Department of Education

FUNDAMENTALS OF ACCOUNTING, BUSINESS AND

MANAGEMENT 2

STATEMENT OF FINANCIAL POSITION -

SFP
ACCOUNTMATHEMATICS
Module 1
9

CONSTANCIA V. LAXAMANA
WRITER
FLORINDA M. BERROYA, MBA
EDITOR
EMELITA D. BAUTISTA EdD
VALIDATOR

Schools Division Office – Muntinlupa City

Student Center for Life Skills Bldg., Centennial Ave., Brgy. Tunasan, Muntinlupa City

1
 12
FUNDAMENTALS OF
ACCOUNTING, BUSINESS AND
MANAGEMENT 2 Quarter 1 –
Module 1:
Statement of Financial Position -
SFP
Fundamentals of Accounting, Business and Management 2 – SHS
Alternative Delivery Mode
Quarter 1 – Module 1: Statement of Financial Position - SFP
First Edition, 2019

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Published by the Department of Education

Secretary:
Undersecretary:
Assistant Secretary:

Development Team of the Module

Authors: CONSTANCIA V. LAXAMANA, CPA
Editor: FLORINDA M. BERROYA, MBA
Validator: EMELITAD. BAUTISTA, EdD
Reviewers:
Illustrator: Name
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Printed in the Philippines by ________________________

Department of Education – Bureau of Learning Resources (DepEd-BLR) (Sample)

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 12
FUNDAMENTALS OF ACCOUNTING,
BUSINESS AND MANAGEMENT 2
Quarter 1 – Module 1:
Statement of Financial Position -
SFP

This instructional material was collaboratively developed and reviewed

by educators from public and private schools, colleges, and or/universities. We
encourage teachers and other education stakeholders to email their feedback,
comments, and recommendations to the Department of Education at
[email protected].

We value your feedback and recommendations.

Introductory Message
For the facilitator:

In response to the challenges posed by the pandemic crisis we are all facing, this module
is intended to immerse our senior high school learners in Fundamentals of Accounting,
Business and Management 2. It features activities that were carefully designed and
sequenced to ensure that our learners are properly assisted towards meeting the
objectives of the lessons and achieving the best learning outcomes.

As the learning facilitator, you are requested to orient your learners on the proper
use of this module and assist parents, elder siblings and other significant adults in
understanding how it can be used to assist our learners at home.

Finally, please do not forget to remind the learners to use separate sheets in
answering the pre-test, self-check exercises, and post-test.

For the learner:

This module is intended to help you continue learning Fundamentals of Accounting,

Business and Management at home. It is hoped that this will help you appreciate the
reading contexts of the subject and will allow you to practice the lessons presented.
Likewise, this will provide a venue for you to utilize your accounting skills and applied to
business-related subject you are currently taking in the SHS curriculum.

In the beginning of each lesson, you will review the previous lessons related to the topic.
Then, you will discover what the learning episode is about. Once the concepts were
presented, you will do self-check exercise that will lead to an application task. Finally,
you will be guided in managing your takeaways.

Please handle this module with utmost care and use separate sheets in answering the
activities.

Enjoy learning the Fundamentals of Accounting!

 What I Need to Know

This module was designed and written with you in mind. It is here to help
you understand and master the elements of the Statement of Financial Position-
SFP. In this lesson you will learn to prepare the Statement of Financial Position
- SFP in Report Form and Account Form.

The module focused on two topics namely:

1. The Elements of Statement of Financial Position - SFP;
2. Preparation of Statement of Financial Position in Report form and Account
Form.

After going through this module, you are expected to:

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 I Know

COURSE PRE-TEST

Directions: Choose the letter of the best answer. Use a separate sheet of paper for your
answers.
1. A Statement of Financial position is also called:
a. Income Statement b. Balance Sheet
c. Profit and Loss Statement d. Cash Flow Statement

2. A Statement of Financial position can be best described as:

a. List of all cash receipts for a particular period of time.
b. Summary of the result of operation of the business
c. Summary of all assets, liabilities, revenue and expenses of the business.
d. An overview of a business’s financial position at a given point in time.

