Republic of the Philippines

Biliran Province State University

(Formerly NAVAL STATE UNIVERSITY)
ISO 9001:2015 CERTIFIED
Naval, Biliran

BACHELOR OF SCIENCE IN BUSINESS

ADMINISTRATION
BACHELOR OF SCIENCE
IN BUSINESS
ADMINISTRATION
 BAand
Financial Analysis 213Reporting
Fin 327& Contracts
Law on Obligations
Module 1

RICARDO P. MEJIA, MAEd JADE C. JORNALES GRACE P. BELCHES

Instructor Instructor Instructor

Second Semester, SY 2020-2021

Name of Student: ________________________________________________________

Course, Year & Section: ___________________________________________________

Contact Number: ________________________________________________________

Ground Floor Administration Building, Main Campus, P. Inocentes St., P.I. Garcia, Naval, Biliran Province, Phillipines 6560
Tel. (053) 507-0082‫ ן‬Telefax. (053) 507-0082 & Cell # 0995-471-5907
SUC Level III-A (Per DBM-CHED Joint Circular #B dated June 21, 2007
Website: www.bipsu.edu.ph ‫ ן‬Email: op@bipsu.edu.ph ‫ ן‬Facebook: www.facebook.com/WowBiPSU
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#Wo
WBi
PSU!

#WoWBiPSU
BiPSU VISION

A state university leading in research and innovation for

human empowerment and social development.

BiPSU MISSION
Overview of the Module
To advance the university through innovative human
resource, responsive research, sustainable production and
demand-driven extension services.

BiPSU CORE VALUES

Brilliance, Innovation, Progress, Service, & Unity

Purpose of the Module

This module aims to refresh in the minds of the students the preparation of the income
statement which is one of the major sources of data/information in preparing for financial
analysis. and report delivery.

Module Title and Description

This module is entitled “A Look Back At The Major Financial Statement”. It contains topics
which will guide the learners in gathering and preparing the data needed until they can come
up with an accurate income statement.
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A. The Income Statement

1.Data needed for the income statement and Its Source.
A. Expenses:
a.1. Operating expenses
a.2. Investment expenses
a.3. Sources of data
a.3.1. Cashflow of operations
a.3.2. Journal Vouchers
a.3.3. Cashiers Cashbook
a.3.4. Bookkeeper Ledger
B. Revenues
b.1. Income from operation
b.2. income from investment
b.3. Sources of data
2. Drafting/Finalizing the Income Statement
A. Computing the: Expenses
B. Computing the revenues
C. Coming up with the Net Profit.

B. . The Balance Sheet

1.Data needed for the balance sheet and Its Source.
A. Assets
a.1. Current Assets
a.2. Non-Current Assets
a.3. Sources of data
a.3.1. Cash flow
a.3.2. Journal Voucher
a.3.3. Bookkeeper Ledger/Trial Balance

B. Liabilities
b.1. Current Liabilities
b.2. Non-Current Liabilities
b.3. Sources of data
b.1. cash flow
b.2. Journal Voucher
b.3. Bookkeeper ledger/Trial Balance

C. Equity
c.1. Sources of data
a.1. Trial Balance
a.2. Schedule of Accounts

Module Guide

You are required to submit your answers and be able to pass the required assessment or
evaluation activities provided in this module.

Specifically, the students will do the following:

1. Analyze the data given for correct classification and accurate posting.
2. Students should come up with schedules and drafts which will be instrumental to the
preparation of the income statement so that the interpretation will be accurate.
3. Come up with concrete, accurate and reliable financial statements which are
readable and understandable to each use.
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Module Outcomes

At the end of this module, students must be able to:

1. Classify business transaction, identify the use and the users of accounting records,
and prepare Financial statements for future references.

Module Requirements

This module serves as a guide for the students to learn with is or with easy
understanding. However, this course needs patients and careful analysis of data and
other information so that the posting will be accurate and problems will be illuminated
in relation to balances which is very important in the accounting process. Atudents:
1. You are free to browse and read the different units of the module even prior to doing
the tasks in each unit. However, you need to ensure that you will not miss any part
of the module and you will not miss to accomplish every activity in every unit as
scheduled.
2. After every task given each of the student should send back their answers online to
the e-mail account of the instructor so that it can be corrected/comments will be given
for the improvement of the learner.
3. Every lesson needs an orientation from the instructor/ or a self-study of the student in
other that the lesson will be clear and they will not experience difficulty in doing
assigned tasks. Those who do not have access to the virtual classes you are
encouraged to read reference books in accounting.
4. Consult your class group chat to see class developments.
5. For any inquiry you may send you message to the group chat/ or the Email add of the
instructor.
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Course Pretest

Define or give the meaning of the following:

1. Cash-flow
Is the net amount of cash that an entity receives and disburses during an period of time usually at
the end of an accounting period and also.Cash flow is the total amount of money that comes into
and goes out of a business. Cash flow statements are financial statements, and they include all
cash a business receives from its operations, investments, and financing.
2. Income statement

 An income statement is a financial statement that shows revenue,

expenses, and income/(loss) during a specific period, usually presented on a monthly
or year-to-date basis depending on the specific report format may also be titled
Statement of Operations,
Statement of Activities, or Statement of Revenue and Expenses

