ST.

SEBASTIAN INTERNATIONAL SCHOOL GRADE 11ABM | 12GAS

Negros occidental, inc. FUNDAMENTALS OF ACCOUNTING,
SUBJECT
Tindalo Avenue, Capitol Shopping, Bacolod City BUSINESS AND MANAGEMENT 1
Tel. Nos. (034) 461-7021 / (034) 703-3980 LEARNING SYLLABUS #9 |
GMAIL: ssisbcd@gmail.com / FACEBOOK: ssisbacolod BUSINESS TRANSACTIONS & THEIR
LEARNING
YOUTUBE: ssisbacolod SYLLABUS ANALYSIS AS APPLIED TO THE
NO. | ACCOUNTING CYLCE OF A SERVICE
TOPIC BUSINESS (Part 1)

SENIOR HIGH DEPARTMENT Subject

Lowela M. Pellejo
SY 2022-2023 | 1ST SEMESTER Teacher

I. Your Targets to Hit!

 describe the nature and give examples of business transactions
 identify the different types of business documents
II. Your Tools, Tips, and Tour!

THE ACCOUNTING CYCLE

1 . Transactions 2 . Journal Entries 3 . Posting 4 . Trial Balance

7. Financial 6 . Adjusting Journal

8. Closing the Books 5 . Worksheet
Statements Entries

III. Your Topics to Learn!

A business is an organization or enterprising entity engaging in commercial, industrial, or professional

activity. The nature of business can be for-profit, non-profit, or others . Moreover, businesses can range in
size from small to huge. They can also range in scale from sole proprietorships to multinational
organizations.

What Is Nature of Business:

The term nature of business meaning pertains to different things to different people. Generally, the nature
of business describes what the company offers to its clients and the industry. It also describes the legal
structure or any other distinguishing characteristics of the business. 

For example, if one says that the nature of business is private, it usually implies the company’s money-
making nature. Similarly, when one says the nature of business is manufacturing, the company focuses on
manufacturing operations. Additionally, when the nature of business is a corporation, it means that the
company has a big reach. The nature of business also refers to the structured technique of describing a
company. This idea describes the type of business. It also describes the services it provides. Moreover,

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the nature of business meaning describes what a company addresses. It describes the major focus of the
company’s goods or services. Such also incorporates everything a firm does to achieve its objectives.

Entrepreneurs, investors, and lenders analyze the nature of financial statements. They do this to determine
whether a firm is feasible before investing in it. They want to know about the company’s prospects for
success first. This lets them choose whether or not it will be a worthwhile investment. 

Types of Nature of Business 

Public Sector-This sector is made up of government and government-controlled businesses. The

Department of Health (DOH) and the British Broadcasting Corporation (BBC) are two examples. 

Private Sector-This sector includes for-profit firms that operate privately. They work individually or
collectively. HICAPS and Gardenia Wheat Bread are two examples.

International Sector-This sector includes exports from foreign countries. Examples are McDonald’s
and Coca-Cola.

Technological Sector-This industry is concerned with the creation, of tech products. They also
develop and distribute them. Apple Inc. and Microsoft Corporation are two examples.

Sole Proprietorship-Businesses run by a single individual fall under this category. The owner and the
company entity have no legal difference. Local restaurants and grocery stores are two examples.

Partnership-Businesses operated by two or more persons under a formal agreement fall into this
category. Microsoft and Apple are two examples. These companies began as collaborations.

Corporation-This sector includes huge corporations or a collection of corporations working as one.

Amazon and JP Morgan Chase are two examples.

Limited Liability Company-An LLC involves a business structure. Here, proprietors are not
personally accountable for the company’s debts or liabilities.

Limited Liability Partnership-An LLP means that all partners have limited responsibility to the
company. Brake Bros Ltd and Virgin Atlantic are two examples.

For-Profit Organizations-Businesses in this category make a profit. These companies operate

privately. 

Non-profit Organizations-Such organizations use the funds they get to further their social cause. 

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Example of Nature of Business

Example of Nature of Business 1: Service Business

Think about how many times you have paid someone to do something for you. Perhaps you paid someone
to paint your house, replace your car’s oil, or make your dinner at a restaurant. You most likely paid
someone to perform these things because you lacked the time or ability to do them yourself. Maybe you
didn’t feel like doing it on your own. So, you decided it was better to hire someone else to do it instead.

Cafes or Restaurants, auto service shops, and other similar establishments are all service-based
enterprises. Every day, they meet the needs of thousands of customers. 

Service businesses will prosper as long as we have limited time and knowledge. They also work because
people do not enjoy doing things themselves.Moreover, the service industry comprises companies that
provide customers with intangible goods. They serve their clients by offering professional advice, skills,
and knowledge. These include professional services (accounting, legal, taxes, programming, etc.),
personal services (laundry, cleaning, etc.), public services (recreational parks, fitness centers, banks, etc.),
and many more. 

Example of Nature of Business 2: Merchandising Business

A merchandising business, often known as a merchandiser, is one of the most common sorts of
companies. We benefit from them on a daily basis. In general, a merchandising enterprise buys finished
goods and resells them to customers. Recall the last time you went shopping for food, home goods, or
personal stuff. You were most likely getting them from a merchandiser. In particular, the products were
bought wholesale from a distributor or manufacturer. Then they got sold to you through that
retailer. While the retailer may have been compelled to buy in bulk, they provide the goods to you in a
modest, personal-use way. 

