MANIFEST

UNDERSTANDING OF
STARTING AND OPERATING
A SIMPLE BUSINESS
DISCUSS BY: GROUP 2 (SET A) AND GROUP 5 (SET B)
OBJECTIVES:
 IMPLEMENT THE BUSINESS PLAN
 IDENTIFY THE REASONS FOR KEEPING BUSINESS
RECORDS
 PERFORM KEY BOOKEEPING TASKS
 IDENTIFY WHERE THERE IS A PROFIT OR LOSS FOR
BUSINESS; AND
 GENERATE AN OVERALL REPORT ON THE ACTIVITY
STARTING A SIMPLE
BUSINESS
 Starting a business involves many
activities related to organizing the
organization, generating of an idea for the
enterprise, researching the idea's potential
for success, and writing a business plan.

 Starting a business of any size requires an

investment. Regardless of the size of a
business, it must be unique in order to
succeed.
Steps to Start a Business
1. CONDUCT MARKET RESEARCH – GATHERING INFORMATION
ABOUT EXISTING BUSINESS AND POTENTIAL CUSTOMERS MAY
HELP YOU TO TELL IF THERE IS AN OPPORTUNITY AND MAY
FIND YOU A COMPETITIVE ADVANTAGE FOR YOUR BUSINESS.

2. WRITE YOUR BUSINESS PLAN – YOUR BUSINESS PLAN IS THE

FOUNDATION OF YOUR BUSINESS. IT IS YOUR ROADMAP ON HOW
TO
STRUCTURE, RUN AND GROW YOUR NEW BUSINESS. YOUR
CONVINCING POWER TO ATTRACT INVESTOR TO YOUR BUSINESS.
3. FUND YOUR BUSINESS – LOOK FOR SOURCES OF FUNDS.

4. PICK YOUR BUSINESS LOCATION – FINDING BUSINESS

LOCATION IS ONE OF YOUR IMPORTANT
DECISIONS TO MAKE.

5. CHOOSE A BUSINESS STRUCTURE – IDENTIFY WHETHER

YOUR BUSINESS IS MICRO OR LARGE, SINGLE PROPRIETORSHIP OR
PARTNERSHIP, IT WILL GIVE IMPACT YOUR BUSINESS REGISTRATION
REQUIREMENTS AND YOUR PERSONAL LIABILITY.
6. CHOOSE YOUR BUSINESS NAME – M A K E SU R E Y O U R
B U SIN E SS N A M E IS U N IQ U E A N D N O T B E IN G
U S ED B Y S O M EO N E E LS E.
7. REGISTER YOUR BUSINESS- MA K E Y O U R B U SI N ES S LEG A L TO
PR O TE C T Y O U R B R A N D .
8. APPLY LICENSES AND BUSINESS PERMIT – MAKE YOUR
B U SIN E SS LE G A LLY O P ER ATED A N D
C O M P LIA N T.

9. ADVERTISE YOUR BUSINESS – Y O U M AY U S E TR A D ITIO N A L

A D V E RTI SIN G SU C H A S T ELEV ISIO N A D S ,
R A D IO A D S, A N D N E W S PA P ER Y O U R A D S A N D T H E EA S IES T WAY N O W IS U SIN G
SO C IA L M ED IA PL ATF O R M S SU C H A S FA C E B O O K , Y O U T U B E, IN STA G R A M A N D
TH E L IK E.
10. BUILD YOUR TEAM
– LOOK FOR STAFF THAT WILL CONTRIBUTE TO THE
SUCCESS OF YOUR BUSINESS.
 Business Plan
Implementation
Business Plan is a written document that describes in
detail how a business — usually a start up — defines its
objectives and how it is to go about achieving its goals.

