LESSON #1

• Forms of Business Organizations

• Kinds of Business
• Registration Requirements

FORMS OF BUSINESS ORGANIZATION

Nagkakaiba ang mga Business Organizations sa kinukuhanan ng puhunan o capital.

• SOLE PROPRIETORSHIP
Iisa lang ang namumuhunan.
• PARTNERSHIP
Two or more ang namumuhunan.
• CORPORATION
Maraming namumuhunan. 15 ang kailangan. Minsan sa General Public nanggagaling ang
puhunan.

KINDS OF BUSINESS
Ito ay kung ano ang activity ng business. Kung ano ang product ng business.

• Service
Service, labor, or skill.
• Merchandise
Bibili ka ng produkto at ibebenta mo ito nang walang ginagawang pagbabago sa produkto tulad
ng buy and sell.
• Manufacturing
May pagbabago kang ginawa sa binili mong produkto bago mop ito ibenta. Haliwbawa, bumili
ka ng kahoy at ginawa mo itong lamesa.
REGISTRATIN REQUIREMENTS
1. Business Name
• Sole Proprietorship - Department of Trade and Industry (DTI) - para makakuha ng business
name.
• Partnership and Corporation - Security and Exchange Commission - ireregister pa and i va-
validate kung wala kang kapangalan na business.
2. Business Permit
Pupunta sa Munisipyo, City, or Province, depende kung saan naka locate yung business niyo,
para makukha ng business permit. Dala ang Barangay Clearance at DTI or Sec Business name or
Sec Registration niyo.
3. BIR - mejo matagal kasi marami kayong ireregister.
• Register as VAT or Non-VAT Business
Kapag non-vat, ang expected gross income ay hindi lalampas ng 3 million in a year. Kapag ito'y
lampas naman sa 3 million kayo ay magiging vat tax payer. Ang registration niyo ay depende sa
expected oe estimated gross sales or revenue niyo for a year.
• Pagrecord o pagpapa-approve ng Books of Accounts
You can use manual or electronic. Kapag electronic, lalagyan ng sticker ng BIR ang mga libro
niyo at tatatakan naman kung ito ay manual. Kailangan approved ng BIR ang books of account
na gagamitin niyo.
• Magpa approve or register ng inyong offcial receipts.
Kapag walang tatak ang official receipts niyo, mahuhuli kayo ng BIR.

You need to have all these things registered ang recorded with the Bureu of Internal Revenue
otherwise, magkakaroon kayo ng maraming penalty. After all of that is done, you can now
operate your business.

LESSON #2
GENERALLY ACCEPTED ACCOUNTI PRINCIPLES

Persons doing business in the Philippines must comply with the Philippine Financial Reporting
Standards (PFRS). The PFRS is a set of Generally Accepted Accounting Principles (GAAP)
issued by the Accounting Standards Council (ASC) to govern the preparation of financial
statements. these standards aim to promote fairness, transparency, and accuracy in financial
reporting.

To ensure compliance with these standards, it is ideal for the persons doing business in the
philippines to have an accounting manual/process flow or documentation and recording
guidelines.

Ito yung ga panuntunan kung paano natin irerecord ang mga transactions at kung paano
ipepresent ang ating financial statements. So Kailangan mayroon tayong Manual, Process Flow,
or documentation and reporting guidelines.

Commonly Practiced/Know Principles

1. Business Entity Concept
2. Going Concerned Assumption
3. Time period Assumption
4. Unit of Measurement Assumption or Monetary Unit Concept
5. Revenue Recognition Convention
6. Matching principle
7. Consistency Principle

BUSINESS ENTITY CONCEPT

Entity means person so yung business cinoconsider natin as person separate and distinct from the
owner/s. Transaction/s of the owner as a person ay hindi pwede ihalo sa business and Business
transactions ay hindi pwede pakielaman ng owner without proper reporting.

GOING CONCERN ASSUMPTION

Inaakala natin na kapag tayo ay nagtayo ng negosyo, ito'y panghabambuhay. Hindi naman tayo
nagtatayo ng business na sineset natin for 1 year lang tatagal unless may stipulation. Joint
Venture for a specific project ay hindi pangmatagaan and hindi ito ang GAAP dahil ang GAAP
ay parang San Miguel Corp, tuloy tuloy lang.
TIME PERIOD PRINCIPLE
Althoug ina-assume natin na pang habam buhay ang negosyo natin, ang habambuhay na ito ay
dini-divide according to period. Hindi tayo gagawa ng financial repost sa simula at dulo kapag na
bankrupt na tayo kundi pinputol like monthly, quarterly, annually' semi-annually. Ang pinka
common ay annual - yearly. Ang reporting sa BIR ay annual - ang due date income tax mo ay
April 15 of the following year pero may quarterly reporting tayo ng financial statements.
Icacapture natin ang business transactions natin from Januray 1 - December 31 at irereport ng
April 15.

