ABM 002

ABM 003/Fundamentals of Accounting,

Business
PHINMA University of Pangasinan and Management 2
Teacher / Facilitator Lesson Plan Grade Level 12
Day/Session# 2

Identifying the Elements of Materials

the SFP and Describing each
Worksheet (SAS), Projector/
of them Manila Paper
Learning Objectives References
At the end of the lesson, you should be able to: 21st Accounting Process: Basic
1. To identify the elements of the Concepts and Procedures 016
Statement of Financial Position, and; Edition; Manuel, ZVC; ZVC
2. To describe each element of the Raintree trading & Publishing
Statement of Financial Position Inc. Quezon City

(Facilitator: Distribute worksheets for the day. Request the students to answer
review/lesson preview before copying the concept notes.)
(Teacher: Use OWN AND TRACK strategy for the review session, where students
will be asked until they get the correct answers from the review session.)

Review/Lesson Preview (5 minutes)

Let's have a recap of our previous topic? Let me see if you still remember. Ready?
Some steps in completing the accounting cycle are shown below. Arrange the steps in
correct order:
• Preparation of a Trial Balance
• Preparation of the Worksheet including Adjusting Entries
• Identification of the events
• Transactions are recorded in the Journal
• Journal entries are posted to the Ledger

Place your answer here:

Step 1
Step 2
Step 3
Step 4
Step 5
Answer:
Step 1: Identification of the events
Step 2: Transactions are recorded in the Journal
Step 3: Journal entries are posted to the Ledger
Step 4: Preparation of a Trial Balance
Step 5: Preparation of the Worksheet including Adjusting Entries
This document and the information thereon is the property of PHINMA
University of Pangasinan 1
ABM 002

ABM 003/Fundamentals of Accounting,

Business
PHINMA University of Pangasinan and Management 2
Teacher / Facilitator Lesson Plan Grade Level 12
Day/Session# 2

Concept Notes (10 minutes)

(Facilitator: Ask the students to copy the concept notes.)
(Teacher: Use TARGETED QUESTIONING strategy for this section, ask a series of pre-
planned questions.

Statement of financial position – depicts the financial position of a business entity

and is affected by
1)the economic resources it owns and controls, 2) its financial structure and 3) its
liquidity and solvency. Its components include Assets, Liabilities and Equity.

Assets are resources controlled by the enterprise and from which future economic
benefits are expected to flow to the firm when it is realized.

Liabilities are present obligation of the enterprise and from which an outflow of
resources are expected upon its settlement.

Equity is the residual or what is left when liabilities are deducted from assets.

Accounting Equation is “ASSETS = LIABILITY + EQUITY”. The total assets should

always equal the total liabilities and equity.
This document and the information thereon is the property of PHINMA
University of Pangasinan 2
ABM 002

ABM 003/Fundamentals of Accounting,

Business
PHINMA University of Pangasinan and Management 2
Teacher / Facilitator Lesson Plan Grade Level 12
Day/Session# 2

Developmental Activity (15 minutes)

(Facilitator: Ask the students to read and comprehend for the allotted time.)
(Teacher: Use TARGETED QUESTIONING strategy for this section, ask a series of pre-
planned questions.
Asset
You’re wrong Jane! As the title
suggests you will determine the
Hey! I think that financial status of your business and
Statement of how effective you are in running the
financial position firm. It is in the statement of Come on Jane! This was
is no longer financial position where we can see mentioned in ABM002. How
important. It’s a how much assets the business has. can you forget? Assets are
waste of time Assets, And after paying all liabilities, how your resources like cash,
Liabilitie much would remain in the equity. furniture, equipment, land…
preparing it. s while your liabilities are
& Equity obligations to be paid like
all in one Accounts Payable, Utilities
report!! ? Payable and your Equity is
? your capital.

Elements of Statement of financial position

There are three elements of the Statement of Financial Position these include the
Assets, Liabilities and Equity.

