Republic of the Philippines

Department of Education
Region III
SCHOOLS DIVISION OF ZAMBALES
Zone 6, Iba, Zambales
Tel./Fax No. (047) 602 1391
E-mail Address: zambales@deped.gov.ph
website: www.depedzambales.ph

Name: ______________________________________ Grade/Section________________

School: _____________________________________ Date: ______________ __________

LEARNING ACTIVITY SHEET

Fundamentals of Accountancy Business and Management 2
Quarter 1 – Week 1

I. Introduction

As a prerequisite to FABM2 is FABM1. You must recall

through your stock knowledge the Elements of Financial
Statements. The main purpose of accounting is to provide
information that is useful for making economic decisions
which commonly communicated to users of accounting
through financial statements

II. Learning Competency

Identify the elements of the SFP and describe each of them

(ABM_FABM12- Ia-b-1)

Prepare an SFP using the report form and the account form with proper
classification of items as current and noncurrent (ABM_FABM12- Ia-b-4)

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III. Objectives:

At the end of this learning activity sheet, you are expected to:

1. Solve exercises and problems that require preparation of an SFP for a

single proprietorship with proper classification of accounts as current
and noncurrent using the report form and the account form

IV. Discussion

STATEMENT OF FINANCIAL POSITION – Also called as the

balance sheet. The statement includes the amounts of the
company’s total assets, liabilities, and owner’s equity which in
totality provides the condition of the company on a specific
date. (Haddock, Price, & Farina, 2012). The amounts reported
on the statement of financial position are the amounts as of final
moment of an accounting period.

The statement of financial position is the same as the basic accounting

equation. For instance, a corporation will report amounts in the following
format: Assets = Liabilities + Owner’s Equity. A non-profit organization’s
format will be: Assets = Liabilities + Net Assets.

The main elements of financial position are as follows:

1. Assets is a resource controlled by the entity; as a result of past
events; and from which future economic benefits are expected to
follow to the entity.
2. Liabilities - a present obligations of an entity arising from past
events, the settlement of which is expected to result in an outflow
of resources that embody economic benefits.
3. Equity is the remaining interest in an entity, after all its liabilities
have been deducted from the value of its assets.
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The above elements are termed Permanent Accounts, which is also
called a real account because their life or usefulness continues
throughout the life of the company and retained permanently in the SFP
until their balances become zero.

This is in contrast with Temporary accounts which are found in the

Statement of Comprehensive Income (SCI) which also known as
nominal accounts because at the end of the accounting period, the
balances under these accounts are transferred to the capital account.

LIABILITIES

ASSETS EQUALS
+
OWNER’S EQUITY

Point out the different parts of the Statement of Financial Position

a. Heading
i. Name of the Company
ii. Name of the Statement
iii. Date of preparation (emphasis on the wording – “as of”)
b. Sample of a Report Form SFP
c. Sample of an Account Form SFP

There are two kinds of forms of statement of financial position the

report form and the account form.

Report form is a form that shows asset accounts first then liabilities
and owner’s equity are in one direction or in a vertical format. This is
usually the format that will be submitted to the government and private
agencies such as Banks. Financial institutions, Bureau of Internal
Revenue, City Treasurer’s Office and others.
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Account form all assets are found on the left side of the account and
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the liabilities and owner’s equity are found on the right of an account.

Sample of a Report Form of SFP

S A S COMPANY
STATEMENT OF FINANCIAL POSITION
AS OF DECEMBER 31, 2019
ASSETS
CURRENT ASSETS
CASH 29,500.00
ACCOUNTS RECEIVABLE 45,000.00
ALLOWANCE FOR DOUBTFUL ACCOUNT 3,500.00 41,500.00
PREPAID RENT 60,000.00
PREPAID INSURANCE 18,000.00
SUPPLIES 12,000.00
TOTAL CURRENT ASSETS 161,000.00

