I.

LEARNING OBJECTIVES:
At the end of the lesson, the students should be able to:
1. Define the five major accounts.
2. Acknowledge the components of an accounting equation.
3. Solve the given accounting questions and equations.

II. Subject Matter:

A. Topic: Accounting Equation

Sub topic: (dagdagan to ng subtopics I base mo mahal sa book)

B. Reference:
1. Accounting Principle 1, by Amelia M. Arganda, Teresa Cardenas-Atis
2. Online: edb.gov.hk; keynotesupport.com; courses.lumenlearning.com; scholastic.com;
moneyinstructor.com; investopedia.com
(ayusin natin format neto yung tama like- Arganda, A., Atis, T. (2007). Accounting
principle 1.
Babalik ako sa library di ko nakuha reference nung 3 books na knuha ko

C. Instructional Materials: Power Point Presentation.

III. Procedure:

A. Preliminary Activities

1. Start the class with the Prayer.

2. Greet the Students.
3. Check the Attendance

B. Lesson Proper
1. Motivation
Group the students into 5 groups

They will play “Accounting with a Twist”

They will read the questions and try to answer the jumbled words for three seconds.
If the group fails to answer, other groups can steal for a chance to answer.
The group with the highest points will win and will get incentives for the quiz.

Question 1: is something that an entity acquired or purchased and expected to generate

income for the business in the future = SESTA
Question 2: is the debt or obligation of the business to a party other than its owner=
AILIBILYT
Question 3: represents the owner’s equity or investments in the business= LATIPAC
Question 4: is the income generated from sale of goods and services or any other use of assets
before any expense is deducted= EUNEVER
Question 5: is the reduction in value of an asset as it is used to generate revenue=
XEPESNE
Question 6: is the foundation of the double-entry accounting system and must be in balance or
equal at all times = ACCOUNTING NOITAUQE

2. Presentation
Ask the class in playing “Accounting with a twist”, what are the words that they encounter after
finding the answers?

Tell them that in Accounting, those are the common used words especially in the “Accounting
Equation”.

Those words are also called Five major Accounts and their role is to define how the owner or
the company’s money is spent or received.
 (Will show meaning of the Five major Accounts, its types and its examples.)

Asset is something that an entity acquired or purchased and expected to generate income for
the business in the future.
There are three types of asset: Non-current, Intangible and Current Assets

Examples:
a. Non-current assets ( land, equipment, office furniture, plant, machinery, vehicles)
b. Intangible assets ( trademark, copyright, patent, licensing agreement, goodwill/
reputation)
c. Current assets ( cash, trade receivables, inventory)

(ang types mahal:

1. Current (magagamit sa within the operating cycle or within the year, whichever is longer
ata/non current (mga long term assets to)
2. Tangible (nahahawakan na mga assets)/intangible (hindi nahahawakan)

Liability is the debt or obligation of the business to a party other than its owner.
There are two types of liability: Current/ Short-term and Fixed/ Long-term liability

Examples:
a. Current/ Short-term liabilities ( accounts payable, notes payable, wages, salaries,
accrued expenses, customer deposits, short-term loans)
b. Fixed/ Long-term liabilities ( mortgages payable, shareholder’s capital, long-term
borrowings, bonds payable)

Capital represents the owner’s equity or investments in the business. Capital is also what’s
left in owner’s hand from the assets after all liabilities have been settled. Other term for capital
is Owner’s equity.

Examples:
a. Tangible capitals ( land, equipment, office furniture, plant, machinery, vehicles)
b. Intangible capitals ( trademarks, copyrights, patents, softwares, brand names)

(medyo misleading tong examples sa assets and capitals)

Revenue is the income generated from sale of goods and services or any other use of assets
before any expense is deducted. Revenue is also called Sales.
There are two types of revenue: Operating revenue, Non- operating revenue

Examples:
a. Operating revenue ( Sales, Service revenue)
b. Non- operating revenue ( dividend income, profit from investments )

Expense is the reduction in value of an asset as it is used to generate revenue. There are two
types of expense: Operating expense, Non-operating expense

Examples:
a. Operating expense( payroll, , transportation, cost of good sold, rent, repairs, taxes)
b. Non-operating expense ( depreciation, amortization, interest charges)

Tell the class that these five major accounts are all components of the Accounting Equation.

Discuss that the Accounting Equation is the foundation of the double-entry accounting system
and must be in balance or equal at all times.

Discuss that the Assets, Liabilities and Capital are components of equation for the Balance
Sheet.
 (Will show the class the accounting equation for the company’s balance sheet)

Assets = Liabilities + Capital

Example 1:
 You want to buy a smartphone at a price of Php5000.
 You only have Php3000 in your pocket; therefore, you borrow Php2000 from your
brother to buy smartphone.

Asset = Liabilities + Capital

(Smartphone worth (borrowing worth Php2000) (your own money worth
Php5000) Php3000)

Example 2:
 You will start a business selling T-shirts and saved Php8000 a year before opening.
 By doing this, you increase your business’ assets and capital by the same amount.

Asset( Php8000) = Liabilities ( 0) + Capital (Php8000)

Then, discuss that the Revenue and Expense are components other type of equation for the
Income statement

(Will show the class the accounting equation for the Income Statement)

Net Income/ Net loss = Revenue- Expense

Tell the class that if the Revenue exceeds the Expense, there will be a Net income and if the
Expense exceeds the Revenue, there will be Net loss.

Example 1:
 ZBR Company sells 100 t-shirts for Php100 per t-shirt, then the revenue are Php10000.
 When ZBR Company sells t-shirts, it costs them money to make t-shirts and to sell them.
They might have to pay salespeople, advertising cost and cost of goods sold.
 So in Php10000 revenue, ZBR Company might have Php8000 in expenses.
 This would leave ZBR Company with Php2000 in net income.

Php2000( Net Income)= Php10000( Revenue) - Php8000( Expenses)

Example 2:
 If the ZBR Company’s total expenses are Php11000, this would leave the company with a
net loss of -Php1000.

- Php1000( Net Loss)= Php10000( Revenue) – Ph11000( Expenses)

3. Generalization
Ask the class to recite the five major accounts and give some examples.
Ask the class to tell the components of accounting equations for balance sheet and income
statement.

4. Application
Call a student to read the question and answer orally.
(Mas maganda din love hanap ka example na marerelate nila sa student life nila)

Activity 1:
Multiple Choice Questions:

 Which of the following is the definition of Assets?

a. is the debt or obligation of the business to a party
b. expected to generate income for the business in the future
c. represents the owner’s equity or investments in the business

 Which of the following is a Liability?

a. Investments
b. Sales
c. Wages

 Which of the following is a current liability?

a. Loan payable due in 1 year
b. Mortgage loan
c. Accounts payable

 Which of the following is the best description of Capital?

a. It is the Net Assets of the business
b. It is earned by the business
c. It is the amount owed by the owner

 Assets ( Php 53000) = Liabilities ( ?) + Capital ( Php30000)

a.Php20000
b.Php15000
c.Php23000

Tell the class to answer Activity 2 on their notebook.

Activity 2:
Complete the Table below.

Assets Liabilities Capital

a. Php22000 Php18000 ?
b. ? Php33000 Php11000
c. Php60000 Php30000 ?
d. Php25000 ? Php15000
e. ? Php31000 Php9000

Prepared by:
Zahgie B. Rosales