3. An asset is a/an:
a. Financial resources that is used by the business in its operation.
b. Obligations to transfer benefits as a result of past transactions.
c. Residual interest of the owner in the business.
d. Expenses that will be incurred by the business in the next accounting period.

4. The Statement of Financial Position equation is:

a. A – L = C b. L + C = A
c. A - C = L d. all of these

5. 20th Century Enterprises has the following financial data:

Non-current asset ₱80,000.00 Current Liabilities ₱50,000.00
Current Asset ₱120,000.00 Long term loan ₱60,000.00
As such, the equity of 20 Century Enterprises is:
th

a. ₱200,000.00 b. ₱60,000.00
c. ₱90,000.00 d. ₱110,000.00

6. A Statement of Financial Position

a. Shows the changes of the owner’s interest.
b. Presents the summary of revenue and expense of the business.
c. Reports the cash inflow and cash outflow of the business
d. Reports the assets and claims against the assets of the business.
7. Which of the following transactions would increase cash as well as non-current
liabilities?
a. Payment to suppliers
b. Payment to customers
c. Purchase of machineries and equipment for cash
d. Proceed from a long - term bank loan

8. Which of the following accounts is a current asset?

a. Accounts Receivable c. Accounts Payable
b. Building d. Interest income

9. Which of the following account is a non-current asset?

a. Prepaid Rent c. Unused office supplies
b. Delivery Equipment d. Allowance for doubtful account

10. Which of the following account is a current liability?

a. Machineries and Equipment c. Notes Receivable
b. Accounts Receivable d. Accrued Interest Payable

11. Which of the following is an asset of the company?

a. Prepaid Insurance c. Accrued Rent Expense
b. Loan Payable d. Interest Income

12. All the following are liabilities, except:

a. Accrued Interest Payable c. Notes Payable
b. Prepaid rent d. Accounts Payable

13. An asset which includes bills and coins on hand, bank accounts and operating
funds.
a. Trade Receivables c. Accounts Payable
b. Cash and Cash Equivalents d. Merchandise Inventory

14. An example of a non-current asset.

a. Unused supplies c. Property, Plant and Equipment
b. Prepaid Expenses d. Interest Payable

15. It is defined as the present obligations arising from past events, the settlement of
which is expected to result in an outflow from the entity’s economic resources.
a. Assets c. Liabilities
b. Owner’s Equity d. Sales Revenue
16. It is defined as the resources controlled by the entity as a result of past events and
from which future benefits are expected to flow to the entity.
a. Assets c. Liabilities
b. Owner’s Equity d. Sales Revenue and Expenses

17. All of the following are current assets. EXCEPT

a. Accrued Interest Receivable c. Accounts Receivable
b. Office Supplies d. Interest Income

18. These are non-current assets that are used in the normal operating cycle or
production of the business, example of which are land, building, machineries, etc.
a. Property, Plant and Equipment c. Trade Accounts Receivable
b. Interest Income d. Interest Expense

19. A current liability account that pertains to expenses incurred but not yet paid.
Examples are salaries, rent, utilities and interest expense.
a. Accrued Expenses c. Prepaid Expenses
b. Accrued Revenue d. Prepaid Revenue

20. A non-current asset or long-lived assets not intended to be used in the production
but for lease out or for long term capital appreciation.
a. Intangible Assets c. Investment Properties
b. Mortgage Payable d. Biological Assets

Lessons Statement of Financial

1 Position SFP
How do businesses communicate with their stakeholders?

Financial statements are how companies communicate their story. Financial

statements are important because they contain significant information about a
company’s financial health. Financial statements help companies make informed
decisions since they highlight which areas of the company provide the best ROI (return
on investment). It’s also important that companies file financial statements once a year.

Some companies prepare financial statements monthly to keep a tight handle on the
financial position of the firm. Other companies have longer accounting cycles. Financial
statements must be prepared at the end of the company's taxable year.
 What’s In

Financial statements are prepared at the end of an accounting cycle. The

Accounting Cycle is a series of steps accountants perform during an accounting
period relating to analyzing, recording, classifying, summarizing, and reporting
useful financial information. Its purpose is to generate the Financial Statements.

