ABM 11 - FABM1 - Q1 - W1 - Mod1-Mod2
ABM 11 - FABM1 - Q1 - W1 - Mod1-Mod2
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Fundamentals of Accountancy, Business and Management 1 – Grade 11
Alternative Delivery Mode
Quarter 1 – Module 1: Accounting Definition
First Edition, 2020
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Illustrator: Writers
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Introductory Message
For the facilitator:
This learning resource hopes to engage the learners into guided and independent
learning activities at their own pace and time. Furthermore, this also aims to help
learners acquire the needed 21st century skills while taking into consideration their
needs and circumstances.
In addition to the material in the main text, you will also see this box in the body of
the module:
As a facilitator you are expected to orient the learners on how to use this module.
You also need to keep track of the learners' progress while allowing them to manage
their own learning. Furthermore, you are expected to encourage and assist the
learners as they do the tasks included in the module.
The hand is one of the most symbolized parts of the human body. It is often used to
depict skill, action and purpose. Through our hands we may learn, create and
accomplish. Hence, the hand in this learning resource signifies that you as a learner
is capable and empowered to successfully achieve the relevant competencies and
skills at your own pace and time. Your academic success lies in your own hands!
This module was designed to provide you with fun and meaningful opportunities for
guided and independent learning at your own pace and time. You will be enabled to
process the contents of the learning resource while being an active learner.
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This module has the following parts and corresponding icons:
What I Need to Know This will give you an idea of the skills or
competencies you are expected to learn in
the module.
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At the end of this module you will also find:
1. Use the module with care. Do not put unnecessary mark/s on any part of the
module. Use a separate sheet of paper in answering the exercises.
2. Don’t forget to answer What I Know before moving on to the other activities
included in the module.
3. Read the instructions carefully before doing each task.
4. Observe honesty and integrity in doing the tasks and checking your answers.
5. Finish the task at hand before proceeding to the next.
6. Return this module to your teacher/facilitator once you are through with it.
If you encounter any difficulty in answering the tasks in this module, do not
hesitate to consult your teacher or facilitator. Always bear in mind that you are not
alone.
We hope that through this material, you will experience meaningful learning and
gain deep understanding of the relevant competencies. You can do it!
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This module was written for you to accomplish at home. It was carefully
designed so that you can work at your own pace and allow self-discovery of the
concept through activities that you will perform. Activities were also selected to allow
independent learning which also aims to develop students’ reading comprehension
skills through understanding written texts.
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______________ 4) Accounting is a process of identifying, recording and
communicating economic information that is useful in making
economic decisions.
_______________ 5) Accountable events are those that affect the assets, liabilities,
equity, income and expenses of a business.
• Source: Ferrer R.C. et.al. (2017). Fundamentals of Accountancy, Business and Management part 1, Bandolin Enterprise,
(Publishing and Printing) Bakekang Sur, Baguio City
2. Which of the following accounting processes comes first ahead of the others?
a. Interpreting b. Recording
c. Communicating d. Identifying
• Source: Ferrer R.C. et.al. (2017). Fundamentals of Accountancy, Business and Management part 1, Bandolin Enterprise,
(Publishing and Printing) Bakekang Sur, Baguio City
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MODULE 1 Accounting Definition, Nature and History
(https://www.accountingcoach.com/accounting-basics/explanation)
Joe has researched his idea and has prepared a business plan that
documents the viability of his new business.
Joe has also met with an attorney to discuss the form of business he should
use. Given his specific situation, they concluded that a corporation will be best. Joe
decides that the name for his corporation will be Direct Delivery, Inc. The attorney
also advises Joe on the various permits and government identification numbers that
will be needed for the new corporation.
Joe is a hard worker and a smart man, but admits he is not comfortable with
matters of accounting. He assumes he will use some accounting software but wants
to meet with a professional accountant before making his selection. He asks his
banker to recommend a professional accountant who is also skilled in explaining
accounting to someone without an accounting background. Joe wants to understand
the financial statements and wants to keep on top of his new business. His banker
recommends Marilyn, an accountant who has helped many of the bank's small
business customers.
At his first meeting with Marilyn, Joe asks her for an overview of accounting,
financial statements, and the need for accounting software. Based on Joe's business
plan, Marilyn sees that there will likely be thousands of transactions each year. She
states that accounting software will allow for the electronic recording, storing, and
retrieval of those many transactions. Accounting software will permit Joe to generate
the financial statements and other reports that he will need for running his business.