A Business Plan plays out a written roadmap for the firm

from each of a marketing, financial, and operational
standpoint to attract investment before a company has
established a proven record (Hayes 2020). The body of
the business plan is divided into five distinct sections
(Rafael 2005):
1. Description of the business
Provide a detailed description of the business. It answers the question
“What business am I in?
The business description is divided into three primary sections:
a. Business Description – In describing the business, it explains legalities
(business
form), licenses and permits you will need, what is your product/ service
offering,
and time of operations.
b. Product/ Service – Describe the benefits of your goods/ services from
your
customer’s perspective.
c. Location – It should be strategic, accessible and secured to consumers.
2. Marketing Plan- know the customers likes, dislikes and expectations to come out with
marketing strategy. Describe your target customers. Marketing plan divided into 3 sections:

a) Competition – In business, “Competition is a way of life.” Know the trends, latest

technology, develop and improve your products according to what the market is looking for.
The more you offer something new the more competitive you are.

b) Pricing and Sales- Pricing strategy is one of the marketing technique you can use. Consider
your competitors prices in the market.

c) Advertising and Public Relations – Advertising and promoting your product/ service is
either you make or break. To have a good product and you did not promote, you are not
doing business at all. Advertising and promoting your product are the lifeline of your
business. Widen your network. The more people will know and see your product the more
chances your business will grow.
3. Management Plan – Managing a business demands dedication, persistence, and ability to
make decisions, the ability to manage both your employees and finances. Marketing and
management plan work hand in hand because it sets as foundation of your business. Forms
of Business Ownership (Paragas, Alma and Fulgencio, Maria Garcia A. 2005)

a) Sole or Single Proprietorship – It denotes single ownership, unlimited liability, control

over all decisions, receives all profits.

b) Partnership – Two or more people bind together to share money, property, common
fund and industry with the intention of dividing the profit among themselves.

c) Corporation - Run by two or more company, run by stockholders having limited liability
and regulate by statute.

d) Cooperatives - An association or corporation established for the purpose of providing

services on a non-profit basis to its shareholders or members who own and control it.
4. Financial Plan – Sound financial management is one of the
best ways for your business to remain profitable and solvent.
To effectively manage your finances, you should plan a sound,
realistic budget by determining the actual amount of money
needed to open your business (your start up costs) and the
amount needed to keep it open (your operating costs). In
planning your financial, loan applications, capital equipment
and supply list, break-even analysis, pro forma income
statement, pro forma cash flow and balance sheet should be
included.
Bookkeeping Tasks
Accounting-is a “language of business”, the process of recording financial transactions pertaining to a
business (Alicia 2020).

Accounting Cycle-is the principal accounting procedure or steps employed to process transactions
during a fiscal period. Modern Accounting involves seven steps and the first three steps fall under the
bookkeeping function.

Bookkeeping-is the process of recording all financial transactions made by a business, and the process
of keeping track of every financial transaction made by a business firm from the opening of the firm to
the closing of the firm. Bookkeepers are responsible for recording, classifying, and organizing every
financial transaction made through the course of business operations. Bookkeeping differs from
accounting. How?

A Bookkeeper collects the documentation for each financial transaction, records the transactions in the
accounting journal, classifies each transaction as one or more debits and one or more credits, and
organizes the transactions according to the firm's chart of account. At the end of the appropriate period,
the accountant takes over to analyze, review, interpret, and report financial information for the business
firm (Carlson 2020).
FUNCTIONS OF BOOKKEEPING
A. Recording Financial Transactions
The following are some of the types of records should you keep as a bookkeeper:

1. Gross Receipts are the income you received form the business. These are cash register
tapes, deposit information, receipt books and invoices.

2. Purchases are the items you buy and resell to customers. These are the cash register tape
receipts, credit card receipts and statements, invoices

3. Expenses are the costs you acquire other than purchases to carry on your business. These
are the cash register tape receipts, credit card receipts and statements, invoices.

4. Assets are the properties such as machinery, equipment, furniture, facility and land. These
are proof when and how you acquire the assets.

5. Employment Taxes are specific employment tax records.

B. Posting Debits and Credits
At the end of a business period, the journal entries will transfer into their respective ledger
accounts.

1. Journal Entry refers to the book of original entry. For each transaction, the journal shows the debit
and credit effects of an account. Companies may use various kinds of journals. The most basic is the
general leger/ general journal. General Ledger/ General Journal has spaces for dates, account titles
and explanations/ references and two amount columns. Entering transaction data in the journal
known as journalizing

2. T-Account is an accounting record of increases and decreases in specific asset, liability, or owner’s
equity item. It is a standard shorthand in accounting, which helps make clear the effects of
transaction on individual accounts.

