Fundamental of Accountancy,

Business and Management 2

Ms. Jessalyn Sarmiento - Tancio

Ms. Jessalyn Sarmiento - Tancio

Fundamentals of Accountancy Business and Management 2
August 2020
 Quarter 1

Lesson 1. Statement of Financial Position

Most Essential Learning Competencies
The learner…
1. identify the elements of the SFP and describe each of them.
(ABM_FABM12- Ia-b-1)

2. prepare an SFP using the report form and the

account form with proper classification of items
as current and noncurrent.
(ABM_FABM12- Ia- b-4)

What is Accounting?
Accounting is the process of recording financial transactions pertaining to a business. Businesses use accounting to
keep their financial information organized which help in the effective management of business.
The accounting process includes summarizing, analyzing and reporting these transactions to oversight agencies,
regulators and tax collection entities.
What are Accounts?
Accounts are names and numbers that you create to track those five primary things in an accounting system those five
things have different names
Assets – things you owned
Liability – the money you owe
Income- Money you receive
Expense – money you spend
Equity- your overall worth

Why use accounts/ accounting?

 Budgeting
 Identify Trends
 Accurate reports
 Maintaining Transparency
 Confidence in making decision for your organization

What is the Accounting Equation?

Assets = Liabilities + Equity

Ms. Jessalyn Sarmiento - Tancio

Fundamentals of Accountancy Business and Management 2
August 2020
Statement of Financial Position
Statement of Financial Position
 Also known as the Balance sheet.
 This statement includes the amounts of the company’s total assets, liabilities, and owner’s equity which in totality
provides the condition of the company on a specific date.

Assets
Anything of monetary value owned by a person or business. Assets are classed as capital/fixed, current, tangible or
intangible and expressed in terms of their cash value on financial statements
 Tangible assets are those tangible physical assets acquired to carry on the business of a company with a life
exceeding one year. It includes money, land, buildings, investments, inventory, cars, trucks, boats, or other
valuables.
 Intangibles such as goodwill are also considered to be assets. client lists
Examples of Intangible assets franchise agreements, favorable finance or lease agreements, brand names,
distribution networks, proprietary processes or technology (or anything protected by copyright), supplier
contracts, skilled employees

PERMANENT ACCOUNTS
 these accounts are permanent in a sense that their balances remain intact from one accounting period to another.
Examples: Cash, Accounts Receivable, Accounts Payable, Loans Payable and Capital

Accrued income
 income which has been earned but not yet received.

 Income must be recorded in the accounting period in which it is earned. Therefore, accrued income must be
recognized in the accounting period in which it arises rather than in the subsequent period in which it will be
received.

Prepaid asset
 an expense that has already been paid for, but which has not yet been consumed. The concept most
commonly applies to administrative activities, such as prepaid rent or prepaid advertising.
 A prepaid asset appears as a current asset on an organization's balance sheet, assuming that it is expected to be
consumed within one year. Once the asset has been consumed, it is charged to expense.

CONTRA ASSETS
• Contra assets are those accounts that are presented under the assets portion of the SFP but are reductions to the company’s
assets.

These include Allowance for Doubtful Accounts and Accumulated Depreciation.

Allowance for Doubtful Accounts is a contra asset to Accounts Receivable. This represents the estimated amount that the company
may not be able to collect from delinquent customers.

Accumulated Depreciation is a contra asset to the company’s Property, Plant and Equipment. This account represents the total
amount of depreciation booked against the fixed assets of the company.

Liability
 A liability is typically an amount owed by a company to a supplier, bank, lender, or other provider of goods,
services, or loans. Liabilities can be listed under accounts payable, and are credited in the double entry
bookkeeping method of managing accounts.

Contra liability account

 account is a liability account where the balance is expected to be a debit balance. Since a debit balance in a
liability account is contrary to the normal credit balance, the account is referred to as a contra liability account.
Ms. Jessalyn Sarmiento - Tancio
Fundamentals of Accountancy Business and Management 2
August 2020
Accrued expense
 an accounting expense recognized in the books before it is paid for. Accrued expenses are typically periodic, and
are documented on a company's balance sheet as current liabilities.