Joe seems puzzled by the term transaction, so Marilyn gives him five examples
of transactions that Direct Delivery, Inc. will need to record:
1. Joe will no doubt start his business by putting some of his own personal
money into it. In effect, he is buying shares of Direct Delivery's common stock.
2. Direct Delivery will need to buy a sturdy, dependable delivery vehicle.
3. The business will begin earning fees and billing clients for delivering their
parcels.
4. The business will be collecting the fees that were earned.
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5. The business will incur expenses in operating the business, such as a salary
for Joe, expenses associated with the delivery vehicle, advertising, etc.
With thousands of such transactions each year, Joe is smart to start using
accounting software right from the beginning. Accounting software will generate
sales invoices and accounting entries simultaneously, prepare statements for
customers with no additional work, write checks, automatically update accounting
records, etc.
By getting into the habit of entering all the day's business transactions into his
computer, Joe will be rewarded with fast and easy access to the specific information
he will need to make sound business decisions. Marilyn tells Joe that accounting's
"transaction approach" is useful, reliable, and informative. She has worked with other
small business owners who think it is enough to simply "know" their company made
P1,300,000 during the year (based only on the fact that it owns P 1,300,000 more
than it did on January 1). Those are the people who start off on the wrong foot and
end up in Marilyn's office looking for financial advice.
If Joe enters all Direct Delivery's transactions into his computer, good accounting
software will allow Joe to print out his financial statements with a click of a button.
1. Income Statement
2. Balance Sheet
3. Statement of Cash Flows
Figure 1
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_________________ 3. It involves keeping a chronological diary of events that are
measured in pesos.
_________________ 4. It occurs through the preparation and distribution of financial
and other accounting reports.
You may now proceeds analyzing what ACCOUNTING is all about. Kindly
identify the following events using IDENTIFYING, RECORDING or COMMUNICATING
as an element of accounting, and kindly write your on the space provided before its
number:
Let us check: The following economic activities below and check if it provides
accounting features. Kindly put a letter “Y” if the transactions conform as an
accounting transaction and a letter “X” if not.
Like all things, who, what, where, when and how a thing exists. Let us arrange
the accounting history: Match Column A to Colum B.
Column A Colum B
1 Cradle of Civilization A Beginning of Modern Accounting
2 14th Century B Mass production and great
importance of fixed assets
3 French Revolution c Development of Accounting
Theory
4 Luca Pacioli d Father of Accounting
5 Industrial Revolution e Double-Entry Bookkeeping
6 19th Century F Clay Tablet
Answer: 1) f 2) e 3) c 4) d 5) b 6) a
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Independent Activity 1:
Case Explorations
Mr. Bean is a retired government employee who is good in baking. One day
he decides to put up a bakery shop in their barangay. He renovates a portion of his
house to serve as the area to produce bread. He purchases baking equipment and
raw materials to produce five different types of bread. Mr. Bean also hires Jack to
help him with the baking and, at the same time, to be in-charge of sales. Mr. Bean
pays Jack on a weekly basis. Every day, Mr. Beans 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. Bean can accounting provide an answer to?
Answer:
___________________________________________________________________
___________________________________________________________________
_________________________________________________________________
Column A Colum B
1 Beginning of Modern a Cradle of Civilization
Accounting
2 Mass production and great b 14th Century
importance of fixed assets
3 Father of Accounting c Luca Pacioli
4 Double-Entry Bookkeeping d Industrial Revolution
5 Clay Tablet e 19th Century
.
and communicating economic information
Accounting is a process of identifying, recording
that is useful in making economic decision.
Only ―accountable events‖ are recorded in the accounting books. Accountable events are
those that affect the assets, liabilities, equity, income and expenses of a business.
The information processed in an accounting system is communicated to interested users
through accounting reports (e.g. financial statements)
Accounting is considered the ―language of business‖ because it is essential in the
communication of financial information
Accounting History
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What I Need to Reflect
Accounting is a challenge as a whole; It is a good subject to learn because
accounting knowledge is in demand . Dealing with financial transactions, Recording
of information, Classification of Data Making Summaries, Analyzing, Interpreting the
financial information, and Communicating the results how accounting works . In a real
scenario, where our life is a center of the economic activities realizes the importance
of it. Thus, everybody do the activity in the way they do as identified and
communicating the result. “The beginning is the most important part of Work – Plato”
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II. TRUE or FALSE
Instruction: Before each statement, write TRUE if the statement is correct or
FALSE if the statement is incorrect.