The basic financial statements of a business entity are

a. Statement of Financial Position or the Balance Sheet,
b. The Statement of Comprehensive Income or the Income Statement,
c. The Statement of Changes in Equity, and
d. The Statement of Cash Flows.
e. Notes accompany these financial statements.

To evaluate the financial condition, the profitability, and cash flows of an entity, the
user needs to understand the statements and related notes.

The financial statement that reflects a company’s profitability is the income

statement. The statement of changes in equity shows the changes in the capital
balance between the beginning and end of a period (e.g. a month or a year). The
balance sheet reflects a company’s solvency and financial position. The statement of
cash flows shows the cash inflows and outflows for a company over a period of time.

What’s New

The most basic statement is the balance sheet or the Statement of Financial Position.

A Balance Sheet or the Statement of Financial Position shows the financial condition
of an accounting entity as of a particular date. It consists of three major sections:
assets, the resources of the firm; liabilities, the debts of the firm; and stockholders’
equity, the owners’ interest in the firm.

At any point in time, the total assets amount must equal the total amount of the
contributions of the creditors and owners. This is expressed in the accounting
equation:

Assets = Liabilities + Owners’ Equity

The Balance Sheet or the Statement of Financial Position subdivides the assets
and liabilities in order to provide more specific information for the users of financial
statements. The assets are classified into current assets and non-current assets.
Liabilities are also classified either as current liabilities or non-current (long-term).

Current assets are cash and other assets that are converted into cash or used up
in relatively short period of time, usually one year or less. Current assets commonly
used by a service type business includes cash, accounts receivable, notes
receivables, and prepaid expenses. Normally, current assets are listed in the order
of liquidity, or the convertibility into cash.

Non-current assets are assets acquired for use in the business rather than for sale.
Non-current assets include Long-term Investments, Property, Plant and Equipment
(Plant assets) also called Fixed assets, Intangible assets and Other assets.

Current liabilities are debts usually due within one year, the payment of which
normally will require the use of current assets. Current liabilities are usually listed
in the order of their maturity. the sooner the liability is to be paid, the earlier it is
normally listed. Examples include accounts payable, notes payable (short term),
unearned revenues, accrued expenses and salaries payable.

Non-current liabilities (long-term liabilities) are those debts that will be paid after a
relatively long period of time, usually more than one year. Normally, the ones with
the earliest due dates are listed first. Examples include Notes Payable (long term),
Mortgage Payable, Bonds Payable.

Owner’s Equity is defined as the proportion of the total value of a company’s assets
that can be claimed by its owners (sole proprietorship or partnership) and by its
shareholders (if it is a corporation). The only difference between owner’s equity and
shareholder’s equity is whether the business is tightly held (Owner’s) or widely held
(Shareholder’s).

How Owner’s Equity is Shown on a Balance Sheet

The owner’s equity is recorded on the balance sheet at the end of the accounting
period of the business. It is obtained by deducting the total liabilities from the total
assets. The assets are shown on the left side, while the liabilities and owner’s equity
are shown on the right side of the balance sheet. The owner’s equity is always
indicated as a net amount because the owner(s) has contributed capital to the
business, but at the same time, has made some withdrawals.

For a sole proprietorship or partnership, the value of equity is indicated as the owner’s
or the partners’ capital account on the balance sheet. The balance sheet also indicates
the amount of money taken out as withdrawals by the owner or partners during that
accounting period. Apart from the balance sheet, businesses also maintain a capital
account that shows the net amount of equity from the owner/partner’s investments.

Shareholder’s equity refers to the amount of equity that is held by the shareholders
of a company, and it is sometimes referred to as the book value of a company. It is
calculated by deducting the total liabilities of a company from the value of the total
assets.

This module focuses on the Statement of Financial Position of a Sole

Proprietorship business ownership.
 What is It

Statement of Financial Position or Balance sheet.

This report shows the financial position of a business as of the report date, and like
the income statement, it is a snapshot of financial performance at a given time
because it can change daily or hourly, depending on circumstances. The information
is divided into the general classifications of assets, liabilities and equity. As a rule,
the total amount of the company's assets is equal to the total amount of its liabilities
plus the owners' equity in the company. This equation must always balance, with
the same amount on each side of the sheet.

