Republic of the Philippines

Department of Education
Region IV – A CALABARZON
Paaralang Sekundarya ng Heneral Nakar
Brgy. Anoling General Nakar, Quezon

Fundamentals of Accountancy and Business Management 1

Name: _______________________________________________ Score: ___________________

Section: _________________ Date: ___________________

TOPIC: USERS OF ACCOUNTING

Directions : What external users will ask or answer the following questions.
_______ 1.Is it profitable for me to invest in this business?
A. Banks b. potential investors c. BIR d. DOLE
_______ 2.If extend a loan to this company, will it be able to pay this loan?
A. Banks b. potential investors c. BIR d. DOLE
_______ 3. Do I extend credit to this company? For how long?
A. Banks b. potential investors c. supply d. DOLE
_______ 4. Is the owner paying the correct taxes?
A. Banks b. potential investors c. BIR d. DOLE
______ 5. Are the employees paid according to what the law states? Do they get the benefits required?
A. Banks b. potential investors c. BIR d. DOLE
_______ 6.. Does this company have sufficient resources to pay its loan?
A. Banks b. potential investors c. BIR d. DOLE
_______ 7. A Users of accounting information are those who are involved in planning, organizing and running the business.
A. Banks b. potential investors c. external users d. internal users
_______ 8. A users of accounting information are those individuals or organizations outside a company who are interested in its
financial information.
A. Banks b. potential investors c. external users d. internal users

Potential Investors – Is it profitable for me to invest in this business? Banks – If extend a loan to this company, will it be able to
pay this loan? Does this company have sufficient resources to pay its loan? Suppliers – Do I extend credit to this company? For
how long? BIR – Is the owner paying the correct taxes? DOLE – Are the employees paid according to what the law states? Do
they get the benefits required?
Internal users of accounting information are those who are involved in planning, organizing and running the business. They need
more detailed information on a timely basis in order to support their decisions. Examples of these internal users are managers,
employees and owners.
The external users of accounting information are those individuals or organizations outside a company who are interested in its
financial information.
TOPIC: FORMS OF BUSINESS ORGANIZATIONS,
The following are the advantages of a one form of business. Tell whether what business form are mention below.
a. Sole /Single Proprietorship b. Partnership c. Corporation d. Cooperatives
_______ 1. The owner keeps all the profits.
_______ 2. The owner makes all the decisions.
_______ 3. It is easy to form and operate.
_______ 4. The life of the business is limited to the life of the owner.
_______ 5. Once the owner dies, the business will cease to operate under the name of the proprietor.
_______ 6. The amount of capital is limited only by the wealth of the proprietor.
_______ 7. A form of business owned by two or more persons.
_______ 8. The details of the arrangement between the partners are outlined in a written document called articles of partnership.
_______ 9. Profits are divided among partners based on their agreed sharing.
_______ 10. The owner is called a partner
_______ 11. It is easy to operate like a sole/single proprietorship
_______ 12. The profits are divided among the partners.
_______ 13. A partner can be held liable for the acts of the other partners.
_______ 14. In a lawsuit, the personal properties of the partners can be held beyond their contributions and may be used to answer
for any liability of the partnership
_______ 15. A corporation is a business organized as a separate legal entity (artificial person) under the corporation law with
ownership divided into transferable shares of stocks
_______ 16. Emphasize that it is the law (Corporation Code of the Philippines) that creates a corporation.
_______ 17. The corporation begins its existence from the date the Articles of Incorporation is approved by the Securities and
Exchange Commission (SEC).
_______ 18. The SEC (Securities and Exchange Commission) is the government agency primarily tasked to regulate private
corporations in the Philippines.
_______ 19. The owners are called stockholders or shareholders.
_______ 20. The word ‘Corporation/Incorporation/Corp./Inc.’ appears in the name of the entity.
_______ 21. The voting rights of a shareholder is generally based on the percentage of ownership.
_______ 22. The management of the business is delegated by the shareholders to the Board of Directors
_______ 23. The ownership is divided into shares and the value of one share may be denominated at a smaller amount, for
example at PHP10 per share.
_______ 24. The proof of ownership is evidenced by a stock certificate.
_______ 25. A cooperative is a duly registered association of persons with a common bond of interest, voluntarily joining together
to achieve their social, economic and cultural needs.
_______ 26. The owners are called members who contribute equitably to the capital of the cooperative.
_______ 27. The members are expected to patronize their products and services.
_______ 28. The word ‘cooperative’ appears in the name of the entity.
_______ 29. This form of business organization is regulated by the Cooperative Development Authority (CDA
Enjoys certain tax exemption privilege
_______ 30. Promotes the concept of sharing resources