ASSETS Examples are Cash on hand, Cash in bank, Marketable securities,

Accounts receivable,
Notes receivable, Other receivables, Merchandise inventory,
Prepaid expenses, Allowance for bad debts (contra asset),
Land, Building, Equipment, Furniture and fixtures, Leasehold
improvements, Accumulated depreciation (contra asset)
LIABILITIES Examples are Accounts payable, Note payable, Loan payable, Utilities
payable, Other
payable, Mortgage payable, and bond payable.
EQUITY Jane, Capital and the contra-account, Jane, Withdrawals.

This document and the information thereon is the property of PHINMA

University of Pangasinan 3
ABM 002

ABM 003/Fundamentals of Accounting,

Business
PHINMA University of Pangasinan and Management 2
Teacher / Facilitator Lesson Plan Grade Level 12
Day/Session# 2

Contra asset accounts Example:

have credit balances
which are deducted from Machinery P85,000
respective Asset accounts Accumulated
Depreciation – 22,00
which have debit Machinery 0
63,00
balances. Net Book Value P 0

Let's have an illustration of the STATEMENT OF FINANCIAL POSITION. Who knows, you might find it a little
challenging. Come on!
Below is a trial balance of Roberto Labandero Company as of January 31, 2017. Identify the accounts
which will be needed for the preparation of Statement of Financial Position and classify these into
Assets, Liabilities and Equity.
Roberto Auto Repair Shop
Trial Balance
As of December 31, 2017

Account Title Debit Credit

Cash on hand 25,000.00

Cash in bank 45,000.00
Accounts receivable 49,000.00
Allowance for bad debts 4,900.00
Notes receivable 30,000.00
Interest receivable 450.00
Prepaid insurance 5,000.00
Prepaid supplies 200.00
Machinery and equipment 150,000.00
Accumulated depreciation - ME 7,500.00
Furniture and Fixtures 25,000.00
Accumulated depreciation - FF 2,250.00
Accounts payable 26,000.00
Notes payable 50,000.00
Interest payable 750.00
Taxes payable 130.00
Roberto, Capital 132,850.00
Roberto, Drawings 5,000.00
Repair income 275,000.00
Referral income 15,000.00
Interest income 450.00
Depreciation Expense - MM 7,500.00
Depreciation Expense - FF 2,250.00
Bad debts expense 4,900.00
Insurance Expense 10,000.00
Salaries expense 45,000.00
Supplies expense 400.00
Rent expense 55,000.00
Taxes and licenses expense 7,380.00
Utilities expense 46,750.00
Interest expense 1,000.00
Totals 514,830.00 514,830.00
This document and the information thereon is the
property of PHINMA
University of Pangasinan 4
ABM 002

ABM 003/Fundamentals of Accounting,

Business
PHINMA University of Pangasinan and Management 2
Teacher / Facilitator Lesson Plan Grade Level 12
Day/Session# 2

ANSWERS:
Statement of Financial Position Accounts
( Real Accounts)
ASSETS LIABILITIES EQUITY

Cash on hand Accounts payable Roberto, Capital

Roberto,
Cash in bank Notes payable Drawings
Accounts receivable Interest payable
Allowance for bad
debts Taxes payable
Notes receivable
Interest receivable
Prepaid insurance
Prepaid supplies
Machinery and
equipment
Accumulated
depreciation - ME
Furniture and Fixtures
Accumulated
depreciation - FF

Guided Practice (15 minutes)

(Teachers: AFFIRMATIVE CHECKING) Check whether you need to re discuss the

concept.

Now that you have obtained the ideas about the accounts to appear in the
statement of financial position, let me hone your skills a little on some not so tough
questions.

Direction: Encircle the letter that corresponds to your answer.