Account Form and Report Form Balance Sheets

A company’s Statement of Financial Position or balance sheet can be presented in

one of two ways, account form and report form, depending on the preference of those
who will review the document.
The Account Form

The account form balance sheet is presented in a horizontal format, with

information in two columns beside each other. The left column of the account form
balance sheet lists assets, while the right column lists liabilities and equity.
Naturally, the last line in each column lists the total value of all assets and liabilities
and equity, respectively. The account form balance sheet can be easier to use when
information is being presented for multiple periods, and it allows the reader to verify
that the ledger is in balance at a glance.
 PAUL'S LAUNDRY SHOP
STATEMENT OF FINANCIAL POSITION
December 31, 2019

Assets Liabilites

Current Assets Current Liabilities

Cash ₱ 32,800.00 Accounts Payable ₱ 49,000.00
Accounts Receivable 9,300.00 Accued Expenses 1,450.00
Prepaid Rent 18,000.00 Unearned Revenue 2,000.00
office Supplies 19,800.00 Total Current Liabilites ₱ 52,450.00
Total Current Assets ₱ 79,900.00
Long-term Liabilities 97,500.00
Non-current Assets Total Liabilities ₱ 149,950.00
Store Equipment ₱ 100,000.00
Accumulated depreciation - 2,000.00 Owner's Equity
Total Non-Current Assets ₱ 98,000.00 Paul Santos, Capital 27,950.00
Total Assets ₱ 177,900.00 Total Liabilities and Owner's Equity ₱ 177,900.00

The Report Form

The report form balance sheet is presented in a vertical orientation, and is

essentially one column that spans the entire width of a page. Starting with assets,
the report form balance sheet provides a total value at the end of the assets section,
followed by liabilities and equity, with the final line of the report form balance sheet
providing the total combined value of liabilities and equity.
 PAUL'S LAUNDRY SHOP
STATEMENT OF FINANCIAL POSITION
December 31, 2019

Assets

Current Assets
Cash ₱ 32,800.00
Accounts Receivable 9,300.00
Prepaid Rent 18,000.00
office Supplies 19,800.00
Total Current Assets ₱ 79,900.00

Non-current Assets
Store Equipment ₱ 100,000.00
Accumulated depreciation - 2,000.00
Total Non-Current Assets ₱ 98,000.00
Total Assets ₱ 177,900.00

Liabilites

Current Liabilities
Accounts Payable ₱ 49,000.00
Accued Expenses 1,450.00
Unearned Revenue 2,000.00
Total Current Liabilites ₱ 52,450.00

Long-term Liabilities 97,500.00

Total Liabilities ₱ 149,950.00

Owner's Equity
Paul Santos, Capital 27,950.00
Total Liabilities and Owner's Equity ₱ 177,900.00

Explanation and Pointers

1. A Balance Sheet shows the financial position or condition of the company;
thus, it is also called "Statement of Financial Position".
2. A typical balance sheet starts with a heading which consists of three lines.
The first line presents the name of the company; the second describes the title
of the report; and the third states the date of the report.
3. Notice that the third line is worded "As of..." Unlike the other components of
the financial statements which cover a span of time ("For the period ended.."),
the balance sheet presents information as of a certain date (at a specific
point in time). In the above example, the contents of the balance sheet pertain
to the financial condition of the company on December 31, 2019.
4. A balance sheet summarizes the assets, liabilities, and capital of a company.
Assets refer to properties owned and controlled by the company. Liabilities are
 obligations to creditors, lenders, etc. And capital represents the portion left for
the owners of the business after all liabilities are paid.
5. Assets and liabilities are classified as either current or non-current (long-
term). Current assets are properties that will be converted into cash within 12
months or within the operating cycle of the business. Current liabilities are
due within 12 months or within the operating cycle. Non-current assets and
non-current liabilities are those that do not meet the above qualifications.
6. "Total assets" and "total liabilities and capital" should always be equal.
7. The capital amount, ₱27,950 for Paul Santos, Capital, was actually taken from
the Statement of Owner's Equity.
8. The balance sheet may be presented in two forms: account form and report
form. In account form, assets are presented on the left side while liabilities
and capital are presented on the right. In report form, assets are presented
first and then followed by liabilities and capital. The example above is
presented using the report form.
9. Good accounting form suggests that a single line is drawn every time an
amount is computed. It signifies that a mathematical operation has been
completed. The "total assets" and "total liabilities and capital" amounts
are double-ruled.