TOPIC: TYPES OF BUSINESS ACCORDING TO ACTIVITIES, PARTICULARLY:

Direction: Identify if it is : a. service business b. merchandising business

c. manufacturing business d. HYBRID OR mixed business
_______ 1. Provides services to customers
_______2.. Sells goods to customers
_______ 3. Raw materials are available
_______ 4. Goods to be sold are purchased from a supplier
_______ 5. Goods to be sold are produced by the company itself
_______ 6. Supplies are used, no goods to be sold
_______ 7. Bakery 8. Barber shop 9. Cellphone store
1_______ 8.Abenson appliances

Key Answers (1) service (2) either merchandising or manufacturing (3) manufacturing (4) merchandising (5) manufacturing (6)
service (7) manufacturing (8) service (9) merchandising (10) merchandising

TOPIC: ACCOUNTING PRICIPLES

_______ 1.The accounting guideline that requires financial statement information to be supported by independent, unbiased
evidence other than someone's belief or opinion is the:
a. Business entity principle b. Monetary unit principle c. Going-concern principle
d. Cost principle e. Objectivity principle
_______ 2. The principle that requires every business to be accounted for separately and distinctly from its owner or owners is
known as the:
a. Objectivity principle b. Business entity principle c. Going-concern principle
d. Revenue recognition principle e. Cost principle
_______ 3. The rule that requires financial statements to reflect the assumption that the business will continue operating instead of
being closed or sold, unless evidence shows that it will not continue, is the:
a. Going-concern principle b. Business entity principle c. Objectivity principle
d. Cost Principle e. Monetary unit principle
_______ 4. To include the personal assets and transactions of a business's owner in the records and reports of the business would
be in conflict with the:
 a. Objectivity principle b. Realization principle c. Business entity principle
d. Going-concern principle e. Revenue recognition principle
_______ 5. The objectivity principle:
a. means that information is supported by independent, unbiased evidence
b. means that information can be based on what the preparer thinks is true
c. means that financial statements should contain information that is optimistic
d. means that a business may not re-organize revenue until cash is received
_______ 6. Marian Mosely is the owner of Mosely Accounting Services. Which accounting principle requires Marian to keep her
personal financial information separate from the financial information of Mosely Accounting Services?
a. Monetary unit principle b. Going-concern principle
c. Cost principle d. Business entity principle
_______ 8. . Which of the following accounting principles would require that all goods and services purchased be recorded at
cost?
a. Going-concern principle b. Continuing-concern principle
c. Cost principle d. Business entity principle

Answers : E, B, A, B, A, D, C

TOPIC: ACCOUNTING EQUATION

a. Prepare balance sheet of the following transactions:
b.

TOPIC : TYPES OF ACCOUNTS

A. IDENTIFY THE FF:

Assets Accounts Receivable Intangible Assets Liabilities
Notes Receivable Property, Plant and Equipment Owner’s Equity Rent Expense
Cash Prepaid Expense
____________ 1. It is the obligations of the company payable in money, goods or services.
____________ 2. These are non-current tangible assets.
____________ 3. These assets are identifiable, non-monetary assets without physical substance.
____________ 4. It is the claim of the owner also known as the capital.
____________ 5. It is the most liquid asset and is the medium of exchange for business transactions.
____________ 6. It is an expense for leased office space, equipment or assets rented from others.
____________ 7. Examples of this are cash, account receivable and prepaid expenses.
____________ 8. It is a written promise from the customer to pay his receivables on a certain future date.

