Fundamentals of Accountancy

Learning Area Grade Level 11

W2 Quarter
Business and Management 1
3rd Quarter Date

I. LESSON TITLE The Accounting Doctrine

II. MOST ESSENTIAL LEARNING The learners:
COMPETENCIES (MELCs) a. explain the varied accounting concepts and principles (ABM_FABM11-
IIIb-c-15
b. solve exercises on accounting principles as applied in various cases
(ABM_FABM11_111b-c-16)
III. CONTENT/CORE CONTENT Accounting Concepts and Principles
Ref: Teachers Guide FABM1 pages 32-40/ FABM1 Textbook pages 35-41/
Quexhub PERC Learning Portal
Suggest
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IV. LEARNING PHASES Learning Activities
Timefra
me
A. Introduction 20 mins DAY 1
Panimula Good day learners! By the end of our topic, you should be able to
1. explain the varied accounting concepts and principles.
2. solve exercises on accounting principles as applied in various cases,
and
3. manifest a greater level of consistency in solving exercises on
accounting principles as applied in various cases.

I hope last time you had a good time studying the proem of accounting. Today
I am so excited about our new topic. Let’s start!

Petness First Petshop

Juan dela Cruz opened his pet shop business called Petness First Petshop. He
opened a bank account for his business and deposited PHP500,000. The
business earned PHP50,000 but he had doubts about the recorded expense of
PHP60,000. He is not sure if he should include the following items as expenses:
Salary expense 20,000
Rent expense 10,000
Utilities expense (at home) 15,000
Utilities expense (at the store) 10,000
Insurance expense 5,000
Withdrawals 10,000
TOTAL 60,000
Can you tell what should not be included as expenses?

Be reminded that the topic revolves on possible violations of the principles and
you should be aware of it.
B. Development 40 mins Now let’s have your Pre-test. Choose the letter of the correct answer and write
Pagpapaunlad it in your accounting journal.
PRE-TEST
1. What is cost accounting?
A. It requires that assets should be recorded at original or acquisition cost.
B. It requires that assets should be recorded at the highest price.
C. It requires that assets should be recorded at the price mandated by the
owner.
D. It requires that assets should be recorded at the lowest price.
2. What is the objectivity principle?
A. It requires that accounting records should be based on reliable and
verifiable data as evidence of transactions.
B. It requires that accounting records should be based on the personal
decisions of the accountants.
 C. It requires that accounting records should be based on the industry the
firm is in.
D. It requires that accounting records should be based on the procedures
of the company.
3. What is materiality principle?
A. It requires that revenue and expense recognition should be matched.
B. It requires that assets should be recorded at original or acquisition cost.
C. It dictates practicability to rule over theory in determining the valuation
of an item.
D. It requires that accounting records should be based on reliable and
verifiable data as evidence of transactions.
4. What is needed in an Adequate Disclosure Principle?
A. Partial disclosure
B. Subjective disclosure
C. Proper disclosure
D. Options A, B, and C
5. What is the definition of business from the accounting point of view?
A. “An entity that is equal to the owner or management”
B. “An entity that is separate and distinct from the owner or
management”
C. “An entity that is one with the owner or management”
D. “An entity that is partially separated from the owner or management”

Photos courtesy of QuexBook Smart Mobile Learning

Activity: SAMPLE! SAMPLE!

Let’s move on to our next activity. Read the following principles and give a
practical example after each principle. Number 1 is already given. Call any
household member and share your insights. Have fun!

1. Business entity principle – a business enterprise is separate and distinct from

its owner or investor.
Example: If the owner has a barber shop, the cash of the barber shop should be
reported separately from personal cash.
2. Going concern principle – business is expected to continue indefinitely.
3. Time period principle – financial statements are to be divided into specific
time intervals.
4. Monetary unit principle – amounts are stated into a single monetary unit.
5. Objectivity principle – financial statements must be presented with
supporting evidence.
6. Cost principle – accounts should be recorded initially at cost.
7. Accrual Accounting Principle – revenue should be recognized when
earned regardless of collection and expenses should be recognized when
incurred regardless of payment. On the other hand, the cash basis principle
in which revenue is recorded when collected and expenses should be
recorded when paid. Cash basis is not the generally accepted principle
today.
8. Matching principle – cost should be matched with the revenue generated.
9. Disclosure principle – all relevant and material information should be
reported.
10. Conservatism principle – also known as prudence. In case of doubt, assets
and income should not be overstated while liabilities and expenses should
not be understated.
 11. Materiality principle – in case of assets that are immaterial to make a
difference in the financial statements, the company should instead record
it as an expense.
C. Engagement 30 mins DAY 2
Pakikipagpalihan Good day, and welcome to another fun and exciting learning activity. Are you
ready? Let’s start!