Sample: Ana is preparing a statement of financial position, she’s not sure where to
put the salaries expense.
a. Don’t ask me
b. Be proud you’re ignorant
c. Ignore not part of SFP
d. Watch the news
 1. Are resources owned and controlled by the enterprise
a. Assets
b. Liabilities
c. Equity
d. Income

This document and the information thereon is the property of PHINMA

University of Pangasinan 5
b. Collectible from customers
ABM 002

c. Burden of payment
PHINMA University of Pangasinan d. Outflow of resources
Teacher / Facilitator Lesson Plan 7. All of the following statements
are correct regarding equity,
except
a. It’s the capital of the owner
b. Could be withdrawn by the
2. These are obligations
owner
payable in some future
dates c. Shows progress of the firm
a. Assets
b. Liabilities
c. Equity
d. Income
3. The residual after the
liabilities are deducted from
the total assets.
a. Assets
b. Liabilities
c. Equity
d. Income
4. Accounting equation is
a. Assets equals liabilities
minus expenses
b. Assets equals liabilities
plus revenues
c. Assets equals liabilities
plus withdrawals
d. Assets equals
liabilities plus equity
5. The following statements
are true regarding assets,
except
a. Are to be paid to
creditors
b. Controlled by the enterprise
c. Economic benefits
d. Reliably measurable
6. The following statements
are true regarding
liabilities, except
a. Expected to be paid
 accumulated depreciation –
ABM 003/Fundamentals of
Accounting, Business and equipment. He is asking you
Management 2 for help.
a. Transfer to dress making
Grade
Level 12
Day/Session
#2

d. Residual interest

8. Marlon has problem that he

cannot balance the
statement of financial
position, he’s thinking that
the error may have come
from the addition of
salaries expense in the
asset section. He is asking
you for a help.
a. Transfer to sports track
b. Put the salaries expense to
equity
c. Accounting is not for you
d. Remove salaries
expense

9. Identify which of the item

below is an asset?
a. Accrued income
b. Supplies used
c. Expired insurance
d. Unearned rent

10. Which of the

item below is a
liability?
a. Supplies unused
b. Advances from
customer
c. Advances to employee
d. Claims against carrier
11. Which of the items
below is part of equity?
a. Withdrawal from contract
b. Acquisition of equipment
c. Additional investment
d. Disposal of asset
12. Paquito is preparing a
statement of financial
position, he doesn’t know
where to put the
This document and the information thereon is the property of PHINMA
University of Pangasinan 6
ABM 002

ABM 003/Fundamentals of Accounting,

Business
PHINMA University of Pangasinan and Management 2
Teacher / Facilitator Lesson Plan Grade Level 12
Day/Session# 2

Since it is credit put it

b. under the d. Should be a deduction to
liabilities Equipment account
c. Sports track is better
Independent Practice (25 minutes)
(Facilitator: Instruct the students to answer the exercises below) Strategy: CIRCULATE
Now solve the exercises below, if you find it a little difficult just go back to the
illustrations above. Get ready with your analysis.
Below is a trial balance of Vergel Tours Company as of December 31, 2017:

Vergel Tours Company

Trial Balance
As of December 31, 2017

Account Title Debit Credit

Pag-ibig premium expense 1,100.00

Phil health premium expense 1,100.00
Tours revenue 716,800.00
Phil Health premiums payable 200.00
Notes receivable 16,000.00
Office supplies 3,700.00
Prepaid rent 93,000.00
Office equipment 112,000.00
Withholding taxes payable 1,617.00
Unearned service revenue 40,000.00
SSS Premium payable 533.00
Vergel, Withdrawals 9,600.00
Taxes and licenses 20,000.00
Pag-ibig premiums payable 200.00
Accumulated depreciation - OE 20,000.00
Advertising expense 26,000.00
SSS premium expense 10,897.00
Vergel, Capital 194,500.00
Accounts payable 55,000.00
Salaries expense 176,000.00
Cash 441,453.00
Accounts receivable 25,000.00
Utilities expense 93,000.00
Totals 1,028,850.00 1,028,850.00

Required: Identify the accounts which will be needed for the preparation of the
Statement of Financial Position and state whether each item is an asset, liability or
equity. Write your answers on the template provided below

Example:
ASSETS LIABILITIES EQUITY
Cash

This document and the information thereon is the property

of PHINMA
University of Pangasinan 7
ABM 002

ABM 003/Fundamentals of Accounting,

Business
PHINMA University of Pangasinan and Management 2
Teacher / Facilitator Lesson Plan Grade Level 12
Day/Session# 2

ANSWER:

Statement of Financial Position Accounts

( Real Accounts)
ASSETS LIABILITIES EQUITY
Cash Accounts payable Vergel, Capital
Accounts receivable SSS premium payable Vergel, Withdrawals
Pag-ibig premium
Notes receivable payable
Phil Health premium
Office supplies payable
Withholding taxes
Prepaid rent payable
Unearned service
Office equipment revenue
Accumulated depreciation
- OE

Closure Activity (10 minutes)

(Facilitator: Instruct the students to answer the questions below.)

