Republic of the Philippines

Department of Education
Caraga Administrative Region
DIVISION OF AGUSAN DEL NORTE
Carmen District 1

WEEKLY LEARNING ACTIVITY SHEET

Name of Teacher : Glorielyn L. Lusterio

School : Senior High School in Carmen/340204
Division : Agusan del Norte

Learning Area: Fundamentals of Accountancy, Business and Management 1

Grade Level: Grade 11
Quarter: Quarter 1
Most Essential Learning Explain the varied accounting concepts and principles
Competency (MELC): Solve exercises on accounting principles as applied in various cases
Code: (ABM_FABM11-IIIb-c-15)
(ABM_FABM11-IIIb-c-16)
Month: August 2020
Week Covered Week 2 (August 31, September 1-4, 2020)
Title of the Activity Activity No. 1: Identification
Activity No. 2: Choose your best choice
Activity 3: True or False
Objective(s):

Materials Activity sheets / activity notebook, tables, pen, online video (YouTube)
Note: This activity sheet can be used with video lesson and printed
materials.
Procedures Accounting practices follow certain guidelines. The set of guidelines and
procedures that constitute acceptable accounting practice at a given time
is GAAP, which stands for generally accepted accounting principles. In
order to generate information that is useful to the users of financial
statements, accountants rely upon the following principles:

FUNDAMENTAL CONCEPT:
1. Entity Concept regards the business enterprise as separate and
distinct from its owners and from other business enterprise.
2. Periodicity Concept is the concept behind providing financial
accounting information about the economic activities of an
enterprise for specified time periods. For reporting purposes, one
year is usually considered as one accounting period.
 An accounting period may be classified as either of the
following:
a. Calendar Year-a twelve-month period that starts on
January 1 and ends on December 31
b. Fiscal Year- a twelve-month period that starts on any
month of the year other than January and ends twelve
months after the start period, e.g., a business whose fiscal
year starts May 1, 2016 ends its fiscal year on April 30, 2017.
3.Stable Monetary Unit Concept-The Philippine peso is a
reasonable unit of measure and that its purchasing power is
relatively stable. It allows accountants to add and subtract peso
amounts as though each peso has the same purchasing power as
any other peso at any time. This is the basis for ignoring the effects
of inflation in the accounting records.
4. Going Concern Concept- assumes that the business enterprise
will continue to operate indefinitely.

BASIC PRINCIPLES:
1. Objectivity Principle states that all business transactions that
will be entered in the accounting records must be duly supported by
verifiable evidence.
Example: Payments must be supported by official receipts and bank
deposits must be supported by deposit slips.

2. Historical cost means that all properties and services acquired

 by the business must be recorded at their original acquisition cost.
Example: Land bought in 2001 for two million pesos should be
recorded at two million pesos even though its market value in the
year 2016 is already three million pesos.

3. Revenue Recognition Principle. Revenue is to be recognized in

the accounting period when goods are delivered or services are
rendered or performed.
4. Expense Recognition Principle. Expenses should be recognized
in the accounting period in which goods and services are used up to
produce revenue and not when the entity pays for those goods and
services.
Example: A resort cannot consider as income the advance payment
of a customer who paid his two-week resort accommodation in
advance until the customer has checked in. This is because the
resort has not yet rendered the service to the customer. As such, the
advance payment by the customer should be considered as a
liability on the part of the resort in the form of services to be
rendered.

5. Adequate Disclosure. Requires all the relevant information that

would affect the user's understanding and assessment of the
accounting entity be disclosed in the financial statements.
Example: Land bought at two million pesos in 2001should be
recorded at historical cost in the 2016 financial statements.
However, the current market value of three million pesos in the year
2016 may be indicated in the financial statements for the year 2016
in the form of footnote or parenthetical note.

6. Materiality. Financial reporting is only concerned with the

information that is significant enough to affect evaluations and
decisions.
Example: Items of significant amount such as paper clips can be
charged outright to expenses.
7. Consistency Principle. The firms should use the same
accounting method from period to period to achieve comparability
over time within a single enterprise. However, changes are permitted
if justifiable and disclosed in the financial statements.
Example: If the straight-line method of depreciation is being used by
the company, then the method should be uniformly used by the
company in computing its annual depreciation.