What’s More

Activity 1

Classify the following accounts.

Indicate CA for current Assets, NCA for Non-Current Assets, CL for Current
Liability. NCL for Non-current liability, and OE for Owner’s Equity account.
Likewise indicate also if account is a CONTRA account in the remarks column.

Account Title Classification: Remarks

CA, NCA, CL,
NCL, OE
1. Accounts Payable
2. Accounts Receivable
3. Building
4. Accumulated Depreciation-Building
5. Accrued Interest Receivable
6. Cash and Cash Equivalents
7. Corona V., Capital
8. Corona V., Drawing
9. Equipment
 10. Accumulated Depreciation -
Equipment
11. Interest Payable
12. Land
13. Notes Payable
14. Notes Receivable
15. Prepaid Insurance
16. Prepaid Rent
17. Salaries Payable
18. Supplies
19. Unearned Management fee
20. Wages Payable

Activity 2

Viceral Realty had the following Trial Balance for June 30, 2020:

Viceral Realty
Trial Balance
June 30, 2020
DEBIT CREDIT
Cash 650,000.00
Accounts Receivable 100,000.00
Prepaid Rent 108,000.00
Prepaid Insurance 28,800.00
Supplies on hand 9,000.00
Office Equipment 90,000.00
Accumulated Depreciation - Office Equipment 21,600.00
Automobile 240,000.00
Accumulated Depreciation - Auto 60,000.00
Accounts Payable 10,800.00
Notes Payable 150,000.00
Unearned Management Fees 46,800.00
C.M. Viceral, Capital 1,337,400.00
C.M. Viceral, Drawing 705,000.00
Sales Commission Revenue 900,000.00
Management Service Revenue 72,000.00
Salaries Expense 599,400.00
Advertising Expense 9,000.00
Automobile Expense 53,400.00
Miscellaneous Expense 6,000.00
Total 2,598,600.00 2,598,600.00
Requirements:
On a separate sheet:

1. List down all the Balance Sheet Account with the corresponding debit
or credit balances. The first line item is done for you. Note that the
 capital account balance of ₱1,641,600.00 is inclusive of net profit from
operations.
2. Prepare a Statement of Financial Position- Report form.
3. Prepare a Statement of Financial Position – Account form.

Requirement No. 1

Viceral Realty
Balance Sheet
June 30, 2020

Cash 650,000.00
Accounts Receivable 100,000.00
Prepaid Rent 108,000.00
Prepaid Insurance 28,800.00
Supplies on hand 9,000.00
Office Equipment 90,000.00
Accumulated Depreciation - Office Equipment 21,600.00
Automobile 240,000.00
Accumulated Depreciation - Auto 60,000.00
Accounts Payable 10,800.00
Notes Payable 150,000.00
Unearned Management Fees 46,800.00
C.M. Viceral, Capital 1,641,600.00
C.M. Viceral, Drawing
Total 1,930,800.00 1,930,800.00

Identify the following:

1. Consist of cash and other assets that are expected to be converted to cash
or used by the business within one year or within the company’s normal
operating cycle.
2. Assets acquired for use rather than for sale. It includes Property, Plant
and Equipment (Plant Assets), Intangible Assets and Long-term
Investments.
3. These are debts usually due within one year, the payment of which
normally will require current assets.
4. These are liabilities that will mature a relatively long period of time.
Usually more than one year.
5. The financial statement that shows the financial condition of an entity as
of a given date. Reports the company’s assets, liabilities, and owner’s
equity as of a specific date.
Complete the statements.
6. In the preparation of Statement of Financial Position, current assets are
arranged according to _________________.
7. In the preparation of Statement of Financial Position, liabilities are
arranged according to _________________.
8. Statement of Financial Position is also called ____________________.
9. A/An ___________________ is the period of time covered by a company's
financial statements. ... For example, a company could have a fiscal year
of July 1 through the following June 30, a calendar year starting January
1 to December 31, a natural business year covering a period of 12
consecutive months, ending at a low point of an organization’s business
activities.
10. The _________________ is the steps taken by a firm for the collection,
processing and reporting of financial transactions. The steps include:
Recording transactions in the general journal. Posting general journal
entries into the general ledger. Preparation of unadjusted trial balance.
Preparation of adjusting entries, Preparation of financial statements.
Preparation of closing entries and post closing trial balance.

