Fundamentals of Accountancy, Business and Management 1: Quarter 3 - Module 1: Introduction To Accounting
Fundamentals of Accountancy, Business and Management 1: Quarter 3 - Module 1: Introduction To Accounting
Fundamentals of Accountancy, Business and Management 1: Quarter 3 - Module 1: Introduction To Accounting
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Senior High School
Fundamentals of
Accountancy, Business
and Management 1
Quarter 3 - Module 1:
Introduction to Accounting
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Table of Contents
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What I Need To Know
Module Content
This module in Fundamentals of Accountancy, Business and Management 1
for the 21st century learners is designed to make learning more engaging and
meaningful to ABM Senior High School learners in the flexible and blended learning
environments. Further, the module provides specific examples on how accounting is
applied in making business decisions . One of the example is service businesses
wherein they provide intangible goods or services to customers. Services usually
generates profit by charging labor and other services rendered to customers.
Meaningful activities are given in the form of worksheets, assignments and
online or virtual activities which allow learners to work at their own pace. As you go
along, you will know the definition, nature and history or origin of accounting. This
module will let you know the external and internal users of financial information. Here,
you are going to solve exercises and problems on the identification of users of
information, type of decisions to be made, and type of information needed by the
users. In addition, you will also cite users of financial information, and identify whether
they are external or internal users.
Learning is fun! So enjoy your journey as you unfold the most interesting and
worthwhile activities in accounting.
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General Instructions
7. Remember to review every time you are done answering the activities; and
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What I Know
Instructions: Choose carefully the letter that best describes your answer.
Write your answer on the space provided before the number.
____1) The selecting of economic events that are relevant to a particular business
transaction is called __________.
a. Recording c. Identifying
b. Measuring d. Classifying
____2) Keeping a chronological diary of events that are measured in pesos is
___________.
a. Verifying c. Interpreting
b. Recording d. Summarizing
____3) It occurs through the preparation and distribution of financial and other
accounting reports is called ___________.
a. Measuring c. Recording
b. Classifying d. Communicating
____4) Accounting provides assistance to decision makers by providing them
financial reports that will guide them in coming up with sound decisions is
called _____________.
a. A process c. An information system
b. A service activity d. An art and a discipline
____5) Collects processes and communicates financial information of any entity
is ______________.
a. A process c. An information system
b. A service activity d. An art and a discipline
____6) The method of performing any specific job step by step according to
the objectives or targets is ____________.
a. A process c. An information system
b. A service activity d. An art and a discipline
____7) Dealt with commercial transactions at the time of Mesopotamia such as
listing of accounts receivable and accounts payable is during _________.
a. The cradle of civilization c. The industrial revolution (1760-1830)
b. French revolution (1700‟s) d. 14th century double-entry bookkeeping
____8) Mass production and the great importance of fixed assets were given
attention during the period of ____________.
a.The cradle of civilization c. The industrial revolution (1760-1830)
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b.French revolution (1700‟s) d. 14th century double-entry bookkeeping
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____9) The most important event in accounting history is generally considered to
be the dissemination of double entry bookkeeping by Luca Pacioli
happened during _______________.
a.The cradle of civilization c. The industrial revolution (1760-1830)
b.French revolution (1700‟s) d. 14th century double-entry bookkeeping
____10) The thorough study of accounting and development of accounting theory
began during the period of ______________.
a.The cradle of civilization c. The industrial revolution (1760-1830)
b.French revolution (1700‟s) d. 14th century double-entry bookkeeping
____11) These are the users wherein accounting information is used for analyzing
viability and profitability of their investments; ____________.
a. Management c. Creditors e. Employees
b. Owners d. Investors
____12) These users' needs the information because they are concerned with the
risk inherent in investing and the returns or invested decisions are the
________.
a. Management c. Creditors e. Employees
b. Owners d. Investors
____13) This user in which accounting is of great assistance to management for
planning, controlling, and decision making process is the __________.
a. Management c. Creditors e. Employees
b. Owners d. Investors
____14) These users who is interested in accounting information because it
enables them to determine the credit worthiness of the business or decide
whether to extend credit or not are the ____________.
a. Management c. Creditors e. Employees
b. Owners d. Investors
____15) These users who wants to find out the financial health, amount of sales and
profitability of business to determine their job security are the ____________.
a. Management c. Creditors e. Employees
b. Owners d. Investors
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What's New
Activity 1
Directions: Explain the three highlighted words in the infographic.
Write your answer on the lines provided below.
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What Is It
Definition of Accounting
Example:
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This definition will provide a better understanding of accounting in terms of
the following:
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>Accounting is concerned with transactions and events having financial
character;
>In accounting, business transactions are expressed in terms of money; and
>Accounting interprets the result of financial statement.
Nature of Accounting
Based on this definition we can derive the following basic features of accounting:
Accounting is a process.
A process refers to the method of performing any specific job step by step
according to the objectives or targets. Accounting is identified as a process, as it
performs the specific task of collecting, processing and communicating financial
information. In doing so, it follows some definite steps like the collection, recording,
classification, summarization, finalization, and reporting of financial data.