NON CURRENT ASSETS

EQUIPMENT 325,000.00
ACCUMULATED DEPRECIATION 61,750.00 263,250.00
FURNITURE AND FIXTURE 260,000.00
ACCUMULATED DEPRECIATION 49,400.00 210,600.00
TOTAL NON CURRENT ASSETS 473,850.00
TOTAL ASSETS 634,850.00

LIABILITIES AND OWNER’S EQUITY

CURRENT LIABILITIES
ACCOUNTS PAYABLE 175,000.00
NON CURRENT LIABILITIES
NOTES PAYABLE 25,000.00
LONG TERM LIABILITIES
MORTGAGE PAYABLE 250,000.00
BONDS PAYABLE 50,000.00 300,000.00
TOTAL LIABILITIES 500,000.00
OWNER’S EQUITY 134,850.00
TOTAL LIABILITIES & OWNER’S EQUITY 634,850.00

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 Sample of an Account Form of SFP

S A S COMPANY
STATEMENT OF FINANCIAL POSITION
AS OF DECEMBER 31, 2019

ASSETS LIABILITIES & OWNER’S EQUITY

CURRENT ASSETS CURRENT LIABILITIES
CASH 29,500.00 ACCOUNTS PAYABLE 175,000.00
ACCOUNTS RECEIVABLE 45,000.00 NON CURRENT LIABILITIES
ALLOW. FOR DOUBTFUL ACCOUNT 3,500.00 41,500.00 NOTES PAYABLE 25,000.00
PREPAID RENT 60,000.00 LONG TERM LIABILITIES
PREPAID INSURANCE 18,000.00 MORTGAGE PAYABLE 250,000.00
SUPPLIES 12,000.00 BONDS PAYABLE 50,000.00 300,000.00
TOTAL CURRENT ASSETS 161,000.00 TOTAL LIABILITIES 500,000.00

NON CURRENT ASSETS OWNER’S EQUITY 134,850.00

EQUIPMENT 325,000.00
ACCUMULATED DEPRECIATION 61,750.00 263,250.00
FURNITURE AND FIXTURE 260,000.00
ACCUMULATED DEPRECIATION 49,400.00 210,600.00
TOTAL NON CURRENT ASSETS 473,850.00
TOTAL ASSETS 634,850.00 TOTAL LIABILITIES & OWNERS EQUITY 634,850.00

Current Assets include Cash and Assets convertible to cash or

consumed in a relatively short period of time, usually within a year or
the business’s operating cycle. Prepaid Expenses and Supplies are
included because they will normally be used or consumed within the
operating cycle.

Current Liabilities are ones the company expects to settle within 12

months of the date on the balance sheet. Examples include Notes
Payable, Accounts Payable, Accrued Expenses (example: Utilities
Payable), Unearned Income, etc.

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Current Assets are arranged based on which asset can be realized first
(liquidity). Current assets and current liabilities are also called short
term assets and shot term liabilities.

Noncurrent Assets are assets that do not meet the criteria to be

classified as current. Hence, they are long term in nature – useful for a
period longer than 12 months or the company’s normal operating cycle.
Examples include Property, Plant and Equipment (equipment, furniture,
building, land), long Term investments, Intangible Assets etc.

Noncurrent Liabilities are liabilities that do not fall due (paid,

recognized as revenue) within one year after year-end date. Examples
include Loans Payable, Mortgage Payable, etc.

Noncurrent assets and noncurrent liabilities are also called long term
assets and long term liabilities.

Difference of the Statement of Financial Position of a Service

Company and of a Merchandising Company
The main difference of the Statements of the two types of business lies
on the inventory account. A service company has supplies inventory
classified under the current assets of the company. While a
merchandising company also has supplies inventory classified under
the current assets of the company, the business has another inventory
account under its current assets which is the Merchandise Inventory,
Ending.

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V. Activities

Activity 1.1

Instructions: Write True if the statement is correct

and False if statement is incorrect.