What I Can Do

Briefly answer the following questions.

1. Usually, current assets are listed in a specific order, starting with cash. What is
the objective of this order of listing?
2. Differentiate the two forms in which a balance sheet may be presented.

Use the following information to answer questions 3,4 & 5.

Villarica Realty had the following balance sheet accounts and balances.

3. The balance of Villanueva, Capital was 210,000.00, what would be the balance
of the Building account?
4. The balance of the building account was 170,000.00, what would be the total
liabilities and owner’s equity?
5. If the balance of the building account was 150,000.00 and the equipment was
sold at 70,000.00, what would be the total of owner’s equity?
 Assessment

Directions: Choose the letter of the best answer. Use a separate sheet of paper for
your answers.

1. All are characteristics of an asset, except:

a. It will bring future economic benefits to the business.
b. It is owned by the business.
c. It can be held by the business for a short period of time.
d. It must have a physical substance.

2. Which of the following could be classified as current asset for a furniture

retailer?
a. Accounts payable
b. Furniture held for resale
c. Office equipment
d. Capital

3. Which of the following is not a correct expression of Statement of Financial

Position?
a. Assets – Liabilities = Owner’s Equity
b. Assets = Owner’s Equity
c. Assets = Liabilities + Owner’s Equity
d. Liabilities = Assets – Owner’s Equity

4. The Statement of Financial Position is also referred as the:

a. Balance Sheet
b. Statement of Changes in Financial Position
c. Statement of Current Affairs
d. Income Statement

5. Current asset and non-current asset differ:

a. On how long the assets has been owned.
b. On the ability to determine the current fair market value of the asset.
c. Whether the asset is tangible or intangible
d. Whether the asset is expected to be converted to cash or used within the
normal operating cycle to benefit the entity.

6. In which order are liabilities usually listed in the Statement of Financial

Position.
a. Alphabetical order
b. The order in which they are expected to be paid.
c. The order in which they were incurred
d. The order of smallest to largest.

7. A report of financial position of the business on a given date is :

a. Statement of Financial Position
 b. Statement of Cash Flow
c. Statement of Changes in Equity
d. Statement of Comprehensive Income

8. The investment of cash of the owner into the business results in a/an:
a. Increase in cash and decrease in owner’s equity
b. Increase in cash and increase in owner’s equity
c. Decrease in cash and increase in owner’s equity
d. Increase in fees earned and an increase in owner’s equity

9. The purchasing of supplies in cash will result in a/an

a. Increase in cash and a decrease of supplies
b. No change in the amount of total assets
c. Increase in liabilities and decrease in asset
d. Increase in equipment and an increase in capital

10. Which of the following is a promise to pay a definite sum of money on demand
or at a fixed or determinable future date made in writing?
a. Accounts payable
b. Accounts receivable
c. Note payable
d. Prepaid insurance policy

Additional Activities

Answer the following questions.

1. Freshly Laundry Shop pays Samsung Repair Services ₱15,000 in December for
Samsung Repair Services to perform services for Freshly Laundry Shop in 45
days. Samsung Repair Services uses the accrual basis of accounting. In
December, Samsung Repair Services will debit Cash for ₱15,000. What will be
the other account involved in the December accounting entry prepared by
Samsung Repair Services? (and what type of account is it)? (two points)

[Accounts Receivable (asset), Prepaid Services (asset), Service Revenues

(revenue),
Unearned Revenues (liability)]

2. Which of the following would not be a current asset?

(Accounts Receivable, Land, Prepaid Insurance, Supplies)