Unearned income
 income from investments and other sources which is unrelated to employment. Examples of unearned income
include interest from savings accounts, bond interest, alimony, and dividends from stock. Unearned income,
known as a "passive source of income," is income not acquired through work
Current assets and current liabilities are also called short term assets and shot term liabilities

Current Asset
 Assets that can be realized (collected, sold, used up) within one year after year-end date.
Examples include Cash, Accounts Receivable, Merchandise Inventory, Prepaid Expense, etc.

Current Liabilities
 Liabilities that fall due (paid, recognized as revenue) within one year after year-end date.
Examples include Notes Payable, Accounts Payable, Accrued Expenses (example: Utilities Payable), Unearned
Income, etc.
Non-Current assets and Non-Current liabilities are also called long term assets and long term liabilities
Noncurrent Assets – Assets that cannot be realized (collected, sold, used up) one year after yearend date.
Examples include Property, Plant and Equipment (equipment, furniture, building, land), Long Term investments,
Intangible Assets etc.
Noncurrent Liabilities – Liabilities that do not fall due (paid, recognized as revenue) within one year after year-
end date. Examples include Loans Payable, Mortgage Payable, etc.

Equity
 is typically referred to as shareholder equity which represents the amount of money that would be returned to a
company’s shareholders if all of the assets were liquidated and all of the company's debt was paid off.

Ms. Jessalyn Sarmiento - Tancio

Fundamentals of Accountancy Business and Management 2
August 2020
 Example of
SFP or
BALANCE
SHEET

Ms. Jessalyn Sarmiento - Tancio

Fundamentals of Accountancy Business and Management 2
August 2020
In Preparing Statement of Financial Position we have different part
a. Heading

i. Name of the Company

ii. Name of the Statement

iii. Date of preparation (emphasis on the wording – “as of”)

Report form
A balance sheet is
a balance sheet that
presents asset, liability,
and equity accounts in a
vertical format.

Account form 
A financial statement
format where the assets
are reported on the left
side and the liabilities
and equity are reported
on the right side
a. Emphasize that the two
are only formats and will
yield the same amount of
total assets, liabilities and
equity

b. Emphasize that assets

should always be equal to
liabilities and equity

Ms. Jessalyn Sarmiento - Tancio

Fundamentals of Accountancy Business and Management 2
August 2020
When the company has a lot of assets (example: cash, accounts receivable, prepaid expenses), owners may sometimes think that the
company is doing well. There are instances that owners forget that they might also have a lot of liabilities which may result to their
equities having a very small balance. With the preparation of the SFP, the owner can easily see the assets, liabilities and equity
balances of his/her company which will show exactly the financial position of the company as of a given point in time.

Important matters:
a. Without the SFP, the company cannot know if it truly owns anything because in case of bankruptcy, liabilities are paid first.
- Small businesses don’t usually account for their assets and liabilities as long as the owners see that cash is coming in. They
sometimes forget that when liabilities become due, if they don’t have enough current assets to be able to pay those liabilities, then they
can get in trouble with their debts.

b. Importance of the format:

i. Report form vs Account form – these are just formats. Usually depends on the reader for preference.
ii. Report form is the normal format for those not familiar with accounting. Account form easily shows that the SFP is balanced
and separates assets from liabilities and equities.
iii. Separation of the current and noncurrent – current liabilities are upcoming liabilities and the company should be prepared
to pay them. Companies should prepare as early as today for payment of noncurrent liabilities as these usually have large balances.
Current assets show the company’s ability to sustain its current operations while noncurrent assets shows the company’s
ability to sustain long-term operations.

Quiz # 1
Define the following question. Choose the answer below.
1. The process of recording financial transactions pertaining to a business.
2. What is the Accounting Equation?
3. This statement includes the amounts of the company’s total assets, liabilities, and
owner’s equity which in totality provides the condition of the company on a specific
date.
4. Anything of monetary value owned by a person or business.
5. Physical assets acquired to carry on the business of a company with a life exceeding one year.
6. Income which has been earned but not yet received.