3. Debits and Credits are the terms that have a special meaning in the bookkeeping. These are
directional signals. Debit indicates left and credit indicate right in the “T account”. When the amount
increases assets and expenses, decreases liabilities, equity and revenue, it is Debit. When the
amount increases liabilities, equity and revenue, decreases assets and expenses, it is credit.
PREPARE FINANCIAL STATEMENTS
Financial Statements written records to determine whether the
company will earn profit and will have enough cash from operations
to finance all its requirements. Companies prepare four financial
statements from the summarized accounting data.

Income Statement or Profit and Loss Statement or

Statement of Financial Condition or Statement of
Operations
presents the revenues, expenses and resulting net income or net loss
for a specific period. Net Income results when revenues exceed
expenses. Net Loss occurs when expenses exceed revenue.
TRANSACTION ANALYSIS
Transaction 1: Investment by owner
In 2020, Bestfriends Joana and Erika opened a dress shop. They cater to the
plus size individuals in the city. On November 2, 2020, they invested 250, 000
each in cash.
Date Account Title and Ref Debit Credit
Explanations

Nov. 2, 2020 Cash 001 500,000

Ms. Joana, Capital 250,000

Ms. Erika, Capital 250,000

Fig. 1 Equal increase in Asset and Owner’s Equity

Transaction 2: Purchase of Equipment for Cash
On November 3, 2020, they purchased sewing equipment worth
35, 000 from Patahian Store.
Date Account Title and Ref Debit Credit
Explanations

Nov. 3, 2020 Sewing Equipment 002 35,000

Cash 35,000

Fig. 2 Increase in assets (equipment) and decrease in asset (cash).

Transaction 3: Purchase of Vehicle on Credit
On the same date Nov. 3, 2020, they also purchased utility van worth 250,000
on credit from Pidalinmo Shop.
Date Account Title and Ref Debit Credit
Explanations

Nov. 3, 2020 Vehicle 003 250,000

Accounts Payable 250,000

Fig. 3 Increase in asset (vehicle) and increase in liability (accounts payable).

Transaction 4: Purchase of supplies in cash
On November 6, they purchased worth of 5,000 office supplies, 15,000 of
sewing supplies from Pandayan Store and Patahian Store.
Date Account Title and Ref Debit Credit
Explanations

Nov. 6, 2020 Office Supplies 004 5,000

Sewing Supplies 005 15,000

Cash 20,000

Fig. 4 Increase in assets (supplies) and decrease in assets (cash).

Transaction 5: Receipt of cash from services provided
On November 10, they completed school uniforms for SHS students of Sapang
Bato National High School worth 350,000.
Date Account Title and Ref Debit Credit
Explanations

Nov. 10 Cash 006 350,000

Service Revenue 350,000

Fig. 5 Increase in asset (cash) and increase in revenue.

Transaction 6: Payment of Expenses
On November 15, 2020. They paid the three sewers 2,000 each and the office
clerk 2,500.
Date Account Title and Ref Debit Credit
Explanations

Nov. 15 Salaries Expense 007 8,500

Cash 8,500

Fig. 6 Increase in expenses and decrease in asset.

Transaction 7: Services provided for credit
On November 18, they accepted to provide service from Sapang Bato
Elementary school for Faculty T-shirts amounting to 30,000 on credit.
Date Account Title and Ref Debit Credit
Explanations

Nov. 18 Accounts Receivable 009 30,000

Service Revenue 30,000

Fig. 7 Increase in asset (Accounts Receivable) and increase in revenue.

Transaction 8: Receipt of Cash on Account
On November 29, they received payment from Sapang Bato Elementary
school for Faculty T-shirts amounting to 30,000.
Date Account Title and Ref Debit Credit
Explanations

Nov. 29 Cash 010 30,000

Accounts Receivable 30,000

Fig. 8 Increase in asset (cash) and decrease in asset (accounts receivable).

