Fundamentals of Accountancy, Business, and Management 1 - ABM Vocabulary Flashcards
SHS ABM Fundamentals of Accountancy, Business and Management 1 — Comprehensive Notes (Summary)
This ABM Specialized Subject is designed for Senior High School, Grade 11, with an emphasis on Fundamentals of Accountancy, Business and Management 1 (FABM11). The course is aligned to the DepEd SHS Curriculum and CHED K to 12 Transition Program, developed in collaboration with the Philippine Normal University (PNU) and other partners. The Teaching Guide is licensed under Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International. Feedback is encouraged via k12@ched.gov.ph.
SHS for SHS Framework (Saysay-Husay-Sarili for Senior High School):
SAYSAY (Meaning): Why is this important? Facilitate understanding of value at cognitive and affective levels.
HUSAY (Mastery): How to deeply understand? Move beyond memorization to analysis and synthesis.
SARILI (Ownership): What can I do with this? Promote independence and self-direction.
Structure of the Teaching Guide: integrated with DepEd SHS Curriculum; contains classroom activities and pedagogical notes; presented in parts: Introduction, Motivation, Instruction/Delivery, Practice, Enrichment, Evaluation.
Course overview: ABM – Fundamentals of Accountancy, Business and Management 1 (May 2016) – page 1-7 of the booklet.
Grade: 11; Semester: 2nd; Hours per Semester: 80.
Course Description: An introductory course in accounting, business and management data analysis that develops understanding of accounting as the language of business and concepts/principles used to analyze business transactions.
Key components of the course (Content Standards, Performance Standards, Learning Competencies – with codes):
1. Introduction to Accounting (ABM_FABM11-IIIa-1 to IIIa-4): define, describe, explain functions, narrate origin.
2. Branches of Accounting (ABM_FABM11-IIIa-5 to IIIa-6): financial, management, government, auditing, tax, cost accounting, accounting education, accounting research.
3. Users of Accounting Information (ABM_FABM11-IIIa-7 to IIIa-10): external/internal users, decision types, information needs.
4. Forms of Business Organizations (ABM_FABM11-IIIb-11 to IIIb-12): sole proprietorship, partnership, corporation, cooperatives.
5. Types of Business According to Activities (ABM_FABM11-IIIb-13 to IIIb-14): service, merchandising, manufacturing (and hybrids).
6. Accounting Concepts and Principles (ABM_FABM11-IIIb-c-15 to IIIb-c-16): key GAAP principles; explain/solve applications.
7. The Accounting Equation (ABM_FABM11-IIIb-c-17 to IIIb-c-18): basic equation and simple transactions applying it.
8. Types of Major Accounts (ABM_FABM11-IIId-e-19 to IIId-e-21): five major accounts – assets, liabilities, capital, income, expenses; examples; chart of accounts.
9. Books of Accounts (ABM_FABM11-IIIf-22 to IIIf-24): journal vs ledger; general vs subsidiary ledgers; posting; trial balance; adjusting entries; financial statements; closing.
Business Transactions and Their Analysis in the Accounting Cycle of a Service Business (ABM_FABM11-IIIg-j-25 to IIIg-j-28) and 11 (IVa-d-29 to IVa-d-34) and 12 (IVe-j-35 to IVe-j-41): service, adjustments, and merchandising cycles.
Lesson contents (overview from Table of Contents):
Lesson 1: Introduction to Accounting
Lesson 2: Branches of Accounting
Lesson 3: Users of Accounting Information
Lesson 4: Forms of Business Organizations
Lesson 5: Types of Business According to Activities
Lesson 6: Accounting Concepts and Principles
Lesson 7: The Accounting Equation
Lesson 8: Types of Major Accounts
Lesson 9: Books of Accounts
Lesson 10-11: Business Transactions and Their Analysis in a Service Business (Pt.1 and Pt.2)
Lesson 12: Accounting Cycle of a Merchandising Business
Core concepts and definitions (selected synthesis):
Accounting: the process of identifying, recording, and communicating economic events of an organization to interested users. Key verbs:
IDENTIFYING: select relevant economic events (transactions).
RECORDING: maintain a chronological diary of events measured in pesos (journals and ledgers).
COMMUNICATING: prepare and distribute financial and other reports.
Accounting is a service activity, a process, an art and a discipline, and an information system dedicated to financial information only.
The four primary functions of accounting in business: provide information to managers/owners, assess efficiency/effectiveness, enable comparison against standards/competitors, and support decision-making.
History/origin highlights: cradle of civilization (3600 B.C.), double-entry bookkeeping by Luca Pacioli (14th c.), French Revolution, Industrial Revolution, modern accounting standards development (20th c.) and globalization towards global accounting standards.
Fundamental accounting concepts and principles (selected list):
Business Entity Principle: the business is separate from its owner(s).
Going Concern Principle: assume the business will continue unless evidence suggests otherwise.
Time Period Principle: financial statements cover defined periods (e.g., monthly, quarterly, yearly).
Monetary Unit Principle: use a single monetary unit (e.g., Philippine peso).
Accrual Accounting Principle: revenues recognized when earned; expenses recognized when incurred; cash basis is not the GAAP today.
Matching Principle: match expenses with related revenues in the same period.
Cost Principle: assets recorded at cost; subsequent costs may be expensed or capitalized per policy.
Revenue Recognition, Disclosure, Conservatism, Materiality, and other standards (summarized).
The accounting equation: A = L + OE, where
A = Assets (resources controlled by the entity)
L = Liabilities (obligations to external parties)
OE = Owner’s Equity (residual interest of owners)
Equity components: Investments (contributions by owners), Withdrawals (drawings by owners), Revenue, and Expenses (which affect equity).
Example form: initial investment increases both assets and equity; loan increases assets and liabilities; revenues increase equity; expenses decrease equity. A simple transaction set demonstrates how the equation remains balanced after each entry.
Notation example: If cash increases by 200,000 and owner’s capital increases by 200,000, then A increases and OE increases by the same amount, leaving A = L + OE balanced if L is unchanged.
Forms of business organizations (by ownership and regulation):
Sole/Single Proprietorship: owned by one person; simplest form; easy to form; owner keeps profits but life limited to owner; regulated by DTI for business name.
Partnership: owned by two or more persons; profits shared as per articles of partnership; greater capital; liability exposure across partners.
Corporation: separate legal entity; ownership through shares; regulated by SEC; owners are stockholders; liability limited to investment; easier to raise capital but more complex to set up;
Cooperatives: member-owned; regulated by CDA; tax-exemption advantages; emphasize resource sharing.
Key governance: SEC for corporations; CDA for cooperatives; DTI for sole proprietorships.
Inventory and merchandising concepts (selected highlights):
Perpetual vs Periodic inventory systems: perpetual tracks inventory continuously; periodic updates inventory and COGS at period end.
Cost flow assumptions in periodic system: FIFO (first in, first out) vs Average Cost (weighted average) vs other methods; affects COGS and ending inventory.
In merchandising, COGS calculation under periodic:
Net Purchases = Purchases − Purchase Discounts − Purchase Returns and Allowances + Freight-In (if freight is included in cost).
Cost of Goods Available for Sale = Beginning Inventory + Net Purchases + Freight-In (if included in cost).
COGS = Cost of Goods Available for Sale − Ending Inventory.
Sample numerical illustration (from the transcript): Beginning BI = 100,000; Purchases = 250,000; Freight-In = 6,000; Purchase Discounts = 2,000; Returns/Allowances = 5,000; EI = 118,570; COGS = 230,250; ending BI = 118,570.
Books of accounts and journal/ledger fundamentals (selected):
Journal: book of original entry; records transactions chronologically; two columns of entries (debit then credit);
Ledger: book of final entry; contains accounts (general ledger and subsidiary ledgers); balances flow from journals to ledgers; used to prepare trial balances and financial statements; the general ledger aggregates the postings of all journals; subsidiary ledgers detail individual accounts (e.g., individual suppliers or customers).
Special journals (to improve efficiency for frequent transactions):
Cash Receipts Journal (CRJ): records cash receipts (cash, accounts receivable collections, etc.).
Cash Disbursements Journal (CDJ): records cash payments.
Sales Journal (SJ): records sales on account.
Purchase Journal (PJ): records purchases on account.
The flow: Journal -> General Ledger (and subsidiary ledgers) -> Unadjusted Trial Balance -> Adjusting Entries -> Adjusted Trial Balance -> Financial Statements -> Closing Entries.
The concept of a trial balance (unadjusted and adjusted) ensures debits = credits; serves as a stepping stone toward financial statements.
The Chart of Accounts (COA): a listing of all accounts used by a company, organized by type (assets, liabilities, equity, revenue, expenses) with account codes.
Sample COA structure shows typical codes: 1000 Cash, 1200 Accounts Receivable, 1300 Inventory, 1600 Office Equipment, 2000 Accounts Payable, 3000 Owner’s Capital, 4000 Service Revenue, 5000 Purchases, 6100 Salaries Expense, etc.
Practical examples and learning activities (selected highlights):
Definition and purpose activities: class activities dividing groups to act out the definition of accounting and the evolution/history of accounting; quiz-style evaluation on accounting concepts.
Motivational prompts use local business examples (bakery, sari-sari store) to illustrate how accounting questions (profitability, break-even, financing, expansion) arise in real life.
Internal vs External users exercise: examples of how LGUs, investors, banks, suppliers, and government agencies use accounting information; role-playing exercises to illustrate information needs.
Branches of accounting exercise: students classify a given service or product activity into the appropriate branch and identify the corresponding service outputs (e.g., financial vs managerial vs tax accounting).
Core formulas and formulas in LaTeX (selected key formulas):
Basic accounting equation: ext{Assets} = ext{Liabilities} + ext{Owner's Equity}
Net income: ext{Net Income} = ext{Total Revenue} - ext{Total Expenses}
Cost of Goods Sold (periodic):
Net Purchases = Purchases - Purchase Discounts - Purchase Returns and Allowances + Freight-In (if included in purchases)
COGS = Beginning Inventory + Net Purchases + Freight-In − Ending Inventory
Cost flow and inventory calculations under periodic: see example in text with BI, COGP (net purchases), EI, and COGS.
Depreciation (straight-line):
Annual Depreciation = rac{Cost - Salvage}{Useful ext{ Life}}
If needed for a partial year, prorate by months: e.g., monthly depreciation = Annual Depreciation / 12; adjust for mid-period purchases.
Revenue recognition (accrual vs cash): revenue recognized when earned; expenses recognized when incurred.
Inventory under perpetual: two-entry recording for each sale (revenue and cost of goods sold) and inventory reduction; under periodic: COGS determined at period-end.
The overarching takeaways for exam preparation:
Be able to articulate and apply the accounting equation to a sequence of transactions and explain how each transaction affects assets, liabilities, and owner’s equity.
Distinguish between the different forms of business organizations and their regulatory bodies, along with advantages and disadvantages.
Identify the external and internal users of accounting information and explain their information needs and decision roles.
Distinguish between the major branches of accounting and provide practical examples of their outputs and reports.
Understand the structure and purpose of the two main books of accounts (journal and ledger), including the use of special journals for repetitive transactions.
Understand inventory systems (periodic vs perpetual) and the cost flow assumptions (FIFO, average cost) and how they affect COGS and ending inventory.
Be proficient in performing basic journal entries, posting to ledgers, preparing trial balances (unadjusted and adjusted), and recognizing the flow to the financial statements.
Be able to prepare simple adjusting entries (depreciation, prepaid expenses, accrued expenses, accrued income, and related closing entries) and understand the purpose of the worksheet in consolidating end-of-period adjustments.
Real-world relevance and ethical considerations:
Accounting provides decision-useful information to stakeholders and must reflect a true and fair view of financial position and performance; misstatement or misclassification (e.g., mixing personal and business expenses, or misreporting inventory) violates the Business Entity and Disclosure principles and erodes trust.
The guide emphasizes alignment with both DepEd’s Functional Skills and CHED College Readiness Standards to ensure graduates can transition to higher education without remediation.
Notable references and suggested readings (as listed in the material):
Anastacio, Ma. Flordeliza. Fundamentals of Financial Management ( Rex Book Store, 2011 ).
Gilbertson, Claudia. Fundamentals of Accounting. 8th ed. (Cengage, 2010).
Padillo, Nicanor, Jr. Financial Statements Preparation, Analysis and Interpretation. (GIC Enterprises, 2011).
Pefianco, Erlinda C. The Accounting Process: Principles and Problems. (Goodwill Trading, 1996).
Young, Felina C. Principles of Marketing. (Rex Book Store, 2008).
Quick reference index (for easy recall during study):
A = L + OE; Assets, Liabilities, Equity; Debits and credits rules; normal balances by account type.
Journal vs Ledger; General vs Subsidiary Ledgers; posting process; trial balance.
Special Journals: CRJ, CDJ, SJ, PJ.
COGS under periodic vs perpetual; inventory cost flow assumptions; FOB terms.
Adjusting entries types: depreciation, prepaid/ deferred (prepaid expenses), unearned revenue, accrued expenses, accrued income.
Financing and investing entries: owner investments; withdrawals; dividends (if applicable in a given context).
This set of notes should provide a structured, exam-ready synthesis of the content presented in the Teaching Guide for Fundamentals of ABM 1, including key concepts, formulas, examples, and procedural steps for accounting transactions, cycle flow, and basic reporting.
If you want, I can convert this into a compact PDF-ready outline or tailor a subset of notes for a specific lesson (e.g., Lesson 7: The Accounting Equation or Lesson 9: Books of Accounts) with worked examples and practice questions.
Title
ABM Fundamentals of Accountancy, Business and Management 1 — Comprehensive Study Notes (Note: no overall title in the content; see sections above for structured topics)