REVIEWER FOR FUNDAMENTALS OF ACCOUNTING AND

BUSINESS MANAGEMENT

➢ MODULE 1 ; STATEMENT OF FINANCIAL POSITION

✓ ASSETS = LIABILITIES + EQUITY

STATEMENT OF FINANCIAL POSITION

➢ ALSO CALLED BALANCE SHEET REPORTS THE RESOURCES AVAILABLE FOR THE COMPANY TO USE,
OBLIGATIONS,AND BELONGINGS.
❖ BALANCE SHEETS IS ALWAYS IN BALANCE
ELEMENTS OF SFP
➢ ASSETS – THESE ARE THE RESOURCES
➢ LIABILITIES – ARE OBLIGATIONS REQUIRED TO PAY
➢ EQUITY – RESIDUAL OR REMAINING INTEREST OF OWNER/COMPANY
ASSETS [ CURRENT ASSETS ] – ARE ASSETS THAT CAN BE CONVERT IN ONE YEAR
➢ CASH – MONETARY VALUE
➢ RECEIVABLES – COMPANY’S RIGHT TO COLLECT OR CLAIM PAYMENT
➢ INVENTORIES – THE COST OF UNSOLD MERCHANDISE THAT COMPANY PURCHASED
➢ PREPAID EXPENSES – ESPENSES PAID IN ADVANCE = SIM CARD TELCOM
ASSETS [ NON CURERENT ] – ARE ASSETS THAT CANNOT BE CONVERT IN ONE YEAR
➢ PROPERTY,PLANT AND EQUIPMENT [PPE] – ARE LONG TERM ASSETS WHICH ARE USED IN THE
OPERATION OF COMPANY
➢ INTANGIBLE ASSETS – ARE LONG TERM ASSETS THAT HAVE NO TANGIBLE PROPERTIES
LIABILITIES [ CURRENT LIABILITIES ] – THAT FALL DUE WITH ONE YEAR
➢ PAYABLES – OBLIGATIONS TO MAKE PAYMENTS
➢ ACCOUNTS PAYABLE [AP] – OBLIGATIONS TO THE SUPPLIERS OF PURCHASED INVENTORIES
➢ NOTES PAYABLES [NP] – OBLIGATION TO PAY DOCUMENTED IN A PROMISSORY NOTE
➢ ACCRUED EXPENSES – OBLIGATION TO PAY FOR GOODS AND SERVICES ALREADY USED IN OPERATION
➢ UNEARNED INCOME – ADVANCE PAYMENTS OF GOODS AND NOT YET DELIVERED TO CUSTOMERS
LIABILITIES [ NON CURRENT ] – THAT ARE NOT FALL DUE IN ONE YEAR
➢ LOANS PAYABLE / MORTGAGE PAYABLE
EQUITY [ OWNERS EQUITY ] – DESCRIBE OWNERS CAPITAL [SL,PC,SH,]
➢ DRAWING – IS A TEMPORARY ACCOUNT
 ➢ ACCOUNT FORM – HORIZONAL
➢ REPORT FORM – VERTICAL
➢ DEBIT ON A LEFT CREDIT ON RIGHT
MODULE 2 ; STATEMENT OF COMPREHENSIVE INCOME

✓ PROFIT AND LOSS STATEMENT

STATEMENT OF COMPREHENSIVE INCOME

➢ IS A REPORT THAT SHOWS THE INCOME, EXPENSES AND RESULTING PROFITS OR LOSSES OF A
COMPANY DURING A SPECIFIC PERIOD
➢ INCOME AND EXPENSES ACCOUNT – TWO CALCULATION OF MULTI STEP INCOME STATEMENT
➢ GROSS PROFIT – CALCULATED BY SUBTRACTING THE COST OF GOODS FROM NET SALES
➢ OPERATING INCOME – CALCULATED BY SUBTRACTING OPERATING EXPENSES FROM THE GROSS
PROFIT
➢ INCOME STATEMENT – CALCULATES NET INCOME OR LOSS OVER A RANGE OF TIME

INCOME STATEMENT USED FOR?

➢ THE MAIN PURPOSE OF ALL PROFIT AND LOSS STATEMENT IS TO COMMUNICATE PROFITABILITY AND
BUSINESS ACTIVITIES OF THE COMPANY

WHO USES AN INCOME STATEMENT?