TLAC Strategy: OWN AND TRACK
Now that you have a good practice in preparing a Statement of Financial Position we
can continue with some more meaningful practice.

Enteng Company
Trial Balance
December 31, 2017

Cash 24,520
Accounts receivable 9,200
Prepaid insurance 3,000
Equipment 53,600
Accumulated depreciation 4,800
Accounts payable 6,800
Notes payable 20,000
Enteng, Capital 62,200
Enteng, Drawing 3,480 ______
Totals 93,800 93,800
Direction: Determine the total amount of each of the following. Identify all the
assets and add up all the
balances of the asset accounts. Do the same for Liabilities. Find out the balance of the
Equity. Note: The balance of Drawings is closed to Capital account.

This document and the information thereon is the property of PHINMA

University of Pangasinan 8
ABM 002

ABM 003/Fundamentals of Accounting,

Business
PHINMA University of Pangasinan and Management 2
Teacher / Facilitator Lesson Plan Grade Level 12
Day/Session# 2

1)Total Assets _______________________ Answer:

2)Total Liabilities _______________________ 1. 85,520
Owner's Equity 2. 26,800
3) balance _______________________ 3. 58,720

Enrichment Activity (5 minutes)

(Facilitator: Instruct the students to answer the below questions.)
(Teacher:Affirmative checking whether the students understand the lessons)
As a future CPA, let's try how fast you are, in computing the assets. Just be ready for
the challenge.

Prepaid Salaries and Doubtful accounts

insurance 2,000 wages 5,000 Expense 2,200
Unearned rental Advertising
fees 8,000 expense 800 Depreciation expense 750
750,0
Interest income 1,250 Unused supplies 300 Owner's capital 00
Deferred tax 90,00
asset 5,000 Owner's drawing 6,000 Rental fees revenue 0

Required: Compute the total assets. Answer: 15,000

“Explore” Activity

Look around your community and choose one business. Go in and check what you
see inside the business. Make a list of everything you see and classify these into
Assets, Liabilities and Equity. You can interview the owner and ask what are the
bills pending for payment. Use the table below for your answers:

For example: Barber Shop

Answer:
Chairs, Water payable Tentoy, Capital
electric fan
ASSETS SSS payable
LIABILITIES Tentoy, Withdrawals
EQUITY
cash
Chairs Supplies
Electricity payable Professional fees
Tentoy, Capital
Electricity
Electric fan payable Accounts Receivable
Water payable Expenses
Tentoy, Withdrawals
Cash SSS payable
Supplies
Accounts receivable

This document and the information thereon is the property of PHINMA

University of Pangasinan 9
ABM 002

ABM 003/Fundamentals of Accounting,

Business
PHINMA University of Pangasinan and Management 2
Teacher / Facilitator Lesson Plan Grade Level 12
Day/Session# 2

Assessment Tool
Fill in the blanks with the appropriate accounting terminology that you have learned in
this module.
Read each statement and write the term being described.

_____________________1. This is the normal balance of Accumulated Depreciation –

Machinery.

_____________________2. Cash advance received from customers to whom services will

be rendered in the future is to be classified as Asset, Liability or Equity.
_____________________3. The equation Assets = Liabilities + Equity explains what
financial statement?
_____________________4. This is a contra asset account that is deducted from
total Accounts Receivable to compute the total accounts
collectible
_____________________5. This is classified as an asset, these include but not limited
to pens, paper, ink for printer, etc.

Answers:
1. Credit 2. Asset 3. Statement of Financial Position4. Allowance for Bad
Debts
5. Office Supplies
This document and the information thereon is the property of PHINMA
University of Pangasinan 10