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Republic of the Philippines

Department of Education
Division of Zamboanga del Norte
SINDANGAN NATIONAL HIGH SCHOOL
Dapaon, Sindangan, Zamboanga del Norte

Name: Grade Level:

Section: Date:

FUNDAMENTALS OF ACCOUNTANCY, BUSINESS AND MANAGEMENT 2

LEARNING ACTIVITY SHEETS
(QUARTER 1, WEEK 1)

The statement of financial position (SFP) is another name for the balance sheet. It
is one of the main financial statements. It displays the assets of a company and their sources of
financing, debt and equity.

Learning Competencies:

The learner will be able to

 Identify the elements of the SFP and describe each of them

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 Prepare an SFP using the report form and the account form with proper
classification of items as current and noncurrent
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The statement of financial position (SFP) is a statement that gives the financial
condition of a business as of a given date. It is composed of three elements- assets, liabilities,
and capital. SFP provides the owner with an understanding of the financial position of the
business. How much are the assets it owns? What is the total of its obligations to suppliers and
external parties? As a capitalist, what is the balance of the owner’s interest in the business?

The following illustration of the financial information of Galaxy Company as of 30 June 2021.

Cash: 6 000.00 Accounts Payable: 1 200.00

+ +
Due from Customers: 250.00 Notes Payable (3 years): 2 200.00
+ +
Supplies: 150.00 Owner’s Capital: 5 600.00
+ =
Equipment: 2 600.00
=
Total Assets: 9, 000.00 + Total Liabilities and Capital: 9 000.00

1. ASSETS are properties or rights on properties owned by the business. They are items
of value that belong to the business. In general, common examples of assets are cash, tools,
equipment, building, and land.

An asset is under the control and custodianship of the entity as result of a past
transaction such as purchase, an exchange, or a donation. The asset will generate income for
the entity. The following describe further what an asset is.
Examples of Current and Noncurrent Assets
Current Assets Noncurrent Assets
Cash Land
Trading account securities Building
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Receivables (accounts, notes) Equipment

Merchandise Inventory Furniture and fixtures
Prepaid expenses Leasehold rights

2. LIABILITY is a debt of the entity resulting from a previous transaction such as loan, a
purchase from a supplier, or an agreement to assume the debt of another party. Settlement of
the liability will decrease the assets of the entity.
The payment of a liability may be done through (a) cash payment, (b) distribution of other
assets, (c) rendering of services, (d) substitution with another liability, and (e) conversion of the
liability into ownership interest of the lender in the borrower’s entity.

Examples of Current and Noncurrent Liabilities

Current Liabilities Noncurrent Liabilities
Accounts payable Notes payable (due more than one year)
Loans payable Mortgage payable
Utilities payable Bonds payable
Interest payable

3. CAPITAL account shows the net worth of a business at a specific point in time. It is also
known as owner's equity for a sole proprietorship or shareholders' equity for a corporation, and
it is reported in the bottom section of the balance sheet.

In the world of business, the term capital means anything a business owns that
contributes to building wealth. The capital will grow when the business earns profits, but will
decrease when the business incurs a loss.

Sources of capital include:

 Financial assets that can be liquidated like cash, cash equivalents, and marketable
securities.
 Tangible assets such as the machines and facilities used to make a product.
 Human capital; i.e. the people that work to produce goods and services.
 Brand capital; i.e. the perceived value of a brand recognition.

Illustration 1
Prepare the SFP of Xerxes Copiers as of 31 December 2020. The accounts in the
company’s general ledger are listed below.

General Ledger
Cash
Debit Credit
Date Particulars PR Amount Date Particulars PR Amount
31 Dec. 14, 700
2020
Accounts Receivable
Debit Credit
Date Particulars PR Amount Date Particulars PR Amount
31 Dec. 3, 200
2020

Supplies
Debit Credit
Date Particulars PR Amount Date Particulars PR Amount
31 Dec. 1, 200
2020

Copying Machines
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Debit Credit
Date Particulars PR Amount Date Particulars PR Amount
31 Dec. 58, 200
2020

Accumulated Depreciation
Debit Credit
Date Particulars PR Amount Date Particulars PR Amount
31 Dec. 3, 200
2020

Accounts Payable
Debit Credit
Date Particulars PR Amount Date Particulars PR Amount
31 Dec. 8, 200
2020

Notes Payable
Debit Credit
Date Particulars PR Amount Date Particulars PR Amount
31 Dec. 50, 000
2020

Utilities Payable
Debit Credit
Date Particulars PR Amount Date Particulars PR Amount
31 Dec. 300
2020

Utilities Payable
Debit Credit
Date Particulars PR Amount Date Particulars PR Amount
31 Dec. 15, 600
2020

Using the given information below is an illustrative example of SFP- Xerxes Copiers in an
account form.
Xerxes Copiers
Statement of Financial Position
31 December 2020
(In Peso Amount)

Assets Liabilities and Owner’s Equity

Current Assets: Current Liabilities:

