LES SO N 9:

FINANCIAL ACCOUNTING
AND MANAGEMENT
Submitted by:
Immaculate L. Fallaria

Submitted to:
Belinda Adora

1. DISCUSS THE IMPORTANCE

OF BOOKKEEPING

Proper bookkeeping provides firms with a trustworthy gauge of

their performance. It also serves as a benchmark for the company's
revenue andincometargets. In short,once a businessisup andoperating,
itis vitaltoinvestextra time and money in keepinggoodrecords.

Becauseofthe high costof hiringfull-time accountants, many small

businesses do not employ them. Small businesses, on the other hand,
usually hire a bookkeeper or outsource the task to a professional firm.
One thing to bear in mind here is that many people who want to start a
new business forget the necessity of things like keeping track of every
penny spent.
 2. EXPLAIN THE MEANING OF
DOUBLE-ENTRY BOOKKEEPING

A key idea underlying modern bookkeeping and accountingisdouble

entry, which argues that every financial transaction has equal and
opposingconsequencesin atleasttwoindependent accounts. Itisusedto
solvethefollowing accountingequation:
Assets=Liabilities+Equity

Credits arecounteredby debitsin a general ledgerorT-accountin a

double entry system. a debit in one account cancels out a credit in
another, the total of alldebits must equal the total of all credits. The
double-entry bookkeeping method standardizes the accounting process
andincreasesthe accuracy ofpreparedfinancialstatements,
3. ANALYZE THE FOLLOWING BUSINESS TRANSACTIONS ON
EXCEL. OBSERVE THE PROPER WAY OF RECORDING
BUSINESS TRANSACTIONS
3. ANALYZE THE FOLLOWING BUSINESS TRANSACTIONS ON
EXCEL. OBSERVE THE PROPER WAY OF RECORDING
BUSINESS TRANSACTIONS
4. EXPLAIN THE MEANING AND
PURPOSES OF THE FOLLOWING:

A. PROFIT/LOSS STATEMENT
Profit and loss (P&L) statements are financial statements that
summarize the revenues, expenditures, and expenses incurred for a
specific time, typically a quarter or fiscal year. These records reveal a
company's ability or inability to produce profit through increasing
revenue, lowering costs, or both. These statements are frequently
presented in cash or accrual format. The profit and loss statement,
together with the balance sheet and cash flow statement, is one of
three financial statements issued by every public company on a
quarterly and annual basis. It is frequently the most popular and
common financialstatementin a businessplan sinceitdisplays how much
profitorloss a company produced.

B. BALANCE SHEET
A balance sheet is a financial statement that shows a company's
assets, liabilities, and shareholder equity at a given point in time.
Balance sheets serve as the foundation for calculating investor rates
of return and assessing a company's capital structure. In a nutshell, a
balancesheetis a financialstatementthatshows what a firm owns and
owes, as well asthe amountof money investedby shareholders.Balance
sheets can be used in conjunction with other essential financial
accounts to perform basic analysis or calculate financial ratios. The
balance sheet follows the accounting equation below, with assets on
oneside andliabilities+shareholderequity on theother, which balances
out:Liabilities+Shareholders'Equity =Equity Assets
C. CASH FLOW STATEMENT
A cash flow statementis a financialstatementthatsummarizes
all cash inflows received by a company from continuing activities and
external investmentsources. It alsoincludes allcash outflowsusedto
fund corporate operations and investments over a certain time period.
The financial statements of a company provide investors and analysts
with a picture of all the transactions that occur within the firm, and
how each transaction adds to the company's success. The cash flow
statement is seen to be the most intuitive of all financial statements
sinceittrackscash generatedby thebusinessin three ways:operations,
investment, and financing. Net cash flow is the total of these three
components.Theseelementscan assistinvestorsin a firm'sstock.
 5. DISCUSS THE FOLLOWING
COMPONENTS OF A BALANCE SHEET:

A. ASSETS
An assetis a resource having monetary worth that an individual,
organization, or country possesses or manages with the prospect of
future benefit. Assets are disclosed on a company's balance sheet and
arepurchasedorcreatedtoraisethe worth ofthecompany orto assist its
operations. An asset is anything that can generate cash flow, cut
expenses, or increase sales in the future, whether it's manufacturing
equipment or a patent. In accounting, there are six types of assets:
current assets, fixed assets, physical assets, intangible assets,
operating assets, and non-operating assets. Your assets may fall into
morethan onecategory. A building, forexample, is an exampleof a fixed,
tangible asset.
5. DISCUSS THE FOLLOWING
COMPONENTS OF A BALANCE SHEET:

B. LIABILITIES
liability issomethingthat a person orcorporation owes,usually
a monetary amount. Liabilities are resolved over time by transferring
economic benefits such as money, products, or services. Liabilities,
which are recorded on the balance sheet's right side, include loans,
accounts payable, mortgages, deferred revenues, bonds, warranties,
and accumulated expenses. A liability is an obligation between two
parties that has not yet been finished or paid for. A financial liability is
also an obligation in the world of accounting, but it is more defined by
previous business transactions, events, sales, exchange of goods or
services, or anything that would offer economic gain at a later date.
Accounts payable andbondspayable aretwoofthe
mostprevalentliabilities.
C. OWNER’S EQUITY
An Owners'equity isdefined as an entity'stotal assets minusits
total liabilities. This is the capital that is potentially available for
distribution to the sole proprietor of a sole proprietorship. From the
standpoint of company liquidation, owners' equity can be defined as the
remaining claim on a firm's assets to which shareholders are entitled
after liabilities have been paid. Because the amount of owners' equity
does not alwaysrepresentthe actual worth of a business,sellingitfor
the precise amountofowners' equity wouldbe entirely coincidental. the
sale price may differ significantly depending on the perceived worth of
the company's cash flows, intellectual property, branding, and other
criteria asdecidedby thebuyer and agreedupon by the acquirer.
ACTIVITY B - TY MEDICAL CLINIC
GENERAL JOURNAL
ACTIVITY B - JOURNALIZE, LEDGER AND DO
ADJUSTING ENTRIES IF NECESSARY.