➢ INTERNAL USERS – TO ANALYZE THE BUSINESS AS A WHOLE AND MAKE THE DECISIONS ON HOW IT IS
RUN.
➢ EXTENAL USERS – ARE PEOPLE OUTSIDE OF THE COMPANY WHO HAVE NO SOURCE OF FINANCIAL
INFORMATION ABOUT THE COMPANY EXCEPT PUBLISHED REPORTS

✓ EXTENAL USERS LIKE INVESTOR AND CREDITORS

✓ INVESTOR – MAINLY CONCERNED WHETHER OR NOT INVESTING THEIR MONEY
✓ CREDITORS – ARE MORE CONCERNED WITH A COMPANY’S CASH FLOW
✓ COMPETITORS – ARE ALSO EXTERNAL USERS AND FINANCIAL STATEMENTS , AND TRY TO
COMPETE WITH OTHER COMPANIES

COMPONENTS OF THE SCI

➢ SCI IS AN ACTION-PACKED FINANCIAL STATEMENT.
WHAT ARE THE ACTION REPORTED ON THE SCI [ ELEMENTS ] ?
➢ INCOME – A TRANSACTION THAT INCREASES ASSETS AND DECREASES LIABILITIES
✓ REVENUE – INCOME GENERATED FROM THE PRIMARY OPERATIONS OF THE BUSINESS
✓ GAINS – INCOME DERIVED FROM THE OTHER ACTIVITIES OF THE BUSINESS
✓
 ➢ EXPENSES – A TRANSACTIONS THAT DECREASES ASSETS AND INCREASING LIABILITIES
✓ EXPENSES – RELATED TO THE PRIMARY OPERATIONS OF THE BUSINESS
✓ LOSSES – ARE FROM THE OTHER ACTIVITIES OF THE BUSINESS

CLASSIFICATION METHOD – IS TO HELP THE READER OF THE FINANCIAL STATEMENT TO UNDERSTAND THE
OPERATION OF THE REPORTING COMPANY
SERVICE INCOME – ACCOUNT IS GENERALLY USED TO DESCRIBE REVENUE DERIVED FROM THE RENDERING
SERVICES
✓ PHP[50,000/10[MONTHS]*7 MONTHS

SALES REVENUE – ACCOUNT IS GENERALLY USED TO DESCRIBE REVENUE DERIVED FROM SELLING OF GOODS
EX; OFFICE SUPPLIES, SALES BOOKS, FOOD SALES.
✓ SALES RETURN AND ALLOWANCES – A CONTRA SALES ACCOUNT.
✓ CONTRA SALES ACCOUNT CALLED SALES DISCOUNT. ( NET SALES = GROSS SALES – SALES
RETURN AND ALLOWANCES- SALES DISCOUNT)

PRESENTATION OF SCI
✓ SINGLE STEP AND MULTI STEP.
✓ SINGLE STEP – RELATED TO THE NATURE OF EXPENSE FORMAT
✓ MULTI STEOP – APPPROACH ALSO ASSOCIATED WITH THE FUNCTION OF EXPENSE

GENERAL AND ADMINISTRATIVE EXPENSES – DAILY OPERATIONS AND MANAGEMENT

SELLING EXPENSES – COSTS RELATED TO MARKETING, SELLING, DISTRIBUTING,AND MERCHANDISE.

MODULE 3 ; STATEMENT OF CHANGES IN EQUITY

✓ STATEMENT OF OWNER’S EQUITY/ SATEMENT OF RETAIN EARNINGS

EQUITY OR CAPITAL – IS THE REMAINING VALUE OF AN OWNER’S INTEREST

SCE – RECORDS AND SUMMARIZES THE MOVEMENT WHICH OCCURRED IN OWNER EQUITY

INCREASED OF OWNERS EQUITY DECREASED OF OWNER EQUITY

✓ ADDITIONAL INVESTMENT DRAWING/WITHDRAWALS
✓ PROFIT/NET INCOME NET LOSS

1. HEADING
i. Name of the company
ii. Name of the statement
iii. Year end period cover
2. INCREASES TO EQUITY
i. Net income
ii. Additional investment
3. DECREASES TO EQUITY
i. Net loss
ii. Withdrawals