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Accounting deals with financial information and transactions.
Accounting records financial transactions and data, classify these and finalize
their results given for a specified period of time, as needed by their users. At every
stage, from start to finish, accounting deals with financial information and financial
information only. It does not deal with non-monetary or non-financial aspects of such
information.
Accounting is an information system.
Accounting is recognized and characterized as a storehouse of information. As a
service function, it collects processes and communicates financial information of any
entity. This discipline of knowledge has evolved to meet the need for financial
information as required by various interested groups.
History of Accounting
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The Industrial Revolution (1760-1830)
Mass production and the great importance of fixed assets were given
attention during this period.
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is to assure transparency and reliability, and to obtain greater confidence on
accounting information used by global investors.
Nowadays, investors seek investment opportunities all over the world. To
remain competitive, businesses everywhere feel the need to operate globally. The
trend now for accounting professionals is to observe one single set of global
accounting standards in order to have greater transparency and comparability of
financial data across borders.
What's More
Activity 2
___________________________________________________
Activity 3
Instructions: Answer the questions according to your own understanding. Write your
answer on the lines provided below.
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1. Define Accounting.
What I Can Do
Activity 4
Instructions:
2. Be Creative.
3. Submit your video presentation only in one file through cellphone, usb or any of
your convenience.
Guidelines:
Use any media platform at your convenience
Maximum of 2 minutes
You can use Mother Tongue, Tagalog or English as language
Wear casual attire
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Self-Check!
Great job! You have completed Lesson 1 successfully! Before going to the
next lesson, check the icon that best shows your learning experience.
Additional Activity
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After doing the activities:
I noticed _______________________________
A question I have is _______________________________
I’m not sure _______________________________
I realized _______________________________
Assessment
Let us check how much you have learned from this module's coverage.
Fill in the blank: Write your answer in the blank provided before the number.
_____________1) Refers as the economic events of an organization.
_____________2) The art of recording, classifying, summarizing and finalizing
financial data.
_____________3) Refers to the method of performing any specific job step by step
according to the objectives or targets.
_____________4) This involves keeping a chronological diary of events that are
measured in pesos.
_____________9) Mass production and the great importance of fixed assets were
given attention during this period.
What's In
Activity 1. Review
Directions: Complete the statement. Write your answer on the lines provided
below.
In the previous lesson I learned that ______________________________________
___________________________________________________________________
___________________________________________________________________
What's New
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Activity 2
What business would you want to enter into?
Sample businesses:
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Instructions: Choose one of any business. Write your answer on the lines provided.
Question 1- If you would like to own a business, what kind of business would you
endeavor, and what do you want to know about the business?
What Is It
Accounting
- is the language employed to communicate financial information of a concern to
such parties.
There are two broad categories of users of financial information: internal and
external users.
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INTERNAL USERS
Internal users of accounting information are those
individuals inside a company who plan, organize, and run the
business. These users are directly involved in managing and
operating the business. These include marketing managers,
production supervisors, finance directors, company officers and
owners.
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Management
Information need: income/earnings for the period, sales, available cash, production
cost
Decisions supported: analyze the organization's performance and position, and take
appropriate measures to improve the company results, sufficiency of cash to pay
dividends to stockholders; pricing decisions
Employees
Information need: profit for the period, salaries paid to employees
Decisions supported: job security, consider staying in the employ of the company or
look for other employment opportunities
Owners/Investors/Stockholders
Information need: profit or income for the period, resources or assets of the
business, liabilities of the business
Decisions supported: considerations regarding additional investment, expanding the
business, borrowing funds to support any expansion plans.
Accounting information is presented to internal users usually in the form of
management accounts, budgets, forecasts and financial statements. This information
will support whatever decision of the internal users.
EXTERNAL USERS
External users are individuals and organizations
outside a company who want financial information
about the company. These users are not directly
involved in managing and operating the business.
The two most common types of external users are
potential investors and creditors.
Potential Investors use accounting information to
make decisions to buy shares of a company.
Creditors (such as suppliers and bankers) use
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accounting information to evaluate the risks of granting credit or lending money. Also
included as external users are government regulatory agencies such as Securities
and Exchange Commission (SEC), Bureau of Internal Revenue (BIR), Department of
Labor and Employment (DOLE), Social Security System (SSS), and Local
Government Units (LGUs).
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Tax Authorities (BIR): for determining the credibility of the tax returns filed on behalf
of a company.
Customers: for assessing the financial position of its suppliers which is necessary for
them to maintain a stable source of supply in the long term.
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the business. They need more detailed information on a timely basis in order to
support their decisions. Examples of these internal users are managers, employees
and owners.
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What's More
Activity 3
Instructions: Answer the questions below. Write your answer on the lines provided.
__________________________________________________
______________________________________________
______________________________________________________
__
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Activity 4
Directions: Answer the questions below. Write you answer on the lines
provided.