For example, a wholesaler may sell baking supplies to a retail store at a significant discount. However,
the store will be required to purchase hundreds, if not thousands, of units. This must be done so they
qualify for the discount. The merchandiser then sells you the deodorant at full retail price. They also
permit you to buy one container. 

The difference between what you paid the retailer and what the shop paid the wholesaler becomes the
store’s profit. Profits enable the store to stay in business. It also lets them continue to provide you with
items in the future. The manufacturing industry includes companies that purchase things at wholesale
costs. Then, they resell them at retail prices. These include stores selling clothes, medicines, and
appliances. 

Example of Nature of Business 3: Manufacturing Business

Even if you don’t buy directly from them, many things you consume on a daily basis come from a
manufacturing company. Take a look around your house or apartment. The television you’re watching,

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the phone next to you, and the computer you’re using right now were all constructed and developed by a
manufacturing firm.This sort of company is also responsible for the tires on your automobile and the
picture frame on your wall.In particular, a manufacturing company used components, pieces, or raw
materials to create a finished product. These final products can be sold directly to customers or to other
manufacturing companies for use in the production of another product. 

Manufacturing firms in today’s world often need machines, tools (e.g. kitchen tools and equipment). They
also use robots, computers, and human labor. These components work together to generate a product.A
manufacturing company also has an assembly line. In this, the product gets assembled from one
workstation to the next. By moving the product down an assembly line, the completed product gets
assembled faster and with less manual work.It’s also worth noting that in other sectors, the manufacturing
process is referred to as fabrication.
Manufacturers include food factories and car companies They also include baking business with bakery
logos. These brands use baking ingredients to make cakes. 

Example of Nature of Business 4: Hybrid Business

This industry includes companies that do the things mentioned above. A vehicle manufacturer, for
example, sells automobiles. They also buy old cars. Then, they resell them for a greater price after repairs.
These companies also provide repairs for broken cars. 

What is nature of business?

A business’ nature specifies what kind of firm it is and what its goals are. It describes a company’s legal
structure and industry. Nature also includes goods or services. In short, it describes everything it does to
achieve its objectives. It also represents the company’s problem as well as its services.

What are the 4 nature of business?

Natural resources, labor (human resources), capital, and entrepreneurship are the four classical
components of production shared by all economic activity. Many experts now consider knowledge to be
the fifth component, recognizing its importance in company success.

What are the type of nature of business?

Here are the types of nature of business:

Government sector
Military sector
International sector
Private sector
Technology sector
Merchandising sector
Service sector
Manufacturing sector

What are the three nature of business?

The three nature of business includes the goods or services that must be designed in a certain way. They
must generate form utility. This means they must convert products into consumable forms. The products

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or services must also have time utility. This involves making the goods and services available when
needed. Lastly, they must generate place utility. This describes the availability of goods or services
wherever needed by the consumers.

OFFICIAL RECEIPT

Official receipt is issued by the seller to the buyer as written evidence on sale of
services or leasing of properties, as well as acknowledgement on collection of cash
payment on services rendered. It serves as basis of the output tax liability of the
seller and input tax claim of the buyer.

Sales invoice
A sales invoice is an accounting document sent by a provider of goods/services to a purchaser.
It records services rendered, items provided, the amount owed by the customer, and how they
can make payment. Invoices create legally binding agreements between companies and
buyers, especially for larger purchases.

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Purchase Order
A purchase order is a commercial document and first official offer issued by a buyer to a seller,
indicating types, quantities, and agreed prices for products or services. It is used to control the purchasing
of products and services from external suppliers.

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Check Voucher- is a document recording and filing system used in accounting to record, monitor
and organize check issuances of the business.

Deposit Slip - is a form supplied by a bank for a depositor to fill out, designed to document in categories
the items included in the deposit transaction. The categories include type of item, and if it is a cheque, where
it is from such as a local bank or a state if the bank is not local.

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Purchase requisition - is a document that an employee within your organization creates to request a
purchase of goods or services. When you fill out a purchase requisition, you are not yet purchasing anything.
You are merely beginning the process of a purchase by asking for internal permission.

Receiving report-is a document companies use to record goods and materials received from
suppliers during deliveries. Most of the time, receiving reports prepared by shipping or receiving
departments are shared with the purchasing department to ensure that the right number and quality of
products are received.

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Delivery report - is the message from an SMCS (Short Message Service Center) that notifies you
that your SMS message sent from your device was delivered to the intended recipient. In other words,
an SMS delivery report shows the current status of the text messages that you submitted to the carrier.

Statement of accounts-is a document that reflects all transactions that took place between
you and a particular customer for a given period of time. Generally, business owners send
statements of accounts to their customers to let them know how much they owe for sales that took place
on credit during that period.

All of these forms are accounted for through a numbered sequence. These forms are supplied in
duplicates and sometimes, in triplicates to furnish a copy to every party involved. These documents are

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very essential during audits, queries, tracking of transactions and all other events the company may deem
necessary.

IV. Your Tests and Tasks 9

Worksheet 9 | BUSINESS TRANSACTIONS & THEIR ANALYSIS AS APPLIED TO THE
ACCOUNTING CYLCE OF A SERVICE BUSINESS (Part 1)
Name: Grade Level & Section:
Date: Score: Parent/Guardian’s Signature:

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