SUBJECT: FUNDAMENTALS OF ACCOUNTANCY, BUSINESS & MANAGEMENT 1

QUARTER: FIRST
LESSON 1: INTRODUCTION TO ACCOUNTING
PREPARED BY: KELVIN JAY S. SAPLA

PART I. INTRODUCTION
Engaging in business is one of the thrilling, most lucrative, and most fulfilling endeavours out there. However,
business is not for everyone- many have tried and many have failed. With times changing at an even- faster pace,
engaging in business is becoming more and more competitive. As a future business professional, you need to equip
yourself with the right knowledge that will help you survive in the business world.
This module is primarily centered on the fundamentals of accounting. This will help student to fully understand
the concepts of accounting and the usage in our daily activities.
This module seeks you to answer: “Is accounting important to you?”.

PART II. STANDARDS

CONTENT CONTENT LEARNING LEARNING TARGETS
STANDARDS COMPETENCIES
Introduction to accounting
The learners demonstrate The learners… At the end of this lesson, the
an understanding of… 1. Define accounting learners will be able to
2. Describe the nature
define accounting and
The definition, nature, of accounting
function, and history of 3. Explain the describe its nature; explain
accounting functions of the functions of accounting
accounting in in business; give examples
business of business transactions and
4. Narrate the history/
origin of accounting decisions requiring the need
for accounting; and narrate
the history of accounting

PART III. TRANSFER

Performance Standard: The learners shall be able to cite specific examples in which accounting is used in making
business decisions.
Transfer Goal: Relate the connection of accounting to our daily activities.

PART IV. ACTIVITIES

Activity 1: DECIDING WHO AM I AS A BUSINESSMAN?
Once upon a time, there lived a turtle, a monkey and a snake.
Mr. Turtle is diligent and has excellent cooking skills but is very shy and timid. No wonder Mr. Turtle is still
single at age 40.
Mr. Monkey is charismatic, has an outgoing personality and has many friends, but sometimes Mr. Monkey can
be very trusting. No wonder many girls have taken advantage of him in the past.
Mr.Snake is very intelligent and cunning. But unlike Mr. Turtle and Mr. Snake is cold as ice and lazy. No
Wonder Mrs. Snake left him.
One day, Mr. Turtle and Mr. Monkey decided to put up a fast food restaurant. Mr. Turtle was in charge of the
cooking, while Mr. Monkey did the marketing.
When Mr. Snake heard about this, he offered himself to be the business’ cashier and bookkeeper. With his
slyness, he was able to make Mr. Turtle and Mr. Monkey accept him as co-owner of the business for a very minimal
amount of investment.
 As skillfull and diligent as he is, Mr Turtle was able to formulate recipes that never failed to make customers
smile. With Mr. Monkey’s marketing skills, the business’ customers and market share continued to grow.
After years of operation, the business has gained considerable growth. The business even received recognition
from various organizations for its excellence. However, Mr. Turtle and Mr. Monkey, the founders of the business, have
never tasted yet the fruits of their labor in monetary terms. They got frustrated, which eventually led them to cease their
operations and call it quits.
THE END
Answer the following question:
1. If you are given a chance to be a businessman, would you rather be Mr. Monkey, Mr. Turtle or Mr. Snake?
Explain.
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2. What do you think is/are the possible reason(s) on the cease of their business operations?
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Activity 2 : BUDGETTING: THE BEAN GAME
Each day we make choices based on what we value as important by assessing whether our time, energy, and money is
worth it. This game, adapted from 20 Bean Salary, will help you discover what is most important to you to spend money
on and how your personal experiences and values affect your money management decisions.
Direction: Shade the bean you desire to choose among each category.