7. An expense that has already been paid for, but which has not yet been consumed.
8. those accounts that are presented under the assets portion of the SFP but are reductions to the company’s assets.
9. An amount owed by a company to a supplier, bank, lender, or other provider of goods, services, or loans.
10. An accounting expense recognized in the books before it is paid for
11. Assets that can be realized (collected, sold, used up) within one year after year-end date.
12. Represents the amount of money that would be returned to a company’s shareholders if all of the assets were
liquidated and all of the company's debt was paid off.

13. A balance sheet is a balance sheet that presents asset, liability, and equity accounts in a vertical format.
14. A financial statement format where the assets are reported on the left side and the liabilities and equity are
reported on the right side
15. Liabilities that do not fall due (paid, recognized as revenue) within one year after year-end date.

Accounting, Assets, Prepaid asset, Assets = Liabilities + Equity, Tangible assets, Liability, Report Ms. form
JessalynStatement
Sarmiento - Tancio
Fundamentals of Accountancy Business and Management 2
of Financial Position, Accrued income, CONTRA ASSETS, Accrued expense, Equity, Noncurrent Liabilities,August 2020
Account form, Current Asset, Current Liabilities, Non-Current Asset
Quiz # 2
Answer the following problem.
1. Learning is Fun Company had current assets amounting to Php 100,000. Noncurrent assets
for the year totaled Php 76,000. How much is the company’s total assets?
2. Happy Selling Company’s total liabilities amounted Php 10,000. Total equity had an ending
balance of Php 20,000. How much is total assets?
3. Happy Selling’s had the following accounts at year end: Cash-250,000, Accounts Payable-70,000, Prepaid Expense-
15,000. Compute for the company’s current assets.
4. Happy Selling’s Accounts Receivable amounted to Php 500,000. Prepaid Expense and Unearned Income totaled Php
30,000 and Php 10,000 respectively. Cash balance amounted to Php 100,000 while Accounts Payable and Inventory
totaled to Php 20,000 and Php 10,000 respectively. How much is the company’s current assets? Current liabilities?
5. Company’s Total Liabilities and Equity amounted to Php 285,000. Total noncurrent assets ended at Php 85,000. Cash
totaled Php50,000. Inventory amounted to Php100,000. Assuming the company had no other assets, how much is
Accounts Receivable?
6. Total assets amounted to Php575,000. Total equity amounted to Php 250,000. Accounts Payable amounted to Php
50,000 while Unearned Income totaled Php 85,000. Assuming there are no other current liabilities, compute for the
company’s noncurrent liabilities.

Ms. Jessalyn Sarmiento - Tancio

Fundamentals of Accountancy Business and Management 2
August 2020
Activity #1
Arrange the following accounts in Current Asset, Non- Current Asset, Current
Liabilities, Non- Current Liabilities

1. Good will 14. Accrued Expenses

2. Intangible Assets 15. Long Term – Debt
3. Accounts Receivable 16. Land
4. Loans Payable 17. Company Vehicle
5. Cash 18. Property, Plant and Equipment
6. Utilities Payable 19. Materials and Supplies
7. Inventories 20. Accumulated Depreciation
8. Prepaid Expense 21. Software
9. Long Term Investments 22. Rent Expense
10. Term Debt 23. Building
11. Accounts Payable 24. Furnitures and Fixtures
12. Income Taxes Payable 25. Allowance for Doubtful Accounts
13. Mortgage Payable

