouping of all accounts directly traceable to chart
of accounts. These accounts will be reflected as a summary of all financial
activities that have taken place as recorded in the general journal and
subsidiary ledgers.

Depicted in figure 2 below is a sample format of a general

ledger:
 What is a Subsidiary Ledger?

The subsidiary ledger is a group of accounts directly

associated from the general ledger. This is created to
maintain individual accounts for customers and vendors
whose cash is not being used as a medium of exchange when
purchasing or selling merchandise.
Depicted in figure 3 and 4 below is a sample format of a subsidiary ledgers Account
Receivable and Accounts Payable respectively:
 The Rules of Debit and Credit
In the process of journalizing, following the rules of Debit and Credit are
essential part to ensure accurate recording and sound decision making.
Debit abbreviated as DR while CR for Credit.
When to Debit?
- When cash or non-cash items are received, the said cash or
non-cash must be recorded in the debit column. This means
that the debit balance increased. It is called Value Received.

When to Credit?
- When cash or non-cash items are given, the said cash or non-
cash items must be recorded in the credit column: This means
that the credit balance increased. It is called Value Parted
With.
 The following steps will be undertaken in determining account
balances for every account title such as cash, account receivable,
etc.:
1. Add all the debit side to generate total
debit.
2. Add all the credit side to generate total
credit.
3. Subtract total debit to the total credit.
4. Determine the balance of each account.
picted in figure 5 below is a matrix of normal debit and credit balances of Five Major Accounts:
In order to fully understand the concept of debit and credit balances, depicted in figure 6
below is a matrix of normal debit and credit balances under each of the five major
accounts:
 TRIAL BALANCE

Trial balance is a list of all ledger accounts with closed or final

balances on a certain period arranged according to the rules
of debit and credit. The debit and credit columns must be
equal in total amount. This is the first report prior to financial
statement preparation.
Depicted in figure 7 below is a sample format of a trial balance report with
peso amount:
As you can observed, the accounts reflected in
figure 7 beside are arranged according to the
proper placement of the five major accounts.

On the other hand, the trial balance report has two

phases.

1. Unadjusted trial balance - report of all

balances after the posting of the general ledger
accounts

2. Adjusted trial balance - is a final report of

trial balance after all necessary adjustments in
journal entries are posted in the general ledger
 What is an Adjusting
Entry?
Making an adjusting entry helps the bookkeeper capture
all financial events happened over a period of time within
the accounting cycle. It is essential in keeping the
financial record updated. Outlined below are the five
basic sources of Adjusting Entries:

1. Depreciation expense
2. Deferred expenses of prepaid expenses
3. Deferred income of unearned income
4. Accrued expenses of accrued liabilities.
5. Accrued income or accrued assets
1. Depreciation

This is a method of allocating the cost of an asset to an expense

over the accounting periods that make up the asset’s useful life.
Depreciation can also be referred to as the decrease in the
usefulness of these types of assets.
The depreciation expense is an allocated for all sixed assets except
land.
2. Deferred Expenses or Prepaid
Expenses
These are items that have been initially recorded as assets but are
expected to become expenses over time or through the operations
of the business. In order to recognize the correct amount of
expenses, prepayments shall be amortized weekly, semi-monthly or
monthly, depending on its nature and purpose.
3. Deferred income of unearned income
These are items that have been initially recorded as liabilities but are
expected to become income over time or through the operations of
the business.

4. Accrued Expenses of accrued liabilities

These are items of expenses that have been incurred but have not
been recorded and paid.

5. Accrued Expenses of Accrued Liabilities

These are income items that have been earned but have not been
recorded and paid by the customer. In short, these are receivables of
the business.
 INCOME STATEMENT
This statement is one of the major financial report. Also known as profit and loss
statement or statement of comprehensive income. This statement summarizes
the results of company’s operations for a specific period of time.

The different parts of Income statement are:

• The heading or title of

report
• Name of the company
• Date or period covered
Major parts are:

• Income or revenues - consist of all income received within the

period upon provision of services for service-concern business and
sales for merchandising
• Expenses - money spent during the conduct of business operations
• Net income/net - loss the outcome of business operations.
 BALANCE SHEET
Also known as the statement of financial position. This statement summarizes the
total balances of assets, liabilities, and owner’s equity. In general, it provides the
financial condition of the business on a specific date.

The balance sheet is composed of Permanent accounts. Permanent in nature

because their balances remain intact and will be forwarded from one period to
another.

The different parts of balance sheet are:

•The heading or title of
report
• Name of the company
• Date or period covered
Major parts are:
• Assets (Current and Non-current)
• Owner’s Equity or Capital
 Current Assets
Assets that can be realized (collected, sold, used
up) one year after year-end date. Examples include
Cash, Accounts Receivable, Merchandise Inventory,
Prepaid Expense, etc.

Current Assets - are arranged based on which asset can be

realized first (liquidity). Current assets and current liabilities are
also called short term assets and shot term liabilities
 Non-Current Assets
Assets that cannot be realized (collected, sold, used up) one year after yearend d

 Liabilities (Current and Non-current)

Current Liabilities - Liabilities that fall due (paid, recognized

as revenue) within one year after year end date.

Non-Current Liabilities - Liabilities that do not fall due (paid,

recognized as revenue) within one year after year- end date.
 Owner’s Equity or Capital
Capital is an item of balance sheet wherein the capital or interest of the
owner of the business is listed. Initial withdrawal of capital will be recorded in
a drawing account of the owner and will be reflected as a deduction to the
capital balance.

Profitability has always been the overall goal of the business. It is of

great achievement in a successful implementation of strategic, operating
and other plans. In identifying the profit or loss of a business, the business
will record every detail of all business transactions and translate it into
financial report. and, most of all the net profit or net loss as a result of
business operations over a specified period of time.
REPORTERS: