“Preparing Financial Reports for Single

Proprietorship”.

HOW TO USE THIS COMPETENCY BASED LEARNING MATERIALS

Welcome to the module in “Preparing Financial Reports for Single Proprietorship”. This
module contains training materials and activities for you to complete.
The unit of competency “Prepare Financial Reports for Single Proprietorship" contains
knowledge, skills and attitudes required for Bookkeeping NC III.
You are required to go through a series of learning activities in order to complete each learning
outcome of the module. In each learning outcome there are Information Sheets, Self Checks, Task
Sheet and Job Sheets. Follow these activities on your own. If you have questions, don’t hesitate to ask
your trainer/facilitator for assistance.
The goal of this course is the development of practical skills. To gain these skills, you must
learn basic concepts and terminologies. For the most part, you'll get this information from the
Information Sheets and TESDA Website, www.tesda.gov.ph
This module is prepared to help you achieve the required competency, in “Preparing Financial
Reports for Single Proprietorship".
This will be the source of information for you to acquire knowledge and skills in this particular
competency independently and at your own pace, with minimum supervision or help from your
trainer/instructor.
Remember to:
▪ Work through all the information and complete the activities in each section.

▪ Read information sheets and complete the self-check. Suggested references are included to
supplement the materials provided in this module.

▪ Most probably your trainer will also be your supervisor or manager. Your trainer is there to support you
and show you the correct way to do things.

▪ You will be given plenty of opportunity to ask questions and practice in your respective laboratory.
Make sure you practice your new skills during regular training schedule. This way you will improve
both your speed and memory and also your confidence.

▪ Use the Self-checks, Job Sheets at the end of each section to test your own progress.

▪ When you feel confident that you have had sufficient practice, ask your Trainer to evaluate you. The
results of your assessment will be recorded in your Progress Chart and Achievement Chart.

▪ You need to complete this module before you can perform the module on Review Internal Control
System.
 List of Competencies
No. Unit of Competency Module Title Code

1. Journalize transactions Journalizing HCS412301

transactions for single
proprietorship

2. Post transactions Posting transactions HCS412302

3. Prepare trial balance Preparing trial balance HCS412303

4. Prepare financial Preparing financial HCS412304

reports reports for single
proprietorship

5. Review internal Reviewing internal HCS412305

control system control system

MODULE CONTENT

UNIT OF COMPETENCY : PREPARE FINANCIAL REPORTS

MODULE TITLE : PREPARING FINANCIAL REPORTS FOR SINGLE

PROPRIETORSHIP

MODULE DESCRIPTOR : This module covers the knowledge, skills, and

attitudes in preparing financial reports manually for single proprietorship.

NOMINAL DURATIONS : 24 hrs.

LEARNING OUTCOMES :

Upon completion of this module, the trainees/students must be able to:

LO1. Prepare financial statements

LO2. Analyze financial statement

LEARNING OUTCOME SUMMARY

LO1. Prepare financial statements for Single
Proprietorship/Partnership
ASSESSMENT CRITERIA:
1. Income statement is prepared in accordance with generally
accepted accounting principles/Philippine Financial Reporting
Standards/Philippine Financial Reporting Standards.
2. Statement of Equity is prepared in accordance with generally
accepted accounting principles/Philippine Financial Reporting
Standards/Philippine Financial Reporting Standards.
3. Balance Sheet is prepared in accordance with generally
accepted accounting principles/Philippine Financial Reporting
Standards/Philippine Financial Reporting Standards.
4. Statement of Cash Flow is prepared in accordance with
generally accepted accounting principles/Philippine Financial
Reporting Standards/Philippine Financial Reporting Standards.
CONTENT:

● Financial Statements for Single Proprietorship and Partnership

CONDITIONS: The students/trainees must be provided with the following:

• Calculator

• Paper

• Learning Materials

• Pencil

• Eraser

• Ruler

• Worksheet

METHODOLOGY

• Interaction

• Lecture

• Practical exercises

ASSESSMENT METHOD

• Written test

• Practical/Performance test
LO2. Analyze financial statements

ASSESSMENT CRITERIA:
1. Financial Statements analyzed in accordance with
prescribed format.

2. Report on financial analysis is prepared in accordance with

industry requirements.

CONTENT:

• Financial Ratios

CONDITIONS: The students/trainees must be provided with the following:

• Calculator

• Paper

• Learning Materials

• Pencil

• Eraser

• Worksheet

• Ruler
METHODOLOGY

• Group discussion

• Lecture

• Practical exercises

ASSESSMENT METHOD

• Written test

• Practical/performance Test •
Oral questioning
 Learning Experiences
Learning Outcome #1
Prepare financial statements for Single Proprietorship/Partnership
Learning Activities Special Instructions

Read Information Sheet 1.1-1 Read and understand the information

Prepare financial statements for sheet and check yourself by
Single Proprietorship/partnership answering the Job Sheet1.1-1. You
must answer all the questions before
proceeding to the next activity.

Information Sheet 1.1-1

Prepare financial statements for Single Proprietorship/Partnership

Learning Objectives:
After reading this INFORMATION SHEET, YOU MUST be able to: 1.
Know to prepare financial statements for Single
Proprietorship/Partnership.

What comprises the Financial Statements?

Finally, we have come to the very purpose of accounting which is to
“communicate” to the proprietor of what happened to the capital that he put into the
business through the financial statements.

What are the complete sets of Financial Statements?

Per PAS (Principles Accounting Standards No. 1), the complete set of
Financial Statements are the following:
1. Statement of Financial Position as at the end of the period (Balance
Sheet);
2. Statement of Performance for the period (Income Statement);
3. Statement of Equity for the period;
4. Statement of Cash Flows for the period;
5. Notes to Financial Statements
STATEMENT OF CASH FLOWS:

This is a financial statement that provides information about cash inflows

(Receipts) and cash outflows (Payments) of an entity for a given period of time
which is being classified into the following activities:

a. Operating Activities - the inflows and outflows of cash from the normal
operating activities of the business.

b. Investing Activities- the inflows and outflows of purchase of assets other

than inventories.

c. Financing Activities- the inflows and outflows from the owners and creditors
of the enterprise.

This shows the net increase or decrease in cash during the period and the cash
balance at the end of the period. The Statement of Cash Flows answers the following
questions:

1.) Where did cash come from during the period?

(Referring to the source or cash inflows)

2.) Where did cash go?

(Referring to the uses or cash outflows)

There are two methods of preparing cash flows under the operating activities;
these are the direct method and the indirect method. However, an enterprise is
encouraged to report cash flows from operating activities using direct method.

As a guide for your cash flow preparation, just take a look at the cash ledger
as shown hereunder.

DEMONSTRATION PROBLEM: (ANG PHOTOGRAPHIC SERVICE)

(Using electronic or 4-columns Journal)

GENERAL LEDGER

GL-1

Account Name: Cash on Hand Account No. 101

Date Account P Debit Credit Balance

2017 os
Items t Debit Credit
R
ef
.

De 1 Tee k. Ang, Capital GJ- Ᵽ 8 0 0 0 0 Ᵽ 8 0 0 0 0

c. 1
8 Account Receivables GJ- 80 880
1 00

10 Utilities Expense GJ- Ᵽ 5 0 0 0 8 3 0 0 0

1

1 Tee K. Ang, Drawing GJ- 50 780

3 1 00

17 Photographic Income 930

GJ-1

20 Accounts Payable GJ- 870

1
00

23 Rent Expense GJ- 30 840

2 00

27 Tee K. Ang, GJ- 20 820

Drawing 2 00

30 Salaries Expense GJ- 80 7 4 0 0

2 00
0
Reconcile with cash balances ending in the Statement of Cash Flows

Shown below is the Statement of Cash Flows of Ang Photographic Services for the
month ended December 31, 2017:

As shown in the statement of cash flows, there is an increase in cash by ₽74,000.

The increase is accounted for as follows:

Net cash flows provided by operating activities

Increased Cash ₽ 1,000

Net cash flows provided by investing activities - 0 –

Net cash flows provided by financing activities

Increased Cash ₽ 73,000

Net increased in Cash ₽ 74,000

What comprises the Income Statement/Statement of Performance?

STATEMENT OF PERFORMANCE/INCOME STATEMENT:

Income Statement is a statement which shows the performance of the
enterprise for a given period of time. It shows the summary of Income and Expense
derived from and incurred for a given period.
Income Statement or Statement of Performance is a statement which
shows the “results of operation” of the business for a given period of time. It
shows the Revenue or Income earned and Costs and Expenses incurred. The period
covered by the income statement may be:
“For the month ended___________”
“For the quarter ended__________”
“For the year ended_____________”

Basically, the income statement features the following:

Sales, Revenue or Income ₽xxx
Cost and Expenses ( xxx)
Profit (Loss) ₽xxx

If the business makes profit, the following series of questions can be

asked: 1. Can I afford to hire additional employees?
2. What costs can I cut- down to maximize profit?

The information presented in an income statement is usually considered the

most important information providing by financial accounting because profitability
is the paramount concern to those interested in the economic activities of the
enterprise.

Two (2) forms in preparing Income Statement:

 1. Modified single- step form (Service concern business)
2. Multiple step form (Merchandising concern business)
Modified single- step form (Service concern business):

Service Concern
Statement of Performance/Income Statement
Revenue from
Service/Service Income

Minus/Less
Expenses

Equals
Profit/Loss

DEMONSTRATION PROBLEM: (ANG PHOTOGRAPHIC SERVICE)

(Using electronic or 4-columns Journal)

GL-8

Account Name: Photographic Income Account No. 401

Date Account Pos Debit Credit Balance

2017 t
items Debit Credit

De 3 GJ- Ᵽ 1 0 0 0 0 Ᵽ 1 0 0 0 0
c. 1

1 GJ- 1 5 0 2 50
7 1 0 00
0

GL-9

Account Name: Utilities Expense Account No. 501

Date Account Pos Debit Credit Balance

2017 t
items Debit Credit

Dec. GJ- Ᵽ 5 0 0 0 Ᵽ 5 0 0 0
10 1

GL-10
 Account Name: Rent Expense Account No. 502

Date Account Pos Debit Credit Balance

2017 t
items Debit Credit

Dec. GJ- Ᵽ 3 0 0 0 Ᵽ 3 0 0 0
23 2

GL-11

Account Name: Salaries Expense Account No. 503

Date Account Pos Debit Credit Balance

2017 t
items Debit Credit

Dec. GJ- Ᵽ 8 0 0 0 Ᵽ 8 0 0 0
30 2

Shown below is the Statement of Performance of Ang Photographic Services for

the month ended December 31, 2017:

Modified Single-Step Form:

Ang Photographic Services

STATEMENT OF PERFORMANCE
For the Month Ended December 31, 2017

Photographic Income ₽ 25,000

Less: Operating Expenses:
Utilities Expense ₽ 5,000
Rent Expense 3,000
Salaries Expense 8,000
Total operating expenses 16,000
Net Profit ₽ 9,000

STATEMENT OF EQUITY:

This is a financial statement that summarizes the changes in equity for a given
period of time. The beginning equity of the owner is increased by the additional
investment and profit. Correspondingly, it is decreased by withdrawal and loss.

DEMONSTRATION PROBLEM: (ANG PHOTOGRAPHIC SERVICE)

(Using electronic or 4-columns Journal)
GL-6

Account Name: Tee K. Ang, Capital Account No. 301

Date Account Pos Debit Credit Balance

2017 t
items Debit Credit
De 1 GJ- Ᵽ 1 3 0 0 0 0 Ᵽ 1 3 0 0 0 0
c. 1

GL-7

Account Name: Tee K. Ang, Drawing Account No.302

Date Account Pos Debit Credit Balance

2017 t
items Debit Credit

Dec. GJ- Ᵽ 50 Ᵽ 5 0 0 0
13 1 00

2 GJ- 20 7 0 0 0
7 2 00

Shown below is the Statement of Equity of Ang Photographic Services for the
month ended December 31, 2017:

Ang Photographic Services

STATEMENT OF EQUITY
For the Month Ended December 31, 2017

Tee K. Ang, Capital – December 1 ₽ - 0 –

Add: Initial investments 130,000
Less: Tee K. Ang, Drawing 7,000
Total ₽123,000
Add: Net Profit 9,000
Tee K. Ang, Capital – December 31 ₽132,000

Looking at this Statement of Equity, we say that the beginning equity of the
owner Mr. Tee K. Ang in the amount of ₽0 has increased to ₽132,000 as a result of
its operations.

The amount of increase is calculated as follows:

Owner’s Equity – Ending ₽132,000

Less: Owner’s Equity – Beginning - 0 -__
Increase in Equity ₽132,000

The increase in Owner’s Equity by ₽132,000 is accounted for as

follows: Profit for the month (Increase Owner’s Equity) ₽ 9,000

Less: Owner’s withdrawal (Decrease Owner’s Equity) 7,000

Net Increase in Owner’s Equity ₽ 2,000

(In an event wherein an Owner’s withdrawal exceeds profit, there is a net decrease
in Owner’s Equity; hence, Beginning Owner’s Equity will also be decreased.)

What is Balance Sheet/Statement of Financial Position?

Balance Sheet is a statement that shows the “financial position” of the

enterprise “as of” a given date.

A Balance sheet is of two forms:

1. Account Form
2. Report Form

1. The Account Form of a balance sheet is patterned after the Accounting

Equation:

ASSETS = LIABILITIES + Owner's EQUITY; wherein the Assets are shown at

the left side and Liabilities and Owner’s Equity at the right side. The three accounting
elements are arranged in horizontal order. This form of a balance sheet is used
when there are plenty of accounts involved.

2. The Report Form of a balance sheet, Assets are shown first, and followed by
Liabilities and Owner’s Equity in a vertical order. This form of a balance sheet is
used when there are only few accounts involved.

A Balance Sheet, gives the following three things at any point of time:
1. How much property a business owns? (ASSET)
2. How much a business owes? (LIABILITIES)
3. How much capital a business has? (OWNER’S EQUITY)

Heading of the Balance Sheet:

1. Name of the business or name of the proprietor or owner

2. Title of the report
3. The period covered by report

DEMONSTRATION PROBLEM: (ANG PHOTOGRAPHIC SERVICE)

(Using electronic or 4-columns Journal)
GENERAL LEDGER

GL-1
Account Name: Cash on Hand Account No. 101

Date Account P Debit Credit Balance

2017 os
Items t Debit Credit
R
ef
.

De 1 Tee k. Ang, Capital GJ- Ᵽ 8 0 0 0 0 Ᵽ 8 0 0 0 0

c. 1

8 Account Receivables GJ- 80 880

1 00

10 Utilities Expense GJ- Ᵽ 5 0 0 0 8 3 0 0 0

1

1 Tee K. Ang, Drawing GJ- 50 780

3 1 00

17 Photographic Income 930

GJ-1

20 Accounts Payable GJ- 6 0 870

1
0

23 Rent Expense GJ- 30 840

2 00

27 Tee K. Ang, GJ- 20 820

Drawing 2 00

30 Salaries Expense GJ- 80 7 4 0 0

2 00
0

GL-2

Account Name: Accounts Receivable Account No. 102

Date Account Pos Debit Credit Balance

2017 t
items Debit Credit

De 3 GJ- Ᵽ 1 0 0 0 0 Ᵽ 1 0 0 0 0
c. 1

8 GJ- Ᵽ 8 0 0 0 2 0 0 0
1

GL-3

Account Name: Photographic Supplies Inventory Account No. 103

Date Account Pos Debit Credit Balance

2017 t
items Debit Credit

De 5 GJ- Ᵽ 1 5 0 0 0 Ᵽ 1 5 0 0 0
c. 1
 GL-4

Account Name: Photographic Equipment Account No. 104

Date Account Po Debit Credit Balance

2017 st
items Debit Credit

De 1 GJ- Ᵽ 5 0 0 0 0 Ᵽ 5 0 0 0 0
c. 1

GL -5

Account Name: Accounts Payable Account No. 201

Date Account Po Debit Credit Balance

2017 st
items Debit Credit

De 5 GJ- Ᵽ 1 0 0 0 Ᵽ 1 5 0 0 0
c. 1

2 GJ- Ᵽ 6 0 0 0 9 0 0 0
0 1

Shown below is the Statement of Financial Position of Ang Photographic Services

for the month ended December 31, 2017:

Account Form:

Report Form:
CLOSING ENTRIES:
The preparation of closing entries is the seventh-step of the accounting
process and is usually prepared at the end of the accounting period of usually one
year and is recorded in the books of original entry which is the General Journal.

The accounts that are to be closed at the end of the accounting period are the
nominal accounts or income statement accounts. By closing, this means that
nominal accounts which have an “open balance” will be reduced to “zero
balance.”

Thus, a nominal or income statement account with a debit balance will be

credited in the closing entry by an amount equal to its debit. Conversely, a nominal
or income statement account with a credit balance will be debited in the closing
entry by an equal to its credit.

Procedures in closing the nominal accounts: (SERVICE CONCERN)

Step 1 – Close the Income/Revenue account, since Income/Revenue

have a normal balance of credit. To close is to debit the said
account.

Step 2 - Close all Expenses account, since Expense has a normal balance
of debit. To close is to credit the said account.

Step 3 – Foot the debit – credit entries of the Income Summary account
ledger. These will results to having a credit balance which
represents “Net Profit.” This amount balance is closed to the
Capital account.
Step 4 – Finally, close the balance of the Drawing account to the
Capital account. Since drawing account showed a debit
balance, it is
close by crediting the said account.
DEMONSTRATION PROBLEM: (ANG PHOTOGRAPHIC SERVICE)

(Using electronic or 4-columns Journal)

Shown below are the closing entries of Ang Photographic Services for the month
ended December 31, 2017:

GENERAL JOURNAL
GJ3
Account Name and Explanation Ref Debit Credit
Date .

2017

Dec. 31 Photographic Income 40 Ᵽ 25,000.00

1

Income Summary 601 Ᵽ 25,000.00

Closing income account to

income summary.

31 Income Summary 601 16,000.00

Utilities Expense 501 5,000.00

Rent Expense 502 3,000.00

Salaries Expenses 503 8,000.00

Closing all expenses to

income summary.

31 Income Summary 601

9,000.00

Tee K. Ang, Capital 301

9,000.00

Closing profit to capital

account.

31 Tee K. Ang, Capital 301

7,000.00

Tee K. Ang, Drawing 302

7,000.00
 Closing drawing account to
capital account.

- ________
_______ __ _____
__ _____

Ᵽ 57,000.00 Ᵽ
57,000.00

Note: Go back to the General Ledger and post the closing entries with zero
balances.

GENERAL LEDGER
POST-CLOSING TRIAL BALANCE:

The preparation of a Post-closing Trial Balance is the eight-step of the

accounting process.

After the nominal accounts have been closed and ruled and the real
accounts have been balanced and ruled, another trial balance is prepared to prove
the equality of the debit and credit amounts of accounts remaining ”open” in the
General Ledger after closing entry. The amount with open balances after closing
entry is “real accounts” or “balance sheet accounts.”

The Post-closing Trial Balance therefore contains the list of balance sheet
account with open balances and is therefore defined as a “balance sheet in a trial
balance form.”

The purpose of the Post-closing Trial Balance is “to insure that the ledger is
in balance for the start of the next period.”
DEMONSTRATION PROBLEM: (ANG PHOTOGRAPHIC SERVICE)

(Using electronic or 4-columns Journal)

Note: Go back to the General Ledger and list the account titles with open
balances then prepare a post-closing trial balance.
Shown below is the post-closing trial balance of Ang Photographic Services for the
month ended December 31, 2017:

Ang Photographic Services

POST –CLOSING TRIAL BALANCE
For the Month Ended December 31, 2017
Acco Account Names Debit Credit
un t
Nos.

101 Cash on Hand Ᵽ 74,000

102 Accounts Receivables 2,000

103 Photographic Supplies Inventory 15,000

104 Photographic Equipment 50,000

201 Accounts Payable Ᵽ 9,000

301 Tee K. Ang, Capital 132,000

Total Ᵽ 141,000 Ᵽ 141,000

JOB SHEET 1.1-1

Title: Prepare Financial Reports/Statements

Performance Objectives: Given the procedure and the same problem

data in Module 1 – Job Sheet 3.1-3, you should be able to prepare
financial reports/statement in accordance with Generally Accepted
Accounting Principles.
Supplies/Materials : Journal (2 columns), Journal (4 columns), pencil,
eraser, ruler, paper, Learning Materials,
worksheet

Equipment : Calculator

Steps/Procedures:
1. Preparing Financial Reports/Statements
2. Submit financial reports to the owner

Assessment Method:
• Written Test

• Practical/Performance test