Non- Current Asset Non- Current Liabilities

Non- Current Asset Non- Current Liabilities

Ms. Jessalyn Sarmiento - Tancio

Fundamentals of Accountancy Business and Management 2
August 2020
Activity # 2
Using the Accounts Form prepare a Statement of Financial Position (Balance Sheet)
Good will -5,000 Long Term – Debt-
420,000
Accounts Receivable-15,000
Land- 500,000
Loans Payable- 23,000
Company Vehicle- 150,000
Cash- 10,000
Property, Plant and Equipment- 320,000
Utilities Payable- 120,000
Materials and Supplies 45,300
Inventories- 50,000
Software-100,000
Prepaid Expense- 7,000
Rent Expense- 26,000
Term Debt- 75,000
Building- 1,200,000
Accounts Payable- 30,000
Furnitures and Fixtures- 33,000
Income Taxes Payable- 60,000
Owner’s Capital-1,230,000
Mortgage Payable- 200,000
Additional Investment- 214,000
Accrued Expenses- 15,000
Accumulated Depreciation- 22,300

Ms. Jessalyn Sarmiento - Tancio

Fundamentals of Accountancy Business and Management 2
August 2020
Activity # 3

Prepare a Statement of Financial Position for the company (account form) Write
you answer on the given space below.

You were hired by Mr. Juan Dela Cruz to prepare his sari-sari store’s Statement of
Financial Position. In order to prepare the statement, you identified the following assets
and liabilities of Mr. Dela Cruz:
a. His sari-sari store has cash deposited in a bank account amounting to P50,000
b. His sari-sari store had a lot of uncollected sales from customers amounting to P75,000
c. The total amount of merchandise left inside the store is P30,000
d. He already paid one year’s rent in advance amounting to P12,000
e. The value of all the company’s furniture amounted to P100,000
f. He bought merchandise from his supplier amounting to P25,000 and the supplier agreed that payment can
be made 2 months after year-end
g. SSS, Phil health and Pag-ibig Payables for his one employee totaled P5,000
h. The sari-sari store had outstanding liabilities to utility companies amounting to P3,000
i. He had a loan from the bank amounting to P50,000 to be paid in 3 years Prepare a Statement of Financial
Position for the company (one in report form and one in account form)

Lesson 2. Statement of Comprehensive Income (SCI)

Most Essential Learning Competencies

The learner…

1. identify the elements of the SCI and describe each of these items for
a service business and a merchandising business (ABM_FABM12- Ic-d-
5)
2. prepare an SCI for a service business using the single-step approach
(ABM_FABM12- Ic-d-6)
3. prepare an SCI for a merchandising business using the multistep
approach (ABM_FABM12- Ic-d-7)

Ms. Jessalyn Sarmiento - Tancio

Fundamentals of Accountancy Business and Management 2
August 2020
What are accruals?
• refers to adjustments that must be made before a company's financial statements are issued.
Accruals involve the following types of business transactions:
• expenses, losses, and liabilities that have been incurred but are not yet recorded in the accounts, and
• revenues and assets that have been earned but are not yet recorded in the accounts
Expense Accruals
Expenses that have been incurred for which we have not yet received an invoice(receipt) from the supplier.
Example
 Travel expenses paid by an employee, but not yet claimed back from the company
 Outside services (legal, advertising, cleaning) received or rendered but not yet billed
Revenue Accruals
good or services that have delivered for which we have not yet billed the customer
Example
 Service work to client performed under existing contract, not yet billed.
 Electricity company supply the electricity to the consumer but not yet billed until the end of the month.

Revenues
Fees earned from providing services and the amounts of merchandise sold. Often the term income is used instead
of revenues.
• Examples of revenue accounts include: Sales, Service Revenues, Fees Earned, Interest Revenue, Interest
Income. 

Expense
Expenses associated with the main activity of the business are referred to as operating expenses. Expenses
associated with a peripheral activity are non-operating or other expenses.
• Example a retailer's interest expense is a non-operating expense. A bank's interest expense is an operating
expense.
Types of Business
1. Service Business
A company that provides certain professional support to its clients.
Examples:
consulting, accounting, transportation, cleaning, hospitality, traveling or maintenance, 
Ms. Jessalyn Sarmiento - Tancio
Fundamentals of Accountancy Business and Management 2
August 2020
 2. Merchandise Business
A business that purchases finished products and resells them to consumers.

Accrued income
is income which has been earned but not yet received.

Accrued expense
is expense which has been incurred but not yet paid.