⭐ Housing ⭐ Food

OPTIONS BEANS OPTIONS Beans

Living with relatives sharing cost of Cook at home; dinner out once a week
utilities

Share an apartment or house with Frequent fast food lunches and weekly
roommates dinner out

Rent your own place All meals away from home

Insurance Clothing
⭐ OPTIONS BEANS ⭐ OPTIONS BEANS

Auto Liability coverage Clothing Wear present No cost

only wardrobe

Complete coverage Use your sewing

skills

Health and Disability No coverage No cost Go to discount or

thrift store, used
clothes

Basic health Shop for designer

coverage clothes

Individual health and Laundry Do laundry at No cost

disability coverage parents’ house

Property Renters insurance Use laundromat;

some dry cleaning

Homeowners Rent or purchase

insurance washer and dryer

Transportation Recreation
⭐
OPTIONS BEANS OPTIONS BEAN
S

Walk or bike No cost Hiking, hanging out with friends No

cost

Ride bus or join carpool TV, snacks, driving around

Buy fuel for family car Cable TV, sports, movies

Buy a used car and gas Music streaming, movies and TV stream

Buy new car and gas Concerts, vacations, attending sports events

⭐ Furnishings Communication

OPTIONS BEANS OPTIONS BEANS

 Borrow from relatives or friends No cost No phone No cost

Rent furniture or live in furnished Phone with limited

apartment data

Buy at a garage sale or thrift shop Phone with

unlimited data

Buy new furniture Wifi at your home

Personal Care Gifts

OPTIONS BEANS OPTIONS BEANS

Basic products: soap, shampoo, toothpaste, make- Make your own

up, etc.

Occasional professional haircuts, basic personal Purchase cards or small gifts

care products occasionally

Regular hairstyling, nails, name brand personal Purchase frequent gifts for family and
care products friends

Savings

OPTIONS BEANS

Keep cash in a piggy bank at home No cost

5% of income

10% of income

Invest for retirement

Contributions to charities and/or religious

groups

Part I: Round One Discussion Questions

1. Explain the reasoning behind how you spent your 20 bean income. 
 2. Take a moment to think about your values around money. Then, look at the top three to four categories where
you are spending most of your beans. How do these choices reflect your values around money?

Part II: Round Two Discussion Questions

3. Think about how you chose to remove the 7 beans. What tradeoffs did you have to make? How did you decide which
categories to cut down on?

4What did you learn about yourself and your values around money through the process of cutting down your budget?

Activity 3:
Browse the internet and research on the following types of calculator and their basis of purpose.
1. Abacus
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2. Basic Calculator
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3 Scientific Calculator
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4 Graphing Calculator
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5 Printing Calculator
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6 Online Calculator
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PART V. NEW IDEAS/ REFLECTION PART
What I learned in this lesson?
I learned that ______________________________________________________________________________________
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PART VI. DISCUSSION/ SUMMARY

Definition of Accounting
Accounting is a process of identifying, recording and communicating economic information that is useful in making
economic decisions.

Essential Elements of the definition of accounting

2. IDENTIFYING – this involves selecting economic events that are relevant to a particular business transaction.
The economic events of an organization are referred to as transactions.
Examples:
In a bakery business:
 Sales of bread and other bakery products
 Purchase of flour that will be used for baking
 Purchases of trucks needed to deliver the products
3. RECORDING- this involves keeping a chronological diary of events that are measured in pesos. The diary
referred to in the definition are the journals and ledgers which will be discussed in future lessons.
4. COMMUNICATING – occurs through the preparation and distribution of financial and other accounting
reports.
NATURE OF ACCOUNTING
According to Accounting Theory: “Accounting is a systematic recording of financial transactions and the
presentation of the related information to appropriate persons.” Based on this definition we can derive the following
basic features of accounting:

• Accounting is a service activity. Accounting provides assistance to decision makers by providing them financial
reports that will guide them in coming up with sound decisions.

• Accounting is a process: A process refers to the method of performing any specific job step by step according to
the objectives or targets. Accounting is identified as a process, as it performs the specific task of collecting,
processing and communicating financial information. In doing so, it follows some definite steps like the collection,
recording, classification, summarization, finalization, and reporting of financial data.

• Accounting is both an art and a discipline. Accounting is the art of recording, classifying, summarizing and finalizing
financial data. The word ‘art’ refers to the way something is performed. It is behavioral knowledge involving a certain
 creativity and skill to help us attain some specific objectives. Accounting is a systematic method consisting of definite
techniques and its proper application requires skill and expertise. So by nature, accounting is an art. And because it
follows certain standards and professional ethics, it is also a discipline.

