Fundamentals of Accountancy

W1 Learning Area
Quarter
Business and Management 1
Third Quarter
Grade Level
Date
11

I. LESSON TITLE The Proem of Accounting

II. MOST ESSENTIAL Define accounting (ABM_FABM11- IIIa-1)
LEARNING Describe the nature of accounting (ABM_FABM11- IIIa-2) Narrate the
COMPETENCIES (MELCs) history/origin of accounting (ABM_FABM11- IIIa-4) Define external users
and gives examples (ABM_FABM11- IIIa-7)
Define internal users and give examples (ABM_FABM11- IIIa-8)
III. CONTENT/CORE CONTENT Introduction to Accounting and Users of Accounting Information
Ref: Teachers Guide FABM, pages 1-6/ FABM1 Textbook, pages 1-11/ Quexhub PERC
Learning Portal
Suggested
IV. LEARNING PHASES Learning Activities
Timeframe
A. Introduction 20 mins DAY 1
Panimula Good day! Today, we are going to explore the world of accounting. By the end our
topic, you should be able to:
1. define accounting and other accounting terminology
2. cite external users and internal users of financial information
3. exhibit integrity on giving accounting information
“Is accounting important to you?” We will leave this question unanswered. I will ask this
question again after our discussion of the introduction to accounting. Bear in mind that
accounting has different components that you need to develop.
Activity: Real Talk!
Read aloud and answer the following questions:
1. Do your parents ask how you spend your allowance every day?
2. When going home, do you sometimes choose to walk from school rather than
riding a jeepney to save up money?

B. Development 40 mins Let us start your Pre-test. Read and understand the following questions. Choose and
Pagpapaunlad write the answer in your accounting journal.
PRE-TEST
1. Which of the following is NOT one of the designations of an
accountant?
A. Certified Management Accountant
B. Certified Public Accountant
C. Certified Private Accountant
D. Certified General Accountant
2. Which of the following is one of the components of accounting?
A. Summarizing C. Reporting
B. Analyzing D. All of these are correct
3. Which of the following refers to a process that helps interpret information
about the economic activities of an organization?
A. Accounting C. Organizing
B. Financial Analysis D. Financial Planning
4. What kind of reports provide the information captured by the accounting
system?
A. Financial Statements C. Balance Sheet
B. Portfolio D. Income Statement
5. Which of the following is NOT closely related to the development of
accounting?
A. Taxation C. Business acquisition
B. Early auditing systems D. Trading activities of temples

Well done learners! Now let’s have our next activity.

Activity: ACCOUNTING VS BOOKKEEPING
(Think, Pair, and Share) Call some family members, relatives, or friends. Form two
groups: one group will act as an accountant while the other group will act as a bookkeeper.
Choose the job listed below that you think belongs to your group. The winning group will
be treated as a VIP on that day.
● Systematic and comprehensive way of recording transaction
● Summarizing, analyzing, and reporting business transactions
● Recording part of accounting that uses systematic procedures in listing
transactions
● Handles the basic accounting functions of a business
I hope you have enjoyed it. This time, let us define some accounting terms: Accounting is
a systematic and comprehensive way of recording the business’ financial transactions. It is
the process of recording, classifying, summarizing, reporting, and interpreting information
about the economic activities of an organization.
Bookkeeping is the recording part of accounting that uses systematic procedures in listing
transactions. A bookkeeper is the one who handles the basic accounting functions of a
business that may include recording of the various transactions. He is also tasked to do the
summarizing, reporting, and analyzing.
GAAP or Generally Accepted Accounting Principles is a set of standards related to
balance sheet identification, outstanding share measurements, and other accounting issues.
Its standard is based on double-entry accounting.
Double-entry accounting is a method which enters each expense or incoming revenue in
two places on a company’s balance sheet. It does not also use one place in a company’s
balance sheet.

Components of accounting are: (1) Recording refers to the process of making records of all
the transactions that the business made in a certain period of time. (2) Summarizing
pertains to the creation of a summary of the accumulated recorded transactions (3)
Reporting is the process wherein the management presents reports to the company
investors as to where the invested money is going (4) Analyzing is the process of drawing
out both the positive and negative points so that the financial performance of the company
will be improved and where profits, sales, and cash are being compared to be able to draw
the needed conclusions within the given period of time.