STATEMENT OF COMPREHENSIVE INCOME

STATEMENT OF COMPREHENSIVE INCOME

• Also known as the income statement.
• Contains the results of the company’s operations for a specific period of time which is called net
income if it is a net positive result while a net loss if it is a net negative result. This can be prepared for a
month, a quarter or a year.
Consists of two major sections:
• Net income (or net earnings) from the company's income statement
• Comprehensive income, which consists of positive and/or negative amounts for foreign currency
translation and hedges, and a few other items
TEMPORARY ACCOUNTS
• Also known as nominal accounts are the accounts found under the SCI.
• They are called such because at the end of the accounting period, balances under these accounts are
transferred to the capital account, thus having only temporary amounts and resulting to zero beginning
balances at the beginning of the following year
• Examples of temporary accounts include revenues, sales, utilities expense, supplies expense, salaries
expense, depreciation expense, interest expense among others.

Ms. Jessalyn Sarmiento - Tancio

Fundamentals of Accountancy Business and Management 2
August 2020
 Single-step
A single-step income
statement is one of two commonly used formats for the income statement or profit and loss statement. The

Different parts of the Statement of Comprehensive Income

A. Heading

i.Name of the Company

ii.Name of the Statement

iii.Date of preparation (emphasis on the wording – “for the”)

B. STATEMENT OF COMPREHENSIVE INCOME

i.First part is revenues -This is the total amount of revenue that the company was able to generate from providing
services to customers

ii.Second part is expenses (can be broken down into General and Administrative and Selling Expenses).

iii.Revenues less Expenses. Net income for a positive result and net loss for a negative result

Ms. Jessalyn Sarmiento - Tancio

Fundamentals of Accountancy Business and Management 2
August 2020
Multiple-step
• An income statement that has more than one subtraction in arriving at net income. An income statement
showing gross profit is an indication it is a multiple-step income statement.

i. First part is Sales This is the total amount of revenue that the company was able to generate from selling products

ii. Second part compose of contra revenue – called contra because it is on the opposite side of the sales account. The sales
account is on the credit side while the reductions to sales accounts are on the debit side. This is “contrary” to the normal
balance of the sales or revenue accounts.

ii.i. Sales returns – This account is debited in order to record returns of customers or allowances for such
returns. Returns occur when customers return their products for reasons such as but not limited to defects or change of
preference.

ii.ii.Sales discount – This is where discounts given to customers who pay early are recorded. Also known
as cash discount. This is different from trade discounts which are given when customers buy in bulk. Sales discount is
awarded to customers who pay earlier or before the deadline.

iii. Sales less Sales returns and Sales discount is Net Sales

iv. Third part is Cost of Goods Sold – This account represents the actual cost of merchandise that the company was able to
sell during the year.

iv.i. Beginning inventory – This is the amount of inventory at the beginning of the accounting period. This
is also the amount of ending inventory from the previous period.

iv.ii.Net Cost of Purchases = Purchases + Freight In

Ms. Jessalyn Sarmiento - Tancio

Fundamentals of Accountancy Business and Management 2
August 2020
 iv.ii.i.Net Purchases = Purchases – (Purchase discount and purchase returns)

iv.ii.i.i.Purchases – amount of goods bought during the current accounting period.

iv.ii.i.ii.Contra Purchases –An account that is credited being “contrary” to the normal balance of
Purchases account.

iv.ii.i.ii.i.Purchase discount – Account used to record early payments by the company to

the suppliers of merchandise. This is how buyers see a sales discount given to them by a
supplier.

iv.ii.i.ii.ii.Purchase returns – Account used to record merchandise returned by the

company to their suppliers. This is how buyers see a sales return recorded by their supplier

iv.ii.ii.Freight In – This account is used to record transportation costs of merchandise purchased

by the company. Called freight in because this is recorded when goods are transported into the
company.

iv.iii.Add Beginning inventory and Net cost of Purchases to get Cost of Goods Available for
Sale

iv.iv.Ending inventory – amount if inventory presented in the Statement of Financial Position.

