Senior High School

APPLIED ECONOMICS

Learning Activity Sheets Week 2

Name of Subject Teachers:
BRIAN S. INCOGNITO- 0916 348 2242

Date of Distribution: August 20, 2020

Date of Retrieval: September 5, 2020

Name of Learner: ____________________________________Address: _______________________________

Track and Strand: __________________________________________________________________________
Grade Level & Section: _____________________________________________________________________
 FUNDAMENTALS OF ACCOUNTANCY, BUSINESS & MANAGEMENT 1

Name of Learner: _____________________________________ Grade Level: _____________

Section: ______________________________________________ Score: __________________

LEARNING ACTIVITY SHEET

Introduction to Accounting and It’s Nature, History and Origin

Background Information for Learners

“ACCOUNTING- is the process of

IDENTIFYING, RECORDING, and
COMMUNICATING economic events of an
organization to interested users.” (Weygandt, J. et.
al)

Explain the three highlighted words in the

graphic:
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 of economic events or transactions - In a bakery business: sales of bread and other bakery products,
purchases of flour that will be used for baking, purchases of trucks needed to deliver the products.
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 chapters.
COMMUNICATING – occurs through the preparation and distribution of financial and other accounting reports.

NATURE OF ACCOUNTING
According to Accounting Theory (http://accountingtheory.weebly.com/nature-and-scope-of-accounting.html):
“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
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:

TIMELINE EVENTS
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.
14th Century - Double-Entry The most important event in accounting history is generally considered to be the
Bookkeeping dissemination of double entry bookkeeping by Luca Pacioli (‘The Father of
Accounting’) in 14th century Italy. Pacioli was much revered in his day, and was a
friend and contemporary of Leonardo da Vinci. The Italians of the 14th to 16th
centuries are widely acknowledged as the fathers of modern accounting and were
the first to commonly use Arabic numerals, rather than Roman, for tracking business
accounts. Luca Pacioli wrote Summa de Arithmetica, the first book published that
contained a detailed chapter on double-entry bookkeeping.
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 Mass production and the great importance of fixed assets were given attention
(1760-1830) during this period.
19th Century – The The modern, formal accounting profession emerged in Scotland in 1854 when
Beginnings of Modern Queen Victoria granted a Royal Charter to the Institute of Accountants in Glasgow,
Accounting in Europe and creating the profession of the Chartered Accountant (CA).
America
In the late 1800s, chartered accountants from Scotland and Britain came to the U.S.
to audit British investments. Some of these accountants stayed in the U.S., setting up
accounting practices and becoming the origins of several U.S. accounting firms. The
first national U.S. accounting society was set up in 1887. The American Association
of Public Accountants was the forerunner to the current American Institute of
Certified Public Accountants (AICPA)

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 The accounting profession in the 20th century developed around state requirements
Development of Modern for financial statement audits. Beyond the industry's self-regulation, the government
Accounting Standards and also sets accounting standards, through laws and agencies such as the Securities and
Commerce 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.

Learning Competency with Code

The learners shall be able to
• define accounting (ABM_FABM11-IIIa-1)
• describe the nature of accounting (ABM_FABM11-IIIa-2)
• narrate the history/origin of accounting (ABM_FABM11-IIIa-4

Exercise 1. TRUE OR FALSE: Encircle T if the statement is true, F if it is false.

T F 1. There is only one acceptable definition of accounting.

T F 2. Accounting is only applicable to businesses rendering services because accounting is a service activity.
T F 3. Because accounting is systematic, definite techniques and their application require particular skill and
expertise.
T F 4. Accounting is used by all types of businesses, even not-for-profit organizations such as charitable
institutions.
T F 5. All businesses are required to communicate the results of their operations with interested outside parties.
T F 6. Accounting only involves financial information in the recording process.
T F 7. Accounting does not deal with non-monetary or non-financial aspects of such information.
T F 8. Internal Accounting is behavioral knowledge involving a certain creativity and skill to help us attain some
specific objectives.
T F 9. Accounting provides assistance to decision makers.
T F 10. Managers, employees and owners needs accounting.
T F 11. Mass production and the great importance of fixed assets were given attention during the Industrial
Period.
T F 12. Around 3600 B.C., bookkeeping was already common from Mesopotamia.
T F 13. 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
T F 14. Social upheavals affecting government, finances, laws, customs and business had greatly influenced the
development of accounting.
T F 15. As economies worldwide continued to globalize, accounting regulatory bodies required accounting
practitioners to observe International Accounting Standards.

Exercise 2. MULTIPLE CHOICE- Choose the letter that corresponds to the correct answer. Circle the letter
that corresponds to your answer:

1. Which of the following correctly defines accounting?

a) It is a process involving one business function only to oversee tax collection entities.
b) It is a systematic recording of financial transaction.
c) It is incomprehensive process of recording business transaction.
d) It is a process of analyzing only transactions to over sight business agencies.