_______1. The right side of the account is Credit

_______2. The permanent accounts are the nominal account.
_______3. The left side of the account is credit.
_______4. The components of the statement of financial position are
Assets and Expenses
_______5. Current Assets are easily convertible into cash within the
normal operating cycle of the business
_______6. The components of Statement of financial position are Assets,
Liabilities and Owner’s Equity account
_______7. Kinds of Assets are Current Liabilities and Non-Current
Liabilities
_______8. Kinds of Liabilities are Current Liabilities and Non- Current
Liabilities
_______9. Under Owner’s Equity Accounts includes Capital, Owner’s
withdrawal, Revenue and Expenses
_______10. Account form and Report form are two kinds of forms of the
Statement of Financial Position

Activity 1.2
Instruction: Solve for the Accounting Equation

Remember the Accounting Equation?

ASSETS is equals to Liability and Owner’s Equity

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1. Learning in Jack Company had current assets amounting to Php
200,000. Noncurrent assets for the year totaled Php 86,000. How
much is the company’s total assets?
2. Happy Selling Company’s total liabilities amounted Php 20,000.
Total equity had an ending balance of Php 30,000. How much is total
assets?
3. Happy Selling’s had the following accounts at year end: Cash-
350,000, Accounts Payable-80,000, Prepaid Expense-25,000.
Compute for the company’s current assets.
4. Happy Selling’s Accounts Receivable amounted to Php 500,000.
Prepaid Expense and Unearned Income totaled Php 30,000 and Php
10,000 respectively. Cash balance amounted to Php 100,000 while
Accounts Payable and Inventory totaled to Php 20,000 and Php
10,000 respectively. How much is the company’s current assets?
Current liabilities?
5. Company’s Total Liabilities and Equity amounted to Php 285,000.
Total noncurrent assets ended at Php 85,000. Cash totaled
Php50,000. Inventory amounted to Php100,000. Assuming the
company had no other assets, how much is Accounts Receivable?
6. Total assets amounted to Php575,000. Total equity amounted to Php
250,000. Accounts Payable amounted to Php 50,000 while Unearned
Income totaled Php 85,000. Assuming there are no other current
liabilities, compute for the company’s noncurrent liabilities.
7. At the end of the first month of operations for Juana’s Delivery
Service, the business had the following accounts: Accounts
Receivable, Php1,200; Prepaid Insurance, Php500; Equipment,
Php36,200 and Cash, Php40,650. On the same date, Juana owed the
following creditors: Nena’s Supply Company, Php12,000; Maria’s
Equipment, Php9,500. The current assets for the Juana’s Delivery
Service are _________.

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8. At the end of the first month of operations for Juana’s Delivery
Service, the business had the following accounts: Accounts
Receivable, Php1,200; Prepaid Insurance, Php500; Equipment,
Php36,200 and Cash, Php40,650. On the same date, Juana owed the
following creditors: Nena’s Supply Company, Php12,000 (due in 6
months); Maria’s Equipment, Php9,500 (due after 2 years).Current
liabilities are _________.
9. If during the year total assets increase by Php75,000 and total
liabilities decrease by Php16,000, by how much did owner's equity
increase/decrease?
10. If assets are Php17,000 and owner's equity is Php10,000, liabilities
are ___________.

Activity 1.3

Instruction:
Prepare a Statement of Financial Position using account form: Learners
can use any business name and the end of the current year for the
heading.
Cash – 5,000
Loans Payable – 77,500
Accounts Receivable – 2,600
Supplies – 2,300
Equipment – 17,000
Owner’s equity – 40,000
Accounts Payable – 22,400
Building – 113,000