Total cost of inventory unsold at the end of the accounting cycle.

v. Sales less Cost of Goods Sold is Gross Profit

vi. Fourth Part is General and Administrative Expenses –These expenses are not directly related to the merchandising
function of the company but are necessary for the business to operate effectively.

vii. Fifth Part is Selling Expenses – These expenses are those that are directly related to the main purpose of a
merchandising business: the sale and delivery of merchandise. This does not include cost of goods sold and contra revenue
accounts.

viii. Gross Profit less General and Administrative Expenses less Selling Expenses is Net Income for a positive result while
Net Loss for a negative result

Ms. Jessalyn Sarmiento - Tancio

Fundamentals of Accountancy Business and Management 2
August 2020
 Ms. Jessalyn Sarmiento - Tancio
Fundamentals of Accountancy Business and Management 2
August 2020
Simple Example of SCI

Ms. Jessalyn Sarmiento - Tancio

Fundamentals of Accountancy Business and Management 2
August 2020
1. How a company can earn without having cash and lose even with lots of cash.
a. Company can still have net income without cash transactions due to accrued income
- A sari-sari store who sells a lot of merchandise but majority of the sales are on credit. High net income, low cash
balance.
b. Company can still have net loss with a lot of cash revenues due to depreciation and accrued expense - We
always see a lot of people buying from Jollibee/Mcdo using cash but a new branch can still have net loss due to
the depreciation expense of its building/equipment.
2. Other important matters:
a. Without the SCI, the company cannot truly know if it is earning.
Example:
- Small businesses don’t usually account for their revenues and expenses as long as the owners see that cash is
coming in. They sometimes forget that equipment is depreciated and some expenses are accrued.

Ms. Jessalyn Sarmiento - Tancio

Fundamentals of Accountancy Business and Management 2
August 2020
b. Importance of the format:
i. Single-Step vs Multi-Step and why is single-step more often used in service companies while multi-step is
more often used in merchandising companies (service companies don’t have inventories)
ii. Use of reduction to sales and contra purchases (contra accounts are used to easily determine those
accounts that are directly connected to sales and purchases. These can also be used as a determinant of
quality –sales returns and purchase returns)
iii. Separation of the General and Administrative Expenses with the Selling Expenses (companies can
know how to reduce expenses and increase net income by pin pointing which expense is very high)

Quiz # 3
Identify the following. Choose the answer below.

1. Refers to adjustments that must be made before a company's financial statements are
issued.
2. A business that purchases finished products and resells them to consumers.
3. This is the amount of inventory at the beginning of the accounting period. This is also the amount of ending
inventory from the previous period.
4. Expenses that have been incurred for which we have not yet received an invoice(receipt) from the
supplier.
5. A company that provides certain professional support to its clients.
6. Contains the results of the company’s operations for a specific period of time which is called net income
if it is a net positive result while a net loss if it is a net negative result.
7. This is the total amount of revenue that the company was able to generate from selling products
8. These expenses are not directly related to the merchandising function of the company but are necessary for the
business to operate effectively.
9. These expenses are those that are directly related to the main purpose of a merchandising business: the sale and
delivery of merchandise. This does not include cost of goods sold and contra revenue accounts.
10. This account is used to record transportation costs of merchandise purchased by the company. Called freight in
because this is recorded when goods are transported into the company.
11. This is where discounts given to customers who pay early are recorded. Also known as cash discount. This is
different from trade discounts which are given when customers buy in bulk. Sales discount is awarded to customers
who pay earlier or before the deadline.
12. Amount of goods bought during the current accounting period.
13. This account is debited in order to record returns of customers or allowances for such returns.
14. The opposite side of the sales account. The sales account is on the credit side while the reductions to sales accounts
are on the debit side.

Ms. Jessalyn Sarmiento - Tancio

Fundamentals of Accountancy Business and Management 2
August 2020
 15. Good or services that have delivered for which we have not yet billed the customer.