UNIT OF MEASUREMENT ASSUMPTION OR MONETARY UNIT CONCEPT

Sa anong currency or pera mo dapat irecord ang transactions and financial statements? It should
be in the currency or monetary unit kug saan ang business at kung san nagsusubmit ng report ang
business mo. Kung sa Philippines, peso.

REVENUE RECONITION CONVENTION

Kailan ba dapat i record ang income or revenue? THE GAAP in recognizing is when the sale has
been made or the revenue has actually been earned. Hindi ka pwede mag record the future
revenue or sales or promise to sell. kailangan consumed ang sale transaction kahit di pa
nababyaaran pero may delivery na, may sale transaction na yun.

MATCHING PRINCIPLE
Pertains to the expenses. Kailangan mag match yung expenses sa revenue for which the expense
was inferred. Kailangan matugma sa income kung bakit natin nagsatos ito. Kung saan
narecognize ang revenue, doon irecord ang expense.

CONSISTENCY PRINCIPLE
Kapag mayroon kang method na na adapt, halimbawa sa rprinciple, may roon tayong tinatawag
na accrual basis of accounting and cash basis of accounting. Kapag cash basis ka na, kailangan
tuloy tuloy na yun. Bawal na mgapapalit ka sa accrual. Kailangan consistent ka sa method na
ginamit mo. Kung ginamit mo tong method na to sa taong ito, sa susunod na taon, yun pa rin ang
gagamitin mong method. Unless, hindi mo na pwede gamitin yung method na yun. Kailangan
may justification sa pagbabago ng method.
LESSON #3
DEFINITION OF ACCOUNTING

ACCOUNTING - (Philippine Financial Reporting Standard) is a service activity. It's function is

to provide quantitative information about economic entities that is intended primarily, financial
in nature that is useful in making economic decisions and making reasoned choices among
alternative courses of action.

• Service Activity - it is doing something for others.

• Quantitative - pertains to volume, amounts, or figures
• Information - data or facts
• Facts - perfect truth, uncontrvertible truth.
• Data - aproximation of truth
• Economic Entities - persons doing business
• Reasoned Choices - based on need and not on feelings and emotions.

FINANCIAL STATEMENTS
Income Statement - dito makikita ang income statement, net income. Paano siya nagperform?
kumita ba siya o nalugi?
Balanced Sheet - dito makikita ang assets, liabilities and capital ng bisness. Magkano natira sa
assets, dumami ba yung utang, o lumaki ba yung captial? or statement of financial position.
Capital Statement - lumaki ba yung capital o lumiit? san nangaling yung mga capital? o magkano
ang naging growings ordeclaration of dividends kung corporation?
Statement of Cash Flow - ano ang sources ng cash at saan ginamit ang cash?
LESSON 4 & 5
Accounting principles
10/21/2020

LESSON NO. 4 - Overview of the Accounting Equation and Accounting Cycle

ACCOUNTING EQUATION
- Ano yung mga assets niya? Katulad sa tao, inaalam din natin ang mga katangian o assets ng
business dahil tinuturing din natin ito bilang tao o entity.
- Kapag hindi ka pa nagnenegosyo o hanapbuhay, kung ano yung katangian mo, yun yung
kapital mo. Assets = Capital.
- Pag nag negosyo ka na, maaaring ang assets mo bilang kapital ay kulang kaya hihiram ka sa
iba. Pag nangutang ka magkakaroon ka ng liabilities. Assets = Liabilities + Capital.
- Pag nagkaroon ka na ng income, ma eexpand yan. Assets = Liabilities + Capital where Capital
= Beginning Capital + Additional Capital/Investments - Drawings.+ [(Revenues - Expenses) or
(+Net Income) or (-Net Loss)]
- Everyday natin irerecord ang transactions. Ano bang epekto nito sa ating assets? sa ating
financial conditions? nakakabuti ba ito o nakaksama?
- Bilang tao, iniimprove mo yung character mo. Sa negosyo, iniimprove mo yung financial
condition mo.
- Ang equation na yan ay imemaintain nating imonitor. Ang financial Statements ang
magigingbatayan ng pag monitor.
- Bago makarating sa financial statement, maraming proseso muna ang pagdadaanan. Ito ang
Accountin Cycle.