What is the nature of accounting?

The financial information captured by the accounting system is usually communicated
through reports called financial statements including (1) income statements, (2) balance
sheets, and (3) cash flow statements.
Income Statement captures revenue, expenses, and net income over a period.
Important elements of an income statement: Revenue is the monetary compensation given
to the organization in exchange for goods and services provided. Expenses are the cost
incurred by the organization in providing the goods and services to its customers. Net
Income (Losses) is the difference between income and expenses, depending on which is
greater. Balance Sheet shows the assets, liabilities, and owner’s equity at a point in time.
Important elements of a balance sheet: Assets are the resources owned by the organization.
These assets can be classified as fixed or current, and as tangible or intangible. Liabilities
are the obligations of the organization to other organizations. The obligations can be
classified as long-term or current.
Equity is the residual amount left after liabilities are
subtracted from the assets of an organization. This represents the
actual value of ownership the shareholders have in the
organization after all the obligations are met. The relationship of
the three types of accounts listed above is represented by the
accounting equation, wherein
ASSET=LIABILITIES+OWNER’S EQUITY (A=L+E)
Cash Flow Statement, also known as statement of cash flows, shows how changes in
balance sheet counts, shows how income affects cash and cash equivalents, and breaks the
analysis down to operating, investing, and financing activities.
Let us talk about the history or origin 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.
14th Century - Double-Entry Bookkeeping The most important event in accounting history
is generally considered to be the 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 (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 the
modern, formal accounting profession emerged in Scotland in 1854 when Queen Victoria
granted a Royal Charter to the Institute of Accountants in Glasgow, creating the profession
of the Chartered Accountant (CA). 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 srcins 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.
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 to have greater transparency and comparability of
financial data across borders.

Did you know that there are two classifications of accounting information users?
These are the following:
External users are those persons or groups outside of organizations. They have limited
authority and they have the ability and access to the company’s accounting information.
They rely only on whatever information is given in the
 company’s websites and annual reports that are mandated to be submitted to financial
regulators. Some examples are owners, creditors, suppliers.
Internal users refer to the members of a company’s management and other individuals
who use financial information in running and managing the business. They work within the
company and make decisions for the business. Some examples are BOD, Chief Executive
Officer, and President.
C. Engagement 20 mins DAY 2
Pakikipagpalihan Today let us have the following activities.
ACTIVITY 1 – DEFINE ME!
What is Accounting? Write your answer in your accounting journal.
ACTIVITY 2 – KNOW ME MORE!
Internal vs External: Three-step interview
Common as an icebreaker or a team-building exercise, this structure can also be used to
share information (1) You form dyads; one of you interviews the other. (2) Then switch
roles. (3) The dyad links with a second dyad. Your four-member learning team then
discusses the information or insights gleaned from the initial paired interviews.
Task:
Ask your partner to give examples of internal or external users then follow up with a
question “what information will that user need that can be answered by accounting?”
Lastly, explain the reason why.
ACTIVITY 3 –THINK IT OVER!
The integrity of the upright shall guide them:
but the perverseness of transgressors shall destroy them- Proverbs 11:3 Based on a real-
life experience, think of culminating activities, business simulation, business owned, or
occupation that you came across. “How will accounting affect the stability of a business?”
Kindly give at least three (3) possible answers.

D. Assimilation 30 mins ● This time try to check what you have learned. In a piece of bond paper, draw the
Paglalapat concept of accounting equation.
● Now, let us go back to the unanswered questions during the introduction of our topic.
“Is accounting important to you? Does it affect your daily activities? How?” Answer
these in your accounting journal.
V. ASSESSMENT 10 mins Before we end this topic, please answer page 24 of Fundamentals of Accountancy
(Learning Activity Sheets for Business and Management 1 textbook by Florenz C. Tugas et al.
Enrichment, Remediation or Assessment
to be given on Weeks 3 and 6)

VI. REFLECTION 5 mins ● The learner communicates the explanation of their personal assessment as
indicated in the Learner’s Assessment Card.
● The learner, in their accounting journal, will write their personal insights about the
lesson using the prompts below.
I understand that .
I realize that .
I need to learn more about .
Prepared by: Jennifer B. Fernandez, SDO Imus City Checked by: Dr. Josephine Canlas,
Adora G. Del Mundo,
Cherie L. Logatoc