Cash 14, 700 Accounts Payable 8, 200

Accounts Receivable 3, 200 Utilities Payable 300
Supplies 1, 200
Total Current Liabilities 8, 500

Noncurrent Liabilities:

Notes Payable 50, 000

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Total Liabilities 58, 500

Total Current Assets 19, 100

Property and Equipment: Owner’s Equity:

Copying Machines 58, 200 Xerxes, Capital 15, 600

Accumulated Depreciation ( 3, 200)

Net Property, Plant, and Equipment 55, 000

Total Assets 74, 100 Total Liabilities and Owner’s 74, 100
Equity

SFP of Xerxes Copiers in report form

Xerxes Copiers
Statement of Financial Position
31 December 2020
(In Peso Amount)

Assets
Current Assets:

Cash 14, 700

Accounts Receivable 3, 200
Supplies 1, 200
Total Current Assets 19, 100

Property and Equipment:

Copying Machines 58, 200

Accumulated Depreciation 3, 200 55, 000

Total Assets 74, 100

Liabilities and Owner’s Equity

Current Liabilities:
Accounts Payable 8, 200
Utilities Payable 300
Total Current Liabilities 8, 500

Noncurrent Liabilities:

Notes Payable 50, 000

Total Liabilities 58, 500

Owner’s Equity:

Xerxes, Capital 15, 600

Total Liabilities and Owner’s Equity 74, 100

Description of Account Titles in the SFP

The following are the account titles usually used in the SFP;
a) Cash- This refers to currencies, checks, money orders, bank deposits, and other money equivalents.
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b) Trading Account Securities- These include stocks of companies listed in the stock exchange and are
readily convertible into cash.
c) Notes Receivable- This includes claims of the business from customers and third parties that are
evidenced by formal instruments of credit such as promissory notes.
d) Accounts Receivable- This pertains to claims of the business from customers for sales of products or
rendering of services.
e) Allowance for Bad Debts- This is a contra account against accounts receivable. The net amount is
called net realizable value.
f) Supplies- These include various office or shop supplies that are necessary in the operation of the
business.
g) Equipment- This refers to office equipment such as computer set, printer, air conditioner, and
delivery equipment (vehicles)
h)Furniture and Fixtures- These pertain to tables, chairs, cabinets, counters, and other types of
furniture used in the business.
i) Accumulated Depreciation- This is a deduction (except land) from property, plant, and equipment.
j) Accounts Payable- These refers to the debt of the business due to purchases of products or services
that are to be paid on a future date.
k) Notes Payable- This covers loans obtained by the business from financial institutions or private
individuals and entities supported by promissory notes.
l) Utilities Payable- These refer to amounts due to providers of water, electricity, telephone, and other
basic services.
m) Mortgage Payable- This pertains to debt secured from a financial institution by mortgage or lien on
real estate of the business or its proprietor.
n)Owner’s Drawing- This covers the withdrawal of cash or any form of assets from the business.

Reflect Upon:
1. What do you think is the role of assets in gaining profits for a business?

Activity 1: IDENTIFICATION
DIRECTIONS: Read the following statements carefully. Identify words or group of words that correspond/s the
following statements. Write your answer on the space provided before each number.

________________1. A debt of the entity resulting from a previous transaction such as loan, a
purchase from a supplier, or an agreement to assume the debt of another party.
______________2. It is also known as owner's equity for a sole proprietorship or shareholders'
equity for a corporation, and it is reported in the bottom section of the balance sheet.
______________3. A statement that gives the financial condition of a business as of a given date.
______________4. These are properties or rights on properties owned by the business.
______________5. It refers to the investment or equity of the owner in the business.
PERFORMANCE TASK
Activity 2: The account balances of Convergence, Inc. as of 31 December 2020 are given below.
Prepare the SFP for the entity in both report form and account form.
Accounts Debit Credit
Notes Payable, due after 10 years 477 850.00
Prepaid Rent 90 900.00
Chen, capital 960 250.00
Cash 27 700.00
Allowance for Doubtful Accounts 5 800.00
Property and Equipment 1 230 000.00
Chen, Drawing 30 000.00
Accounts Receivable 95 300.00
Accounts Payable 30 000.00
Total 1 473 900.00 1 473 900.00

Assessment:
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Directions: The following table includes Assets, Liabilities and Owner’s Equity. Put a check mark
( / ) in the column where each account belongs to.

Account Asset Liabilities Owner’s

Equity
Accounts Receivable
Accounts Payable
Supplies
Computer Equipment
Mary Fatima, Capital
Accumulated Depreciation-
Computer Equipment
Prepaid Insurance
Interest Payable
Notes Payable
Cash
Buildings
Mortgage Payable
Land
Salaries Payable
Mary Fatima, Drawing

References:
https://www.investopedia.com/terms/c/capitalaccount.asp

https://www.paretolabs.com/what-is-capital-definition-types-and-examples/

Fundamentals of Accountancy, Business, and Management 2 (DIWA)

Prepared by:

ANN SHERYL T. ARTICULO

SHS-Teacher