ACTIVITY 1 – Concept check

Choose the letter of the correct answer. Write your answer in your accounting
journal.

1. The accounting guideline that requires financial statement information to be

supported by independent, unbiased evidence other than someone's belief or
opinion is the:
A. Business entity principle D. Cost principle
B. Monetary unit principle E. Objectivity principle
C. Going-concern principle

2. The principle that requires every business to be accounted for separately and
distinctly from its owner or owners is known as the:
A. Objectivity principle D. Revenue recognition principle
B. Business entity principle E. Cost principle
C. Going-concern principle

3. The rule that requires financial statements to reflect the assumption that the
business will continue operating instead of being closed or sold unless evidence
shows that it will not continue, is the:
A. Going-concern principle D. Cost Principle
B. Business entity principle E. Monetary unit principle
C. Objectivity principle

4. To include the personal assets and transactions of a business's owner in the

records and reports of the business would conflict with the:
A. Objectivity principle D. Going-concern principle
B. Realization principle E. Revenue recognition principle
C. Business entity principle

5. The objectivity principle means that:

A. information is supported by independent, unbiased evidence
B. information can be based on what the preparer thinks is true
C. financial statements should contain optimistic information
D. a business may not re-organize revenue until cash is received

ACTIVITY 2 –Match it!

Manifest a greater level of consistency as you match the following words with
their definition. Write the letter of your answer in your accounting journal.

A. Going concern principle E. Time period principle H. Monetary unit principle

B. Objectivity principle F. Cost principle I. Accrual accounting principle
C. Matching principle G. Disclosure principle J. Conservatism principle
D. Materiality principle

______1. All relevant information should be included in the financial reports

______2. In case of doubt, assets and income should not be overstated.
______3. Assume that the company will continue indefinitely.
______4. All transactions should be supported by unbiased evidence.
______5. Expenses should be recorded in the period when the revenue is
generated.
______6. Minimal costs incurred should be recorded as an expense.
______7. A Philippine company should report financial statements in pesos.
______8. A barber who performs services for a client should record revenue.
 ______9. Statement of Financial position should be recorded as of December 31,
2015.
______10. A company that purchases furniture should record it at its acquisition
price.

D. Assimilation 10 mins This time you are going to express what you have learned. Supply the missing
Paglalapat words in the paragraph.

Generally accepted accounting principles (GAAP) are a common set of

accounting __________, standards and procedures that companies must follow
when they compile their __________ statements. __________ is a combination of
authoritative standards (set by policy boards) and the commonly accepted
ways of recording and reporting accounting information. GAAP improves the
clarity of the communication of ____________ information. GAAP is meant to
ensure a minimum level of ____________ in a company's financial statements,
which makes it easier for investors to ________ and extract useful information.
GAAP also facilitates the cross comparison of financial information _______
different companies.

V. ASSESSMENT 20 mins For our assessment, kindly indicate which principles are violated. Write your
(Learning Activity Sheets for answer in your accounting journal.
Enrichment, Remediation or
Assessment to be given on Weeks
3 and 6) 1. The owner-manager bought a computer for personal use. The invoice was
given to the accountant who recorded it as an asset of the business.
2. The statement of financial position of a company included equipment
purchased from Japan for 350,000 yen. It was reported at that amount in the
statement of financial position while all the other assets were reported in
Philippine pesos.
3. No financial statements were prepared by Michael Go for his business. He
explained that he will prepare the statements when he closes the business,
which he predicts to take place after 20 years.
4. Aside from owning a shoe store, Hermie operates a canteen. The assets of
the canteen are reported in the statement of financial position of the shoe store.
5. The owner purchased a hammer at a cost of PHP500. This was recorded as
an asset and expense to decrease its value by PHP50 per year for 10 years.
6. A food company ordered a machine needed in the assembly line of its
production department. Upon order, the machine was immediately listed as
one of its assets.

Congratulations you did it well!

VI. REFLECTION 5 mins ● Communicate the explanation of your personal assessment as

indicated in the Learner’s Assessment Card.
● In your accounting journal write your personal insights about the lesson
using the prompts below.
I understand that ___________________.
I realize that ________________________.
I need to learn more about __________.
Prepared by: Jennifer B. Fernandez, SDO Imus City Checked by: Dr. Josephine Canlas, Adora G. del Mundo, Cherie
L. Logatoc