• Accounting deals with financial information and transactions: Accounting records financial transactions and data,
classifies these and finalizes their results given for a specified period of time, as needed by their users. At every stage,
from start to finish, accounting deals with financial information and financial information only. It does not deal with
non-monetary or non-financial aspects of such information.

• Accounting is an information system: Accounting is recognized and characterized as a storehouse of

information. As a service function, it collects processes and communicates financial information of any entity.
This discipline of knowledge has evolved to meet the need for financial information as required by various
interested groups.
FUNCTION OF ACCOUNTING IN BUSINESS
1. Accounting is the means by which business information is communicated to business owners and
stakeholders. The role of accounting in business is to provide information for managers and owners to use in
operating the business. In addition, accounting information allows business owners to assess the efficiency
and effectiveness of their business operations. Prepared accounting reports can be compared with industry
standards or to a leading competitor to determine how the business is doing. Business owners may also use
historical financial accounting statements to create trends for analyzing and forecasting future sales.
2. Accounting helps the users of these financial reports to see the true picture of the business in financial terms. In
order for a business to survive, it is important that a business owner or manager be well-informed.

HISTORY OF ACCOUNTING

Accounting is as old as civilization itself. It has evolved in response to various social and economic needs of men.
Accounting started as a simple recording of repetitive exchanges. The history of accounting is often seen as
indistinguishable from the history of finance and business.

Following is the evolution of accounting:

• The Cradle of Civilization

Around 3600 B.C., record-keeping was already common from Mesopotamia, China and India to Central and
South America. The oldest evidence of this practice was the “clay tablet” of Mesopotamia which dealt with
commercial transactions at the time such as listing of accounts receivable and accounts payable.

• French Revolution (1700s)

The thorough study of accounting and development of accounting theory began during this period. Social upheavals
affecting government, finances, laws, customs and business had greatly influenced the development of accounting.

• The Industrial Revolution (1760-1830)

Mass production and the great importance of fixed assets were given attention during this period.

• 19th Century – The Beginnings of Modern Accounting in Europe and America

In this period rapid changes in accounting practice and reports were made. Accounting standards to be observed by
accounting professionals were promulgated. Notable practices such as mergers, acquisitions and growth of
multinational corporations were developed. A merger is when one company takes over all the operations of another
business entity resulting in the dissolution of another business. Businesses expanded by acquiring other companies.
These types of transactions have challenged accounting professionals to develop new standards that will address
accounting issues related to these business combinations.
• The Present - The Development of Modern Accounting Standards and Commerce
The accounting profession in the 20th century developed around state requirements for financial statement
audits. Beyond the industry's self-regulation, the government also sets accounting standards, through laws and
agencies such as the Securities and Exchange Commission (SEC). As economies worldwide continued to globalize,
accounting regulatory bodies required accounting practitioners to observe International Accounting Standards. This is
to assure transparency and reliability, and to obtain greater confidence on accounting information used by global
investors.

Nowadays, investors seek investment opportunities all over the world. To remain competitive, businesses everywhere
feel the need to operate globally. The trend now for accounting professionals is to observe one single set of global
accounting standards in order to have greater transparency and comparability of financial data across borders.
PART VII. EVALUATION
TRUE OR FALSE. Write TRUE if the statement is correct and FALSE if it is incorrect. Put your answer on the space
provided before each number.
____________1. Accounting is a process of identifying, recording and communicating economic information that is
useful in making economic decisions.
____________2. Only accountable events are recorded in the books of accounts.
____________3. Accountable events are those affect the business operation.
____________4. Sociological and psychological matters are within the scope of accounting.
____________5. The basic purpose of accounting is to provide information that is useful in making economic decisions.
____________6. Accounting provides only quantitative information.
____________7. Accounting is described as an art. This is because it is a body of knowledge which has been
systematically gathered, classified and organized.
____________8. Accounting is described as an information system. This is because it requires the use of creative skills
and judgment.
____________9. Booking and accounting is the same.
____________10.
5. eThe
6. referred Financial
economic
to aseventsinformation
of anar
transactions. in accounting reports is also quantitative information.