_________ 1) Financial information is a quantitative information.
_________ 2) Quantitative information is expressed in units and numbers.
_________ 3) All types of events are recorded in the accounting books.
_________ 4) Auditing is a process of identifying, recording and communicating
economic information tha is useful in making economic decision.
_________ 5) The basic objective of accounting is to provide quantitative financial
information about an entity that is useful in making rational economic
decision.
_________ 6) Marketing is responsible in creating value for customer and building
strong customer relationships.
_________ 7) Management is a process of establishing common objectives,
coordinating efforts towards those objectives, and efficiently and
effectively utilizing available resources to achieve certain goals.
_________ 8) As a practical art, accounting is a body of knowledge which has been
systematically gathered, classified and organized.
_________ 9) Bookkeeping and accounting are synonymous.
_________ 10) Accounting is often referred to as a “Language of business” because
it is fundamental to the communication of financial information.
• Source: Ferrer R.C. et.al. (2017). Fundamentals of Accountancy, Business and Management part 1, Bandolin Enterprise,
(Publishing and Printing) Bakekang Sur, Baguio City
5) It is face of business that is responsible for providing information that is useful for
making economic decisions
a) Production b) Management
c) Marketing d) Accounting
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6) Which accounting process pertains to preparation and distribution of accounting
reports to potential users of accounting information.
a) Identifying b) Communicating c) Measuring d) Recording
10) The primary responsible for the financial information of an entity are:
a) Stockholders b) Employees c) Investors d) Management
• Source: Ferrer R.C. et.al. (2017). Fundamentals of Accountancy, Business and Management part 1, Bandolin Enterprise,
(Publishing and Printing) Bakekang Sur, Baguio City
References:
• Accounting Theory (n.d.) Retrieved from ttp://accountingtheory.weebly. com/nature-
and-scope-of—accounting
• Andres, C.S., et al.(2016) ‖Teaching Guide for Senior High School Fundamentals
of Accountancy, Business and Management 1‖ – Published by Commission on
Higher Education in collaboration with the Philippine Normal University
• Ferrer R.C. et.al. (2017). Fundamentals of Accountancy, Business and
Management part 1, Bandolin Enterprise, (Publishing and Printing) Bakekang Sur,
Baguio City
• Rabo, Joy S. et.al. (2019). Fundamentals of Accountancy, Business and
Management 1 (K to 12 Revised Edition), Vibal Publishing, Manila
• Valencia, E. and Roxas, G. (2009). Basic Accounting, 3rd ed. Valencia Education
Supply
• Valix, Conrado T. et.al. (2015). Financial Accounting, Vol. 1, First part. GIC
Enterprises & Co. Inc • Weygandt, J. et. al. (2012) Accounting Principles 10th ed.
John Wiley & Sons (Asia) Pte. Ltd.
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Answer Keys: Module 1 – Accounting Definition, Nature and History
What I Know
I. Identification:
1. Language of Business 4. Accounting
2. Accountable events, Business 5. Identifying
3. Judgment
What’s In
Activity 1
1. Accounting 3. Recording
2. Identifying 4. Communicating
What’s More
Independent Activity 1
1. E 4. B
2. D 5. A
3. C
Assessment
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Worksheet:
Name: _______________________________ Grade & Section: ___________
A. Critical Thinking: The grade computation for this case analysis is 25% for
the computation and 5% for explanation.
I. Case Analysis: Analyze the case and determine if he gain or loss? Show your
computation and explain.
After graduation from high school, Richard Cruz decided to put up
photocopying business because there was none near the vicinity of the school.
Students had to walk far just to go to the nearest photocopying center. Richard knew
that the demand for photocopying service among high school students was high
because teachers often assigned readings and lecture notes that should be
photocopied.
Richard opened his photocopying business on August 1, 2019. He rented a
commercial space located in front of the high school gate for P 5,000 per month. He
also borrowed P 50,000 (without interest) from his father to buy a brand-new
photocopying machine costing P30,000 and to pay for other start-up expenses. He
planned to pay thus P50,000 in four years. From his personal savings, Richard
Spent P10,000 for supplies like bond papers, staplers, paper clips, and other
supplies that would need in his business. He also paid P2,000 for business permits
and licenses. And because Richard had to attend to his classes in a nearby
university, he hired a staff with a weekly salary of P1,000 to operate the business.
Richard planned to visit his photocopying shop after his class every day to check on
it.
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