Activity No. 1 Identification: Identify the concept or principle that each

statement refers to.
1. This refers to the relative importance of an item or event. An item is
considered significant if knowledge of it would influence prudent users of
the financial statements.
2. Expenses should be recognized at the time they are incurred such as
when goods and services are actually used and not at the time when the
entity pays for those goods and services.
3. Approaches used in reporting must be uniformly employed from period
to period to allow comparison of results between time periods.
4. This states that all materials facts that will significantly affect the
financial statements must be indicated.
5. All properties and services acquired by the business must be recorded at
their original acquisition cost.
6. The business enterprise is separate and distinct from its owners and
from other business enterprise.
7. All business transactions that will be entered in the accounting records
must be duly supported by verifiable evidence.
8.Income should be recognized at the time it is earned such as when goods
are delivered or when services have been rendered.
9. Accounting information about the economic activities of an enterprise is
provided for specified time periods.
10. This refers to the assumption that the business enterprise will
continue to operate indefinitely.
11. Paper clips were automatically charged to expense.
12. Even though a project will take five years to finish, an annual report
was furnished to the investors.
13. There are around Five Beauty Salon in the vicinity and the business
doesn't earn much due to stiff competition. However, the accountant
prepares the annual financial statements with the assumption that the
business will not close any time.
14. A business agreed to pay a down payment for the purchase of
additional ten machines early next year in line with its business expansion.
This was an added note to the financial statements.
15. Separate financial statements were prepared for the restaurant and the
barber shop of Mr. Panot.
16-30 Open your book page 42 (Do the Exercise 5-3)

Activity No. 2 Multiple Choice. Read and analyze each item. Circle the
letter of the best answer.

1) According to this concept, revenues, and expenses exhibiting cause-

and-effect relationships should be recognized in the same accounting
period.
a) Matching Principles
b) Accrual basis of accounting
c) Cash basis of accounting
d) Time period assumption
2) This assumption states that a business is an entity separate and
distinct from its owners.
a) Separate legal existence
b) Going concern assumption
c) Accounting entity assumption
d) Time period assumption
3) Which of the following statements describes the time period
assumption?
a) The indefinite life of a company can be subdivided into periods of
varying lengths for financial reporting purposes.
b) The indefinite life of a company can be subdivided into periods of
equal lengths for financial reporting purposes.
c) The main reason why financial reports ate generated periodically is
the benefit derived by managements from such reports.
d) b and c only
4) Which of the following evidences allows a company to abandon the
going concern assumption?
I. Future losses are estimated by the company.
II. The company defaults on its loans and borrowings.
III. Suppliers are not willing to sell on credit to the company
a. I only
b. I and II only
c. I and II only
d. All of the above
5) Which of the following can be considered a fiscal year?
a. January 1 - December 31
b. February 1 - January 31
c. March 1 - December 31
d. October 1 - May 31
6) Jinky, the accountant of XYZ Company, recorded sales of ₱2 000 000
for the amount of October. Related to this sale are the salaries of factory
employees worth ₱250 000 and bonuses amounting to 3% of the total
sales. What amount of expense should Jinky record?
a. ₱250 000
b. ₱60 000
c. ₱190 000
d. ₱310 000
7) Which is the most probable reason why most companies have 1-year
accounting periods?
a. It corresponds to the operating cycle of the companies
b. Government usually requires financial reports on a yearly basis.
c. 1-year accounting periods are the most convenient of most
companies.
d. Almost all users of financial information except financial reports on
a yearly basis.
8) Why does the accrual basis of accounting result in more accurate
financial statements?
a. Under accrual accounting, an accountant is sure that expenses are
not understand and revenues are not overstated.
b. Accrual accounting allows the recognition of some expenses in the
future.
c. Accrual accounting properly matches expenses to the related
revenues.
d. Under Accrual accounting, the timing cash flows is the indicator
whether or not the accountant will record the financial
transaction.
9) Which is the main reason why some companies elect to use the fiscal
year rather than the calendar year)
a. The peak of the operations of some companies does not fall on
 December.
b. December is a busy month and employees have no time to prepare
financial statements.
c. The calendar year is only applicable for service and merchandising
firms.
d. None of the above
10)If the company abandons the going concern assumption, It probably
means that
a. the company is planning to restructure and revive its business
operations.
b. The company will undergo the process of liquidation.
c. The company will continue its operations, but it will terminate most
of its employees.
d. the company will prepare its financial statements based on the cash
basis of accounting.
11)Which of the following principles/assumptions of accounting helps in
making the financial statements more accurate?
a. Matching principle
b. Accrual accounting
c. Time period assumption
d. a and b only
12)Which of the following is true about the accounting entity assumption?

