ABM Lesson Week 1

Fundamental of Accountancy,
Business and Management2
Teacher Rochelle
Direction: Look on the table and find the words related to Statement of Financial Position
B A L A N C E S H E E T
D P I K J U Q Y J Q H E
C C A S H H U H G U D S
A L B M N G I T F I Q S
E T I R U N T T R P S A
O X L A N D Y D G M W A
Y Z I P A Y A B L E R P
U O T A C U R R E N T L
P A Y P A T E N T T Y U
Learning Objectives
• Identify and define the elements of financial
position.
• Solve problems; and
• Apply learned concepts in daily experiences.
Statement of Financial Position (SFP)
• also known as the Balance Sheet, shows the

financial position of a business entity at a given
period or a specified date. Its purpose is to
help the financial statement users in the
assessment of the financial health and
soundness of a business entity in determining
its liquidity, financial, credit and business risks.
• a report based on the accounting equation:
Assets= Liabilities + Owners’ Equity. The sum of
assets should be balanced to the sum of the
liabilities and equity(Salazar, 2017).
3 Elements of SFP
• 1. Assets -resources owned and controlled by the
business);
• 2. Liabilities -obligations owed to someone by
the business; and
• 3. Owner’s Equity or Capital-residual interest of
the owners of the business or what was left of the
assets after paying the liabilities is the right of
the owners.
ASSET
o Current Asset- items that are listed on a

business’ statement of financial position that
are expected to be used or realized into cash
within one accounting period or a year.
• Cash
• Cash Equivalents
• Notes Receivable
• Account Receivable
• Inventories
• Prepaid Expenses
Non-current Asset- items that are listed on a business’
statement of financial position that cannot be used or realized into
cash within one accounting period or a year
• Property, Plant and Equipment

• Accumulated Depreciation
• Intangible Assets
LIABILITIES
o Current Liabilities- liabilities that should be

paid and realized within a year after the year-
end date
• Accounts Payable
• Notes Payable
• Accrued Liabilities
• Unearned Revenues
• Current Portion of Long-term Debt
o Non-Current Liabilities-are liabilities that
are to be paid for more than a year from the
year- end date.
• Mortgage Payable
• Bonds Payable
OWNER’S EQUITY/ CAPITAL
• Capital
• Withdrawal
• Income Summary
Dale’s Garden
Statement of Financial Position
As of December 31, 2021
ASSETS
Current Assets
Cash PhP 250,000.00
Accounts Receivable 85,000.00
Garden Supplies and Materials 185,000.00
Prepaid Expenses 48,000.00
Total Current Assets PhP 568,000.00
Non- Current Assets

Garden Tools and Equipment PhP 285,000.00
Accumulated Depreciation (95,000.00) PhP 190,000.00
Delivery Vehicle 500,000.00

Land 1,500,000.00
Building 550,000.00
Total Non- Current Assets PhP 2,622,500.00
TOTAL ASSETS PhP 3,190,500.00

LIABILITIES
Current Liabilities
Accounts Payable PhP 355,000.00
Notes Payable, 1 year 150,000.00
Salaries Payable 35,500.00
Total Current Liabilities PhP 540,500.00
Non-Current Liabilities
Notes Payable, 7 years PhP 350,000.00
TOTAL LIABILITIES PhP 890,500.00
OWNER’S EQUITY
Owner’s Equity
D. Ramos, Capital PhP 2,300,000.00
TOTAL LIABILITIES AND OWNER’S PhP

EQUITY 3,190,500.00
Steps in preparing a simple Statement of
Financial Position (SFP)
1. You should start with a heading. The heading includes the name of the
business or entity (ex. JD Gardens), name of the financial statement
(ex. Statement of Financial Position) and the reporting date/ period
(ex. As of December 31, 2019). We use as of in SFP because the
amounts (in Philippine Peso) of the items are cumulative from the
start of the operations of the business up to the accounting date.
2. Assets are presented first. These are classified into current and non-
current assets.
3. Next is to present the Liabilities. These should also be classified into

current and non- current liabilities.
1.
4. Equity/ Owner’s Equity is then added after the liabilities to complete

the accounting equation (Assets= Liabilities + Equity)
Forms of SFP
• Report Form - it is a form of SFP wherein accounts
are presented vertically, the Assets first, followed by
the Liabilities and then the Equity. The above
presented Balance Sheet is an example of a Report
Form SFP
• Account Form - it is a form of SFP wherein accounts
are presented horizontally, the Assets are presented
on the left side while the Liabilities and the Equity
are on the right side of the Balance Sheet. It will look
like the debit and credit balances of an account.
Activity 1: “Guess What”
Time Allotment: 5 minutes

Direction: Classify the following into Assets, Liabilities or
Equity
1. Cash
2. Inventory
3. Notes Receivable
4. Account Payable
5. Building
6. Equipment
7. Supplies
8. Notes Payable
9. Unearned Income
10. Investment, Capital
Fig. 1 Accounting Equation
Assets = Liabilities + Owner’s Equity/ Capital
PhP
= PhP 400.00 + PhP 600.00
1,000.00
Activity 2: Let’s Analyze
1. You have a capital of PhP 5,000.00 for your start-up
business and you borrowed from your parents PhP
4,000.00 and promised to pay it before the end of the
month. How much will be your assets?
2. Laba Ko Inc. has total assets of PhP 1,000,000.00, wherein
the total current assets is amounting to Php 650,000.00.
How much is the company’s non-current assets?
3. The total assets of Juan Co. is Php 860,500.00, total equity
is Php 680,500.00. How much is its liabilities?
4. The company has a liability of PhP 550,000.00 from a
bank, its equity is worth Php 320,000.00. How much is its
assets?
5. Gia’s Bakeshop has current assets of Php 250,000.00 and
non-current assets of PhP 360,000.00. It has current
liabilities of PhP 78,000.00 and non-current liabilities of
Assignment
Prepare your household’s Statement of Financial
Position. Give at least five examples of your assets.
Asset
Liabilities
Owner’s Equity
Activity 3: Let’s Answer
Directions: Multiple Choice. Identify the letter of

the best answer.
1. It is a financial statement that provides a

snapshot of what a company owns and owes, as
well as the amount invested by shareholders.
a. Statement of Changes in Equity
b. Statement of Comprehensive Income
c. Statement of Financial Position
d. Cash Flow Statement
2. The following are current liabilities except for _____.
a. accrued expenses c. mortgage payable
b. income tax payable d. trade accounts payable
3. Which is an example of asset?

a. Building c. unearned income
b. capital d. notes payable
4. Which of the following refers to the cost of unsold

merchandise?
a. assets c. liabilities
b. inventory d. cash
5. Which is not an example of intangible assets?

a. patent c. dividends
b. copyright d. franchise

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Fundamental of Accountancy,

Business and Management2

• also known as the Balance Sheet, shows the

o Current Asset- items that are listed on a

• Property, Plant and Equipment

o Current Liabilities- liabilities that should be

Non- Current Assets

Accumulated Depreciation (62,500.00) PhP 437,500.00

TOTAL ASSETS PhP 3,190,500.00

TOTAL LIABILITIES PhP 890,500.00

TOTAL LIABILITIES AND OWNER’S PhP

3. Next is to present the Liabilities. These should also be classified into

4. Equity/ Owner’s Equity is then added after the liabilities to complete

Time Allotment: 5 minutes

Assets = Liabilities + Owner’s Equity/ Capital

Directions: Multiple Choice. Identify the letter of

1. It is a financial statement that provides a

3. Which is an example of asset?

4. Which of the following refers to the cost of unsold

5. Which is not an example of intangible assets?

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