3. Which of the following would normally be a current liability?

(Note Payable Due In Two Years, Unearned Revenue)
4. When an owner draws ₱5,000 from a sole proprietorship or when a corporation
declares and pays a ₱5,000 dividend, the asset Cash decreases by ₱5,000.
What is the other effect on the balance sheet?
(Owner's/Stockholders' Equity Decreases, None)

5. Cleanest Co. incurs cleanup expense of ₱5,000 on December 30. The supplier's
invoice states that the ₱5,000 is due by January 10 and Cleanest Co. will pay
the invoice on January 9. ABC follows the accrual basis of accounting and its
accounting year ends on December 31. What is the effect of the cleanup service
on the December balance sheet of Cleanest Co.?
(Assets Decreased, Liabilities Increased, No Effect on Owner's Equity)

6. Notes Payable could not appear as a line item on the balance sheet in which
classification?
(Current Assets, Current Liabilities, Long-term Liabilities)

7. On December 1, ABC Co. hired Juana Pelaez to begin working on January 2 at

a monthly salary of ₱14,000. ABC's balance sheet of December 31 will show a
liability of: (₱14,000, ₱168,000, No Liability)
8. Rich Company, has current assets of ₱500,000 and total assets of ₱1,450,000.
ABC has current liabilities of ₱130,000 and total liabilities of ₱380,000. What is
the amount of ABC's owner's equity? (two points)
(₱1,120,000 ₱1,130,000 ₱1,070,000, ₱1,120,000)

Answer Key

What I know
1 b 11 a
2 d 12 b
3 a 13 b
4 d 14 c
5 c 15 c
6 d 16 a
7 d 17 d
8 a 18 a
9 b 19 a
10 d 20 c
What’s More – Actiity 1
Account Title Classification: Remarks
CA, NCA, CL, NCL, OE,
CONTRA
1. Accounts Payable CL
2. Accounts Receivable CA
3. Building NCA
 4. Accumulated Depreciation- NCA CONTRA
Building
5. Accrued Interest Receivable CA
6. Cash and Cash Equivalents CA
7. Corona V., Capital OE
8. Corona V., Drawing OE CONTRA
9. Equipment NCA
10. Accumulated Depreciation - NCA CONTRA
Equipment
11. Interest Payable CL
12. Land NCA
13. Notes Payable CL/NCL CL OR NCL
14. Notes Receivable CA/NCA CA OR NCA
15. Prepaid Insurance CA
16. Prepaid Rent CA
17. Salaries Payable CL
18. Supplies CA
19. Unearned Management fee CL
20. Wages Payable CL

What’s More – Activity 2

Viceral Realty
Balance Sheet
June 30, 2020

Cash 650,000.00
Accounts Receivable 100,000.00
Prepaid Rent 108,000.00
Prepaid Insurance 28,800.00
Supplies on hand 9,000.00
Office Equipment 90,000.00
Accumulated Depreciation - Office Equipment 21,600.00
Automobile 240,000.00
Accumulated Depreciation - Auto 60,000.00
Accounts Payable 10,800.00
Notes Payable 150,000.00
Unearned Management Fees 46,800.00
C.M. Viceral, Capital 1,641,600.00
C.M. Viceral, Drawing 705,000.00
Total 1,930,800.00 1,930,800.00
 Statement of Financial Position - Report Form

VICERAL REALTY
Statement of Financial Position
June 30, 2020

ASSETS
CURRENT ASSETS
Cash ₱ 650,000.00
Accounts Receivable 100,000.00
Prepaid Rent 108,000.00
Prepaid Insurance 28,800.00
Supplies on hand 9,000.00
Total Current Assets ₱ 895,800.00
NON-CURRENT ASSETS
Ofice Equipment ₱ 90,000.00
Accumulated Depreciation - Office Equip. - 21,600.00 68,400.00
Automobile ₱ 240,000.00
Accumulated Depreciation - Auto - 60,000.00 180,000.00
Total Non-current 248,400.00
Total Assets ₱ 1,144,200.00