a. According to the accounting entity assumption, businesses have

distinct and separate legal existence from its owners.
b. The accounting entity assumption allows a persons who owns many
businesses to prepare a single set of financial set of financial
statements.
c. Under the accounting entity assumption, personal transactions of
the owners affects the financial statements of the company.
d. The accounting entity assumption helps prevent the distortion of the
company's financial statements.
13)Why is there a need to continuously update or modify the accounting
standards being used by the companies?
a. Advancement of technology
b. The phenomenon of globalization
c. Sometimes, there is a better way to treat a transaction that is not
reflected in the accounting standards
d. All of the above
14)What is the main purpose of the accounting entity assumption?
a. To allow the government to properly assess the taxes payable of the
company
b. For the financial statements to present an accurate and truthful
presentation of the results of company operations
c. To protect the personal assets of owners from the claims of
creditors.
d. To properly distinguish the assets of the business and the personal
assets of the owners
d. Salary Expense
15)This accounting assumption assumes that the company has an
indefinite life.
a. Time period assumption
b. Going concern assumption
c. Accounting entity assumption
d. Matching principle

Exercise No. 3

16) Statement I - The purchase of an owner of a vehicle for personal use

can be reflected on the financial statements of the company.
Statement II -Aside from expenses, the going concern assumption
allows accountants to defer recognition of income into the future.
a. Both statements are true
b. Only statement I is true
c. Only statement II is true
d. Both statements are false
17)Statement I - In accrual accounting, an accountant does not have to
wait for cash receipts of payments before he or she record a
transaction.
Statement II - The main purpose of the accounting assumption is for
the fair presentation of the financial statements.
a. Both statements are true
b. Only statement I is true
 c. Only statement II is true
d. Both statements are false
18)Statement I - All companies are required to follow the time period
assumption.
Statement II - An owner needs reports consistently to decide if it is still
beneficial to transact with the company.
a. Both statements are true
b. Only statement I is true
c. Only statement II is true
d. Both statements are false
19)Statement I - A person who owns a business with many branches can
prepare a single set of financial statements.
Statement II - The going concern assumption is also known as the
continuity principle.
a. Both statements are true
b. Only statement I is true
c. Only statement II is true
d. Both statements are false
20)Statement I - The final and comprehensive report of the results of the
company operations cannot be produced until the company is at the
end of its life.
Statement II - If a company is undergoing liquidation, It means that it
already abandoned the going concern assumption.
a. Both statements are true
b. Only statement I is true
c. Only statement II is true
d. Both statements are false
Guide Questions and Performance Rating = 4 Rating = 3 Rating = 2 Rating = 1
Rubrics: Area
Defining the Student Student Student fails Student does
Problem states the adequately to define the not identify
problem defines the problem the problem.
clearly and problem. adequately.
identifies
underlying
issues.
Developing a Student Student Student Student does
Plan to develops a develops an develops a not develop a
Solve the clear and adequate marginal coherent
Problem concise plan plan and plan, and plan to solve
to solve the follows it to does not the problem
problem, conclusion. follow it to
with conclusion.
alternative
strategies,
and follows
the plan to
conclusion.
Collecting Student Student Student Student
and collects collects collects collects no
Analyzing information adequate inadequate viable
Information from information information information
multiple and to perform
sources and performs meaningful
analyzes the basic analyses.
information analyses.
in-depth.
Interpreting Student Student Student Student does
Findings provides a provides an provides an not interpret
and Solving logical adequate inadequate the
the Problem interpretatio interpretatio interpretatio findings/rea
n of the n of the n of the ch a
findings and findings and findings and conclusion
clearly solves the does not
solves the problem, but derive a
problem, fails to logical
offering provide solution to
alternative alternatives. the problem.
solutions.

Concepts Learned: Reflection

Reference: Fundamentals of Accountancy, Business, and Management 1 (Joselito G.
Florendo)
B. Fundamentals of Accountancy, Business, and Management 1 (Florenz
C. Tugas, Herminigilda E. Salendrez, Joy S. Rabo);
C. Basic Accounting (Win Lu Ballada, CPA)

GLORIELYN L. LUSTERIO
Teacher II

JOCELYN B. PACON
Principal II