3. Balance sheet
 Balance sheets are financial statements providing snapshots of organizations’ liabilities,
assets, and shareholders’ equity at specific moments in time. Balance sheets represent one
type of financial statement used to evaluate companies’ financial health and worth.
Accountants use the accounting equation, also known as the balance sheet equation, to
create balance sheets: “Assets = Liabilities + Equity

4. Investment Income
 Investment income is money that someone earns from an increase in the value of
investments. It includes dividends paid on stocks, capital gains derived from property sales
and interest earned on a savings or money market account.
5. Operating Income
6. “Operating Income” shall mean all income, computed in accordance with the Approved
Accounting Method, derived from the ownership
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Key Terms

Accounting The process of identifying, measuring, and communicating

economic information to permit informed judgments and

decisions by user of the information.

Business Transaction The occurrence of an event or a condition that must be

recorded in the accounting records

Investment Any amount budgeted and expended for any business

transaction with the objectives to gain.

Expense The amount of assets consumed or services used in the

processed of earning revenue.

Net Income The final figure in the income statement when revenues exceed

expenses.

Revenue The amount charged to customers for goods sold or services

rendered.

Assets

Liabilities

Equity
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Lesson I
PREPARING THE INCOME STATEMENT

Learning Outcomes:

At the end of this lesson, you are expected to:

Group the data for investment and operating income and expenses.

Overview:

This part of the lesson will show the students to identify the business transactions
related to income. The tasks of the students are to classify the types of expense incurred so
that there will be correct posting of transactions to come up with the clear understanding of
the result of the business.

Let’s Start

Answer me:

1. What do you understand about expenses? Investments?

2. Why do people invest?

3. What is income?

4. Differentiate gross income from net income.

Let’s Analyze

Group the transactions below according to its account.

Classify these according to:

- Operating expenses
- Investment expense
 Interest paid for the company’s loan
 Payment for fire insurance
 salary paid to clerks
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 Deposits for capital of sister company

 Purchase of bond paper
 Office rental
 Wages of guards
 Payment for light
 Paid taxes

Classify these according to:

- Operating income

- Investment income

 Payment for services rendered

 Interest earned from bank
 Paid rental of equipment
 Dividends from stocks
 Share from investment with a sister company

Let’s Dig Deeper

1. Assign amounts to the expenses, and post these on the draft. (Use
the given account above)
2. Assign amounts to the income, and post these on the draft. (Use the
account above)

Let’s Use it:

1. Let us now prepare the income statement using the format below:
The income and expenses we worked out in the previous activities.

INCOME STATEMENT ENDED Dec 31, 1999

I. Income
A. Income from operation
________________________ Php
________________________ Php
________________________ Php
________________________Php
________________________Php

Total__________Php

B. Income from investment

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________________________ Php
________________________ Php
________________________ Php
________________________Php
________________________Php

Total__________Php

II. Total Income ______________________ Php

11.Expenses
A. Operating Expense
________________________ Php
________________________ Php
________________________ Php
________________________Php
________________________Php
Total__________Php

B. Expenses on investment
________________________ Php
________________________ Php
________________________ Php
________________________Php
________________________Php
Total__________Php

III. Total Expenses ______________________ Php

IV. Net Income ______________________ Php

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ASSESSMENT

1. Below are business transactions please classify it and prepare the income statement
from the sample below:

R.S MANAHASN, CPA

STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2020

Accounting Title Amount

Professional Fees
228, 850.00

Salaries and Allowances 81, 500.00

Miscellaneous Income 12, 500.00

Rent 60,000.00

Taxes and Licenses 9,560.00

Depreciation Expense 11,500.00

Utilities 11,750.00

SSS, Philhealth, Pag-ibig premiums 8,500.00

Office Supplies Expense 4,250.00

Provision for Credit Losses 204.00

Interest Expense 2,500.00

Miscellaneous Expense 4,350.00

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Depreciation 1,000.00

LESSON 2
PREPARING THE BALANCE SHEET

Learning Outcomes
At the end of the lesson, you are expected to:

1. Group the need date according to assets, liabilities and equities.

2. Post the data in a ledger.
3. Prepare a reliable, accurate and presentable balance Sheet.

Overview
This part of the lesson is all about the second major financial statement It show
all the assets and liabilities of a business firm including equities. Tis will expose
the company’s financial condition. This is why some authors call this statement
as “statement of financial condition”

Let’s Start
Give me an idea about the following:
1. What do you understand about financial condition of a business.
2. What are the assets of a firm? What are its liabilities?

Let’s Analyze
A. Given are facts. Please classify these into:
- Current Assets
- Non-current assets
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 cash in bank
 building
 cash on hand
 unused supplies and materials
 service car
 Bonds
 Cash advance paid for services propose
 Land
 Short time collectibles

B. Given are facts. Please classify these into

- current liabilities
- non- current liabilities
- Equity

 Supplies payable
 Paid up capital of Mr. Chan
 Trust fund
 SSS premium payables
 Unearned payments/cash receipts
 Loans payables
 Paid up capital of Mr. Cruz
 Reserves
 Net profit

Let’ Dig Deeper

1. Assign amounts to the assets and record these in a draft. Use the
accounts above)
2. Assign amounts to the liabilities and equity and record these on a
draft. (use the account above)

Let’s Use these

Let us now prepare the balance sheet. The format is shown under.
Please fill these out.
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BALANCE SHEET ENDED Dec. 31,1999.

1. Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Php
A. current assets
__________________________ Php ______
__________________________ Php______
__________________________ Php ______
(Use more lines if needed)
Total Php

2. B. Non-current assets

Rubric Used in the Assessment

Projects (journals, portfolios, instructional materials/devices etc.) will be
graded using the following rubric:

TASKS EXEMPLARY SUPERIOR (3) SATISFACTO UNSATISFACTO SCOR

E
(4) RY (2) RY (1)
Quality All tasks were Nearby all tasks Nearly all tasks Fewer than half of
done with were done with were done with tasks were done
outstanding high quality. acceptance with poor quality.
quality; work quality.
exceeds
expectations
Completenes Complete, Complete, Incomplete; Has many lacking
s, Clarity and clear, well- clear, well supporting components; is
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Organization organized, and organized, and documentations unorganized and

all supporting most supporting is/are unclear.
documentations documentations organized but
are located in are available lacking.
sections clearly and/or in logical
designated. and clearly
marked
locations.
Submission Before the On the A day after the Two days or more
deadline deadline. deadline. after the deadline.
Over-all Score

Scoring Rubric for written Outputs

Poor Fair Good Excellent Your
1-5 6-10 11-15 16-20 Score
points points points points
Content Does not Demonstrat Demonstrate Demonstrates
demonstrat e limited comprehensi mastery of
e comprehens on of core core concept
comprehen ion of concept in in reading and
sion of concept in reading and or offers
concept in reading and or offers irrelevant
reading or offers irrelevant responses to
and or irrelevant responses to reaction
offers responses reaction questions
irrelevant to reaction questions
responses questions
to reaction
questions
Format & Few Relationship Relationships Writer express
Organizati relationshi s among among ideas relationships
ps ideas are are assisted among ideas;
on
between sometimes by transitions careful and
ideas are clear but and logical subtle
presented conveyed progression organization
inconsistentl of ideas enhances
y effectiveness
of
communication
Grammar, Errors in Errors in A small Mastery of
Punctuati grammar grammar number of grammar,
spelling spelling and errors in spelling,
on &
and mechanics grammar mechanics
Spelling mechanics don’t spelling and enhances the
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cause
distract or mechanics effectiveness
reader to
interfere don’t distract of
frequently
from the from the communication
stop
overall overall
reading
effectivenes effectiveness
s of the of the paper
paper
Total Points Earned____________/60 points
-----------------------------------------------------------------------------------------------------------
Rubrics retrieved from
https://homepages.gac.edu/~dmoos/documents/ReflectionResponse.LearningStyles_001.doc

FEEDBACK

The answer key will be provided

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SUMMARY
An income statement is a written presentation of all business transactions which include
income and expenses which are recorded/ posted in the book of accounts of a given
company. This numerical presentation could be a source of interpretation and a picture of
the companies results in each operation. Many authors also term the income statements as
the profit or loss statement if the profit is more than the expenses it will result in net income.
On the other hand, if the income is lessen than the expense it will result to net loss. This
presentation will give the users insights in how to/or what to do in order to improve the
business operation.
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SUGGESTED READINGS

Preparation of the Statement of Income, Fundamental of Accounting by Raquel

Monte
Galanza & Rouella Marie G. Corpuz. Rex bookstore 2010.

Pondexter: Steps un Reading An Income Statement: 2019.

Kaplan Group: Income Statement Analysis, www.gkaction.com
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COURSE
POST TEST

Test I. Discuss fully the following:

(You may extend the lines if more space if needed)

1. Can the income statement give an information on which transaction is the cause of
the loss of the company. Explain how.
___________________________________________________________________
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___________________________________________________________________
___________________________________________________________________

2. What other ideas can the income statement gives to the user of the financial
statement?
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

3. If you are the manager and so and the income statement your company gained only
Php2,000.00 only for one year, What are the probable steps that you should plan in
other that the income will improve?
___________________________________________________________________
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___________________________________________________________________
___________________________________________________________________
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REFERENCES/RESOURCES

Cabrera, E. and Ledesma E. Fundamentals of Accounting Vol. 2 GIC Enterprises

Co. Inc. Quezon City 2008.

Cabrera, E. and Ledesma E. Gilbert. Business Finance: Principles and Applications.

2017 Ed. GIC Enterprises. Manila 2017.

Helfert, Erich. Techniques in Financial Analysis. Ninth Edition. 2017. U.S.A

Frias, Solita and Fajardo, Consolacion. Elementary Acccounting. 5 th Edition. Katha

Publishing Co. Quezon Coty 2008.

Valencia, Edwin, et al. Partnership and Corporation Accounting. 2 nd Edition.

Valencia Educatonal Supply. Baguio City 2007.
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