Freight In, Revenue Accrual, Sales discount, Contra revenue, Sales returns, Purchases, STATEMENT OF
COMPREHENSIVE INCOME, Selling Expenses, General and Administrative Expenses, Sales, Service
Business, Beginning Inventory, Expense Accruals, Merchandise Business, Accrual, Income

Ms. Jessalyn Sarmiento - Tancio

Fundamentals of Accountancy Business and Management 2
August 2020
Quiz # 4
Answer the following problem
1. Learning is Fun Company generated revenues amounting to Php 100,000.
Expenses for the year totaled Php 76,000. How much is the company’s net
income for the year?
2. Happy Selling Company’s salaries to sales agents amounted to Php 10,000.
Salaries of accountants amounted to Php 20,000. No other expenses were incurred. How much is the
company’s general and administrative expense?
3. Happy Selling’s beginning inventory amounted to 250,000. Net purchases amounted to 70,000. Freight In
totaled 15,000. Compute for the company’s cost of goods available for sale.
4. Happy Selling’s Sales amounted to Php 500,000. Sales returns and sales discounts amounted to Php
30,000 and Php 10,000 respectively. Purchases of the company totaled Php 100,000 while purchase
returns and purchase discounts amounted to Php 20,000 and Php 10,000 respectively. How much is the
company’s Net Sales? Net Purchases?
5. Company’s Cost of Goods Sold amounted to Php 285,000. Net cost of purchases totaled Php 85,000.
Beginning inventory amounted to Php 250,000. Sales amounted to Php 500,000. Compute for the
company’s Ending Inventory.
6. Gross profit of Happy Selling amounted to Php 175,000. Beginning Inventory totaled Php 250,000.
Ending Inventory amounted to Php 50,000 while Net Cost of Purchases totaled Php 85,000. Compute for
Happy’ s Net Sales.
7. At the end of the first month of operations for Juan’s Service Company, the business had the following
accounts: Cash, Php19,000; Prepaid Rent, Php500; Equipment, Php5,000 and Accounts Payable
Php2,000. By the end of the month, Jackson's had earned Php20,000 of Revenues, Php1,000 of Utilities
Expenses and Php1,500 of Salaries Expenses. Calculate the net income to be reported by the company for
this first month.
8. During October, a sari-sari store had the following transactions involving revenue and expenses. Did the
firm earn a net income or incur a net loss for the period? What was the amount?
Paid Php1,200 for rent
Provided services for Php2,750 in cash
Paid Php250 for telephone service
Provided services for Php1,900 on credit
Paid salaries of Php1,675 to employees
Paid Php350 for office cleaning service
9. Compute for the Cost of Goods Sold using the following:
Sales – 15,000
Purchases – 2,000
Purchase returns – 200
Purchase discounts – 200
Freight in – 100
Beginning inventory – 1,000
Ending inventory – 500

Ms. Jessalyn Sarmiento - Tancio

Fundamentals of Accountancy Business and Management 2
August 2020
Activity #4
1. Prepare a single-step Statement of Comprehensive Income using the
following:
Revenues – 20,000
Rent expense – 3,000
Salaries expense – 4,000
Utilities expense – 2,000
Learners can use any business name and the end of the current year for the heading.

2. Prepare a multi-step Statement of Comprehensive Income using the following:

Net Sales -100,000
Cost of Goods sold- 75,000
Salaries Expense for Admin Staff – 23,000
Salaries Expense for Sales Agent -36,000
Rent Expense for Office Building – 15,000
Miscellaneous Expense -13,000
Utilities Expense for Shop -5,000
Advertisement – 11,000
Depreciation of delivery van- 2,000
Learners can use any business name and the end of the current year for the heading.
3. Identify if the account is part of the general and administrative expenses or selling expenses
Nena had the following expense accounts for the year ended December 31, 2016:
A. Salaries of admin personnel
B. Salaries of janitors
C. Salaries of sales agents
D. Utilities of home office
E. Rent of office building
F. Depreciation of office equipment
G. Depreciation of delivery van
H. Advertising
I. Miscellaneous Expense
J. Rent of the Retail Store

Ms. Jessalyn Sarmiento - Tancio

Fundamentals of Accountancy Business and Management 2
August 2020