LIABILITIES AND OWNER'S EQUITY

LIABILITIES ₱ 10,800.00
Accounts Payable 150,000.00
Notes Payable 46,800.00
Unearned Management Fees ₱ 207,600.00
Total Liabilities
OWNER'S EQUITY
C.M. Viceral, Capital ₱ 1,641,600.00
C.M. Viceral, Drawing - 705,000.00
Total Owner's Equity 936,600.00
Total Liabilities and Owner's Equity ₱ 1,144,200.00

Statement of Financial Position - Account Form

VICERAL REALTY
Statement of Financial Position
June 30, 2020

ASSETS LIABILITIES AND OWNER'S EQUITY

CURRENT ASSETS LIABILITIES
Cash ₱ 650,000.00 Accounts Payable ₱ 10,800.00
Accounts Receivable ₱ 100,000.00 Notes Payable 150,000.00
Prepaid Rent ₱ 108,000.00 Unearned Management Fees 46,800.00
Prepaid Insurance ₱ 28,800.00 Total Liabilities ₱ 207,600.00
Supplies on hand ₱ 9,000.00
Total Current Assets ₱ 895,800.00
NON-CURRENT ASSETS
Ofice Equipment ₱ 90,000.00
Accumulated Depreciation - Office Equip. -₱ 21,600.00 68,400.00
Automobile ₱ 240,000.00 OWNER'S EQUITY
Accumulated Depreciation - Auto -₱ 60,000.00 180,000.00 C.M. Viceral, Capital ₱1,641,600.00
Total Non-current 248,400.00 C.M. Viceral, Drawing - 705,000.00 936,600.00
Total Assets ₱1,144,200.00 Total Liabilities and Owner's Equity ₱ 1,144,200.00
 What I have Learned
1 Current Assets
2 Non-current Assets
3 Current Liabilities
4 Non-current Liabilities
5 Statement of Financial Position
6 liquidity
7 due to be paid (payment due)
8 Balance Sheet
9 Accounting Period
10 Accounting Cycle

What I can do.

Briefly answer the following questions.

1. Usually, current assets are listed in a specific order, starting with cash.
What is the objective of this order of listing?
Answer may vary: Current assets are listed in the balance sheet according to
liquidity because . . . ______________
2. Differentiate the two forms in which a balance sheet may be presented.
Answer: Balance Sheet may be presented in Account form or Report form . . .

Use the following information to answer questions 3,4 & 5.

Villarica Realty had the following balance sheet accounts and balances.

Accounts Payable ₱ 60,000.00 Equipment ₱ 70,000.00

Accounts Receivable 10,000.00 Villanueva, Capital ?
Building ? Land 70,000.00
3. Cash 30,000.00
4. The balance of Villanueva, Capital was 210,000.00, what would be the
balance of the Building account?
Answer: ₱90,000.00 (A=L+OE); L+OE=60,000+210,000 = 270,000
Total Assets = 270,000;
Bldg = 270,000-(10,000+30,000+70,000+70,000) = 90,000
5. The balance of the building account was 170,000.00, what would be the
total liabilities and owner’s equity?
Answer: ₱290,000
6. If the balance of the building account was 150,000.00 and the equipment
was sold at 70,000.00, what would be the total of owner’s equity?
Answer: ₱270,000
 Assessment Additional Activities
1 d
1 Unearned Revenue
2 b
3 b 2 Land
4 a 3 Unearned Revenue
5 d 4 Owner's Equity Decreases
6 b 5 Liabilities Increased
7 a
8 b
6 Current Assets
9 b 7 No Liability
10 c 8 ₱1,070,000

References
https://www.accountingcoach.com/
https://corporatefinanceinstitute.com/resources/knowledge/valuation/owners-equity/

https://smallbusiness.chron.com/

https://www.accountingcoach.com/

https://opentextbc.ca/principlesofaccountingv1openstax/chapter/describe-the-income-statement-
statement-of-owners-equity-balance-sheet-and-statement-of-cash-flows-and-how-they-interrelate/

Principles of Accounting by Baguino, Balbarino, Dela Cruz, Doquenia, Espino, Fonte, Hermane, et.al.

Fundamentals of Accounting, Business and Management 2 – Teacher’s Manual – DEP

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