1. Is the Local Government Unit (LGU) interested in your accounting reports?
___________________________________________________________________
2. Are the officers of the Local Government Unit internal or external users? Why?
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What I Can Do
Activity 5
Instructions: Using the graphic below. Write at least four frequently asked
questions by Internal Users. Write your answer on the lines provided.
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
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Self-Check!
Great job! You have completed Lesson 2 successfully! Before going to the
next lesson, check the icon that best shows your learning experience.
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If you have checked the first icon, you can proceed to the next module. If you
have checked the second icon, you need to review the things that you need to relearn.
If you have checked the third icon, it would be best if you read more and ask help
from your teacher, parents or peers in clarifying the lessons that you find difficult. Be
honest so that you will truly improve.
Additional Activity
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After doing the activities:
I noticed _______________________________
A question I have is _______________________________
I’m not sure _______________________________
I realized _______________________________
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Assessment
Essay
1. In your own opinion, which internal user needs the accounting information the most?
Why?
___________________________________________________________________
2. In your own opinion, which external user needs the accounting information the
most? Why?
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as follows;
relevant to a particular business
transaction Allowance P100
The economic events of an Expenses:
organization are referred to as
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Fare (Tricab) P20
transactions.
Examples of economic events or
transactions - In a bakery business:
• sales of bread and other bakery
products
RECORDING – this involves keeping a
chronological diary of events that are
measured in pesos. The diary referred
to in the definition are the
journals and ledgers which will be
discussed in future chapters.
Pre-test
COMMUNICATING – occurs through
1. C 6. A 11. B
2. B 7. A 12. D
3. D 8. C 13. A
4. B 9. D 14. C
5. C 10. B 15. E
(Lesson 1)
Answer Key
FOR COMPLETING THIS MODULE!
CONGRATULATIONS
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Activity 3
1. Accounting is the process of
IDENTIFYING, RECORDING and
COMMUNICATING
economic events of an organization for
interested users.
2. • Is my business earning?
Post-test
(profitability)
• How much daily or monthly sales do I 1. Transactions
need in order to recover my fixed cost?
2. Accounting
(break-even)
• Do I need to hire additional workers to 3. Process
help me with my production? 4. Recording
• Can I afford to set up a new store in
another place? Where do I get the 5. Art
funds? (financing decisions) 6. Clay Tablet
• Can I afford to pay a bank loan?
Activity 4
Video Presentation
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Activity 2
1.
• How much income have I earned
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for a certain period?
• How much receivables do I have?
• How much do I owe my
suppliers?
• How much is the value of my
inventory?
2.
• Will I be able to pay my liabilities
if I earn this much?
Activity 1
• Can I expand my business? Will I
I have learned in the previous lesson that
be able to afford buying new
accounting is a systematic process of
equipment?
identifying, recording, measuring,
• Do I need to adjust my selling classifying, verifying, summarizing,
price? interpreting and communicating financial
information.
• Do I need to cut costs?
One nature of accounting is, it is a service
activity and the father of accounting is Luca
Pacioli.
(Lesson 2)
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Activity 4
Activity 3
1. Yes. The LGU will check
whether you are paying your potential investors –
local taxes. As required,
businesses must have a
business permit before they are Income or profit of the business
allowed resources or assets of the business
to operate in the city or liabilities or amount owed by the
municipality. This is renewed business to its suppliers
every year, with appropriate
taxes paid. The local government taxes paid by the business
may review your
salaries and other benefits paid to
accounting records to check employees
whether you are declaring or
paying the correct taxes.
Potential Investors – Is it profitable
2. External. They are not directly
for me to invest in this business?
involved in the operation or
management of the business.
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Activity 3
Owners invest capital to start and run
1. Yes. The LGU will check whether you
business with the primary objective to
are paying your local taxes. As
required, businesses must have a earn profit. They need accurate financial
business permit before they are allowed
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to operate in the city or municipality. earned
This is renewed every year, with
2. Investors- They use financial
appropriate taxes paid. The local
government may review your statements to obtain valuable
information used in the valuation and
accounting records to check whether
you are declaring or paying the correct
credit analysis of companies. ...
taxes. Knowledge of accounting helps investors
2. External. They are not directly
determine an assets' value, understand a
involved in the operation or company's financing sources, calculate
management of the business. profitability, and estimate risks
embedded in a company's balance sheet.
3. Internal users are people within a
business organization who use financial
information. While External users are
people outside the business entity
(organization) who use accounting
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Activity 5
1. Is cash sufficient to pay
bills?
2. What is the cost of
manufacturing each unit of
product?
3. Can we afford to give
employee pay raises this
year?
4. Which product line is the
most profitable?
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E-BOOK
Carlsberg S. Andres, Arthur P. Barrido, Jr., and Christopher B. Honorario. (2016).
Fundamentals of Accountancy, Business, and Management 1. Commission on
Higher Education.
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For inquiries or feedback, please write or call:
Department of Education
Masterson Avenue, Upper Balulang, Zone
Office Address: 1, Cagayan de Oro City, Misamis Oriental
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