ANSWERS: 1. Liabilities 2. Property, Plant and Equipment 3. Intangible Assets

4. Owner’s Equity 5. Cash 6. Rent Expense 7. Assets 8. Notes Receivable

B. Indicate whether it is an increase (+), decrease (-), or no effect on the asset, liabilities and equity accounts.
Assets Liabilities Equity
1. Investment of cash in the business ___+____ __NE_____ ___+____
2. Purchase of computer equipment for cash ___NE____ __NE_____ ___NE____
3. Billed a customer for services rendered ___+____ __NE_____ ___+____
4. Paid salaries ___-____ __NE_____ ___-____
5. Purchased office supplies on credit ___+____ __+_____ ___NE____
6. Paid advertising expense ___-____ __NE_____ ___-____
7. Paid rent in advance for 3 months ___NE____ __NE_____ ___NE____
8. Received cash from customers on account ___+____ __NE_____ ___+____
9. Withdrew cash for personal use ___-____ __NE_____ ___-____
10. Invested land into the company ___+____ __NE_____ ___+____

TOPIC: 5 TYPES OF MAJOR ACCOUNTS

________1. Account which the resources owned and controlled by the firm.

a. Assets b. Liabilities c. Owner’s Equity d. Income e. Expense.

________1. Account which obligations of the firm arising from past events which are to be settled in the future.

a. Assets b. Liabilities c. Owner’s Equity d. Income e. Expense.

________1. Account which the owner’s claims in the business. It is the residual interest in the assets of the enterprise after
deducting all its liabilities.

a. Assets b. Liabilities c. Owner’s Equity d. Income e. Expense.

________1. Account which the increase in economic benefits during the accounting period in the form of inflows of cash
or other assets or decreases of liabilities that result in increase in equity. Income includes revenue and gains.

a. Assets b. Liabilities c. Owner’s Equity d. Income e. Expense.

________1. Account which decreases in economic benefits during the accounting period in the form of outflows of assets
or incidences of liabilities that result in decreases in equity

a. Assets b. Liabilities c. Owner’s Equity d. Income e. Expense.

Topic: Assets
a. Current b. Non-Current Assets c. Tangible d. Intangible Assets.
_____ 1. This assets are assets that can be realized (collected, sold, used up) one year after year-end date.
_____ 1. This assets Examples include Cash, Accounts Receivable, Merchandise Inventory, Prepaid Expense, etc.
_____ 1. This assets are assets that cannot be realized (collected, sold, used up) one year after year-end date.
_____ 1. This assets are Property, Plant and Equipment (equipment, furniture, building, land), long term investments, etc.
_____ 1. This assets are physical assets such as cash, supplies, and furniture and fixtures.
_____ 1. This assets are non-physical assets such as patents and trademarks

Topic: Current and Non Current Assets

a. Cash b. accounts receivable c. inventories D. Suppliers
e. prepaid expense f. accrued income g. Short term investments
• Cash is money on hand, or in banks, and other items considered as medium of exchange in business transactions.
• Accounts Receivable are amounts due from customers arising from credit sales or credit services. • Notes Receivable are amounts
due from clients supported by promissory notes.
• Inventories are assets held for resale
• Supplies are items purchased by an enterprise which are unused as of the reporting date.
• Prepaid Expenses are expenses paid in advance. They are assets at the time of payment and become expenses through the passage
of time.
• Accrued Income is revenue earned but not yet collected
• Short term investments are the investments made by the company that are intended to be sold immediately
Non-Current Assets
• Property, Plant and Equipment are long-lived assets which have been acquired for use in operations. • Long term Investments are
the investments made by the company for long-term purposes

Topic : Liabilities and Owners Equity

a. Liabilities b. current liabilities c. non current liabilities
b.
Liabilities Liabilities are the debts and obligations of the company to another entity.
• Discuss the differences of Current vs. Non-Current Liabilities. Current Liabilities.
Liabilities that fall due (paid, recognized as revenue) within one year after year-end date.
Examples include Accounts Payable, Utilities Payable and Unearned Income.
Non-current Assets are liabilities that do not fall due (paid, recognized as revenue) within one year after year-end date. Examples
include Notes Payable, Loans Payable, Mortgage Payable, etc.
• Discuss the Account Titles used for Liability Accounts. Define each account and differentiate one from the other.
Current Liabilities Accounts Payable are amounts due, or payable to, suppliers for goods purchased on account or for services
received on account. Notes Payable are amounts due to third parties supported by promissory notes. Accrued Expenses are
expenses that are incurred but not yet paid (examples: salaries payable, taxes payable)l Unearned Income is cash collected in
advance; the liability is the services to be performed or goods to be delivered in the future.
Non-Current Liabilities Loans Payable Mortgage Payable
4. Owner’s Equity • Discuss what Owner’s Equity is. Owner’s Equity is the residual interest of the owner from the business. It can
be derived by deducting liabilities from assets. • Discuss the Account Titles used for Equity Account. Define each account and
differentiate one from the other.