2. Which of the following is the components of accounting?

a) Analyzing b) Summarizing c) Reporting d) All of the above
3. Which of the following handles basic accounting functions of a business?
a) Financial planning b) Organizing c) Accounting d) Financial analysis
4. Which of the following ways are done by accounting departments as ways of monitoring the money of the firm?
a) By dealing with payroll and taxes c) By recording transactions
b) By analyzing transaction patterns d) All of the above
 5. The development of accounting is closely related to the following; except:
a) Business acquisition c) Trading activities of temples
b) Taxation d) Early auditing systems
6. Which of the following handles basic accounting functions of a business?
a) Bookkeeper c) Supervisor
b) Human resources officer d) Branch manager
7. Which of the following is an objective of financial reporting?
a) to help management in the company’s decision-making
b) to solve conflicts inside the company
c) to help interested users in their economic decisions
d) to adhere to government rules and regulations
8. Which of the following is NOT a relevant economic event?
a) An agent who attended to the concern of a complaining customer
b) Patricia, manager of Company X, who sold an abandoned building of her company.
c) Company Y which borrowed P5M from a bank due to tight financial conditions.
d) Company Z which paid its employees their salaries for the month of January.
9. Which of the following does NOT show one of the main functions of accounting?
a) Fred prepared a report to be submitted to the taxing authorities.
b) John recorded the purchase of equipment in the accounting books immediately after purchase.
c) Jason prepares financial reports monthly for the company’s stakeholders.
d) Allen canvassed the price of a sewing machine to be used in the company’s operations.
10. Jamie, the Chief Accountant of Company X, is preparing for a meeting with the top management. This
meeting is done monthly to evaluate the performance of the company. Which step of the accounting process is most
likely being done?
a) Recording b) Communication c) Identification d) Classification
11. Which of the following can be considered as a relevant economic event?
a) A meeting of the top management was held in the discussion room last month.
b) The company received advance payments from its customers.
c) Meralco announced that it will increase energy prices by the end of the month.
d) GMA Network signed a contract with Kris Aquino.
12. Which professional organization below defines accounting as a service activity?
a) American Association of Certified Public Accountants
b) Philippine Institute of Certified Public Accountants
c) American Accounting Association
d) Accounting Standard Council
13. Because accounting is an art, __________________________
a) It refers to something that can be performed
b) It refers to a skill that can be enhanced
c) It refers to a behavioral knowledge
d) All of the above
14. Accounting being regarded as the performance of specific actions such as identifying, measuring, and
communicating financial information is through the nature of accounting as _____________
a) A service activity
b) A process
c) An art
d) A skill

15. Customers look at a company’s financial statements

a) To see if it will be beneficial to build a long-term relationship with the company
b) To help members of the academe to gather data for educational purposes
c) To decide whether or not they will lend resources to the company
d) To estimate the potential returns if he or she plans to transact with the company

Exercise 3: IDENTIFICATION Identify what is asked or described in each item. Write you answer on the
space provided before the item.
_________________________1. It is the language of business.
_________________________2. Lifeblood of the government.
_________________________3. The brain of the company.
_________________________4. The required number of persons to form a cooperative.
_________________________5. The income distributed to stockholders in a corporation.
_________________________6. A 12-month period that ends on any month of the year.
_________________________7. The economic events of an organization are referred to as __________________.
_________________________8. Involves keeping a chronological diary of events that are measured in pesos.
_________________________9. Occurs through the preparation and distribution of financial and other accounting
reports.
_________________________10. It is the process of IDENTIFYING, RECORDING, and COMMUNICATING
economic events of an organization to interested users.”
_______________________11. Father of Accounting
_______________________12. S.E.C
_______________________13. AICPA
_______________________14. C.A
_______________________15. CPA

Exercise 4: Sequence the following Notable Events on the History and Development of Accounting in the
Philippines. Use the numbers 1-10 for your answers.

Answer Events
The Philippines became fully compliant with IFRS.
The Accountancy Law was revised and passed under Presential Decree No. 692.
The Philippines started transitioning form applying American accounting standards to applying IAS.
The first income tax law in the Philippines was enacted.
Until 1996, most if not all, Philippine accounting standards, called Statement of Financial Accounting
Standards (SFAS), were based on accounting standards in the USA.
In 1967, the Accountancy Law in the Philippines was revised and passed under Republic Act No. 5166.
In 1981, the Philippine Institute of Certified Public Accountants (PICPA) created the Accounting
Standards Council (ASC) to establish and improve accounting standards generally accepted in the
Philippines.
The Professional Regulation Commission (PRC) created the Financial Reporting Standard Council
(FRSC).
The FRSC was created to assist the Board of Accountancy (BOA) to carry out its powers and functions
provided under Republic Act No. 9298, The Philippine Accountancy Act of 2004.
Republic Act No. 9298 was also passed and enacted regulating the practice of Accountancy in the
Philippines, repealing for the purpose of PD No. 692.

Exercise 5: As a student, identify at least three scenarios or economic events that you encounter the definition of
accounting as to IDENTIFYING, RECORDING and COMMUNICATING. If possible, cite concrete examples in your
explanation.

RUBRIC for SCORING

INDICATORS POINTS RATINGS

1. Content relevance 15
2. Organization of Thoughts 10
3. Grammar and Mechanics 5
Total 30 points
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Exercise 6: Directions: Based on your readings with regards to the ‘Nature of Accounting’ be able to craft 10
importance of accounting to you as a student (2), to businesses (3) , to schools (2) and to the government (3).

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Reflection:
Complete this statement:
What I have learned from this activity
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Reference:
Fundamentals of Accountancy , Business and Management 1 Teaching Guide
Fundamentals of Accountancy , Business and Management – Rabo, Tugas and Salendrez (Vibal Publishing)

Prepared by:

BRIAN S. INCOGNITO
SHS Teacher II