Transaction 9: Payment of Expenses
On November 30, they paid electric of 2,000, water bill worth 750.00 and
internet connection for 1299.
Date Account Title and Ref Debit Credit
Explanations

Nov. 30 Utilities 011 2,750

Internet Connection 012 1,299

Cash 4,049

Fig. 9 Increase in expenses and decrease in asset (cash).

Transaction 10: Withdrawal of cash by owners
On November 30, Joana and Erika withdrew 2,000 each for personal use.
Date Account Title and Ref Debit Credit
Explanations

Nov. 30 Ms. Joana, drawing 013 2,000

Ms. Erika, drawing 014 2,000

Cash 4,000

Fig. 10 Decrease in owner’s equity (drawing) and decrease in asset (cash). Summary
of Transactions
SUMMARY OF TRANSACTIONS
 Prepare Income Statement/ Profit and Loss Statement/
Statement of Operations/ Statement of Financial
Condition
Based on the Summary of Transactions it may be easy for you to
prepare income statement. Here are some of the steps to guide
you.
1. The heading at the center of the sheet: Name of your Business and the
period covered.
2. Start with the Revenue or Sales.
3. Compute your expenses and deduct from your revenue.
4. Include the signatories, who prepare, audit and approve the income
statement report.
 Bestfriend’s Dress Shop

Income Statement

For the Month Ended November 30,2020

Revenues

Sales Revenue 380,000

Expenses

Salaries Expense 8,500

Utilities 2,750

Internet Expense 1,299

Total Expense 12, 549

Net Income 367,451

 Prepare Owner’s Equity

Based on the Summary of Transactions it may be easy for you to prepare

owner’s equity statement. Here are some of the steps to guide you.

1. The heading at the center of the sheet: Name of your Business and the
period covered.
2. Start with the Owner’s capital, the total investments or beginning capital.
3. Compute all the owner’s drawings and deduct from the capital.
4. Add net income.
5. Include the signatories, who prepare, audit and approve the owner’s equity
report
 Bestfriend’s Dress Shop

Owner’s Equity Statement

For the Month Ended November 30,2020

Owner’s beg. Capital

Ms. Joana, capital 250,000

Ms. Erika, capital 250,000

Total Beginning Capital 500,000

Add Income 367,451

Total Owner’s equity 867,451

Less Owner’s Drawing

Ms. Joana, drawing 2,000

Ms. Erika, drawing 2,000 4,000

Total Owners equity, 863,451

Nov. 30, 2020
 Prepare Balance Sheet

Based on the Summary of Transactions it may be easy for you to prepare

balance sheet. Here are some of the steps to guide you.

1. The heading at the center of the sheet: Name of your Business and the
period covered.
2. Determine your assets, liabilities and owner’s equity.
3. Compute all your assets, liabilities and owner’s equity
4. Include the signatories, who prepare, audit and approve the balance sheet.
 Bestfriend’s Dress Shop

Balance Sheet

November 30,2020

ASSETS
Cash 808,451
Supplies 20,000
Equipment 285,000
Total Assets 1,113,451
LIABILITIES AND OWNER’S EQUITY
Liabilities
Account Payable 250,000
Owner’s Equity
Owner’s capital, Nov. 30,2020 863,451
Total Liabilities and Owner’s Equity 1,113,451
 Prepare Statement of Cash Flows

Based on the Summary of Transactions it may be easy for you to prepare

statement of Cash Flows. Here are some of the steps to guide you.

1. The heading at the center of the sheet: Name of your Business and the
period covered.
2. Determine your cash flows from operating activities, cash flows from
investing activities and cash flows from financing activities.
3. Include the signatories, who prepare, audit and approve the cash flows
statement.
 Bestfriend’s Dress Shop
Statement of Cash Flows
For the Month ended November 30,2020
Cash flows from operating activities
Cash Receipts from revenues 380,000
Cash payments for expenses 12,549
Net Cash from Operating activities 367,451
Cash flows from investing activities
Purchase of Equipment (35,000)
Purchase of Supplies (20,000)
Cash flows from financing activities
Investments by owner 500,000
Drawings by owner 4,000 496,000
Net increase in Cash 808,451
Cash balance at the beginning period 0000
Cash at the end of the period 808,451