ACCOUNTING CYCLE
1. Analyzing source documents
2. Journalizing business transactions
3. Posting to the ledger
4. Preparation of unadjusted trial balance
5. Gathering of data for adjustments
6. Journalizing adjusting entries
7. Preparation of financial statements
8. Preparation of closing entries
9. Preparation of post closing trial balance
10. Preparation of reversing entries

Divided into five stages:

1. Recording of External Transactions
2. Recording of Internal Transactions
3. Preparation of Financial Statements
4. Preparation of Closing Entries and Post Closing Trial Balance
5. Preparation of Reversing Entries

Recording of External Transactions

- External transactions are transactions covered by documents and affecting a third party.
Halimbawa, bumili ako ng supplies. Lumabas ako sa aking business to another person. Binigyan
ako ng store ng source document, official receipt na nagrerepresent ng payment ko sa kaniya. So,
irerecord ko yun sa first stage. Ginagamit ko itong supply na binili ko sa opisina pero wala
naman akong source document o record ng paggamit ko nito. Doon ko iyon ilalagay sa second
stage.
- Source document - mga dokumento na naglalaman ng transaction na may impact doon sa
equation natin. Pag may document ka tas di naman nakaka apekto sa equation, hindi na antin yon
ijojournalized. Halimbawa nagpadeliver tayo, yung delivery receipt at OR nun ay source
document at kinakailngang gumawa ng journal para dito.
1. Analyzing source documents
2. Journalizing business transactions
- irerecord ang debit at credit.
- Assets = Liabilities + Capital. Ang asset na nasa left side ay debit. Ang liabilities and capital na
nasa right side ay credit. Debit means left side, credit means right side.
- Assets = Liabilities + Capital where Capital = Beginning Capital + Additional
Capital/Investments + Revenues - Expenses - Drawings. yung drawing at expenses although nasa
left, sila ay negative kaya kapareho lamang sila ng assets na debit. dahil positive yung additional
capital/investments at revenues, susundin pa rin nila yung normal na batayan kasya sila ay credit
pa rin. Pag ang mga value nila ay dumami, mananatilii silang debit o credit pero pag kumaunti,
magbabago ito.

Recording of Internal Transactions

- Mga transactions na walang source documents. Ito ang tinatawag nilang adjusting entries. Kaya
inaadjust, walang source document.

LESSON NO. 5 - Understanding the Basic Accounting Equation

Assets = Liabilities + Owner's Equity

- The basic features of the accounting model in use today trace roots back over 500 years. Luca
Pacioli, a Renaissance-era monk, developed a method for tracking the success or failure of
trading ventures.
- The central part of accounting system is the notion that a business entity can be described as a
collection of assets and the corresponding claims against those assets. The claims can be divided
into the claims of creditors and owners (i.e., liabilities and owners, equity).

ASSETS
- are the economic resources of the entity, and include such items as cash, accounts receivable
(amounts owed to a firm by its customers), inventories, land, buildings, equipment, and even
intangible assets like patents and other legal rights. Assets entail probable future economic
benefits o the owner.
- ito yung mga gamit na pwede ka magbenefit at kumita. mga bagay na pwede mong pagka
kitaan.

LIABILITIES
- are amounts owed to others relating to loans, extensions of credit, and other obligations arising
in the course of business. Implicit to the notion of a liability is the idea of an "existing"
obligation to pay or perform some duty.
- ang liabilities ang mag iincrease ng asset at the same time mayroon kang obligation na palitan o
bayaran ito with the same amount or value.
OWNER'S EQUITY
- is the owner's stake in the business. It is sometimes called net assets, because it is equivalent to
assets minus liabilities for a particular business.
- yung kapital mo pwede mong pambili ng assets mo. yung assets mo yung mga bagay na pwede
mong pagkakitaan sa future. pag yung assets mo galing sa sarili mong pera, owner's equity ang
source mo.
- Who are the "owner's"? The answer to this question depends on the legal form of the entity;
example of entity types include sole proprietorship, partnerships, and corporations.
- pag sole proprietorship, ang may ari is yung tao mismo; pag partnership, yung mag partner, pag
corporations, stockholders.

ANALYZING THE EXPANDED FORMULA AND ITS APPLICATION ON THE

FINANCIAL STATEMENTS GENERATED BY THE ACCOUNTING CYCLE

- Sa expanded formula natin makikita yung financial satements na gagawin. Yung financial
statements ay detailed presentation lang ng formula.

- [Assets = Liabilities + Capital where Capital] = {Beginning Capital + Additional Capital + Net
Income (Revenues - Expenses) - Drawings}

Legend:
[balanced sheet accounts]
{capital statement account}
(Income statement account)