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Activity 1.4
Instruction:
Prepare a SPF for the company using report form
You were hired by Mr. Dan Cruz to prepare his sari-sari store’s
Statement of Financial Position. In order to prepare the statement, you
identified the following assets and liabilities of Mr. Cruz:

o Jan. 1- His sari-sari store has cash deposited in a bank account

amounting to P50, 000.00
o Jan. 4- His sari-sari store had a lot of uncollected sales from
customers amounting to P75, 000
o Jan.8- The total amount of merchandise left inside the store is
P30,000
o Jan.15- He already paid one year’s rent in advance amounting to
P12,000
o Jan. 18- The value of all the company’s furniture amounted to
P100,000
o Jan. 22- He bought merchandise from his supplier amounting to
o P25,000 and the supplier agreed that payment can be made 2
months after year-end.
o Jan. 25- SSS, Philhealth and Pag-ibig Payables for his one employee
totaled P5,000
o Jan. 27- The sari-sari store had outstanding liabilities to utility
companies amounting to P3,000
o Jan. 30- He had a loan from the bank amounting to P50,000 to be
paid in 3 years

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VI. Assessment

Instructions: Choose the answer that corresponds for each

of the question provided below: Write the letter only.

1. What are the elements of the Statement of Financial Position (SFP)

a. Assets, liabilities and equity
b. Assets, Liabilities, Equity, Revenue and Expenses
c. None of these choices
d. Revenue and expenses
2. These are resources controlled by the entity as a result of past events
and from which future economic benefits are expected to flow to the
entity
a. Assets c. Expenses
b. Equity d. Liabilities
3. An element of the Statement of Financial Position that refers to a
present obligation of the enterprise arising from past events. The
settlement of which is expected to result in an outflow from the
enterprise of resources embodying economic benefits.
a. Expenses c. Equity
b. Revenue d. Liabilities
4. The following are examples of current assets except
a. Cash c. Prepaid Expenses
b. Accounts Receivable d. Unearned Income
5. The residual interest in the assets of the entity after deducting all the
liabilities.
a. Equity c. Liabilities
b. Revenue d. Assets

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 6. Other name for equity is:
a. None of these choices c. Net assets
b. Both net worth and net assets d. Net worth
7. An element of the Statement of Financial Position that could result in
increases in equity.
a. Equity c Assets
b. Liability d. Revenue
8. It represents what the business owes to its owner’s. It is also a reflection
of the capital left in the business after assets of the entity are used to
pay off any outstanding liabilities.
a. Assets c. Equity
b. Liabilities d. Revenue and Expenses
9. A group of assets that are completely consumed sold or converted into
cash in 12 months or less.
a. Non-current assets c. Long-term assets
b. Current assets d. Short-term assets
10. A group of liabilities which the entity expects to settle after one
year from the reporting date.
a. Long-term liabilities c. Short-term liabilities
b. Non-current liabilities d. Current liabilities

VII. Reflection
My Family’s Financial Position

Instruction: I want you to identify all the Assets, Liabilities and Owner’s
Equity of your family. Make your own My Family’s Financial Position. You
may choose either report form or account form.

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Rubrics
Preparation of Financial Statements (Statement of Financial Position)
Advanced Proficient Needs Poor 3pts No
10pts 8pts Improveme Submissio
nt 5pts n 0pts
Stateme Preparatio Preparatio Preparation Poor No
nt of n of n of of Student submissio
Financia Statement Statement Statement does not n Project
l of of of demonstrate was
Position Financial Financial Financial an submitted
Position is Position is Position, understandi .
correct, correct, but ng of how to
with no with few contains prepare the
errors. minor many Statement of
errors. errors. Financial
Position.
Work is
incomplete.

VIII. References

Teaching Guide in Senior High School Fundamentals of Accountancy

Business and Management 2, donated by the Commission on Higher
Education in Collaboration with the Philippine Normal University to
Department of Education

Haddock, M., Price, J., & Farina, M. (2012). College Accounting: A

Contemporary Approach, Second Edition. New York: McGraw-
Hill/Irwin.

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Valencia, E. G., &Roxas, G. F. (2010). Basic Accounting (3rd ed.).
Mandaluyong City, Philippines: Valencia Educational Supply

Websites
Accounting coach.com
https://accounting-simplified.com/financial/statements/statement-
of-financial-position.html

https://www.rcampus.com/rubricshowc.cfm?sp=yes&code=JX8863C
&

Prepared by:

HAZEL F. BONDOC
Teacher III
Subic National High School, Subic District

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