Fabm 2

QUEEN ANNE SCHOOL
STA. ROSA
ADAPTIVE TEACHING GUIDE
FABM 2
WEEK 3
MET # 1
Lesson: STATEMENT OF FINANCIAL POSITION
Prerequisite Content-knowledge: Fundamentals of Accounting

Prerequisite Skill: Creativity & Problem Solving.
Prerequisites Assessment:
Read the statement very carefully and write your answer on the space provided before each number. Write legibly, remember you are a USA learner, right? (Understanding with Speed and Accuracy)
____________1. An art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events, and interpreting the result thereof.
_____________2. Widely accepted set of rules, concepts & principles of accounting procedures
_____________3. Assumes that all the business transactions are separate from the business owner’s personal transactions.
_____________4. All assets acquired should be valued and recorded based on acquisition cost not the prevailing market value.
_____________5. The principles that requires that expenses be matched with revenue in a given accounting period.
_____________6. Requires the business to complete the whole accounting process over a specific operating period.
For items 7-15 identify the account title as Assets, Liabilities and Owner’s Equity. Classify each if current and noncurrent assets, current and noncurrent liabilities:
7. Cash _______________ _______________
8. Accounts Receivable _______________ _______________
9. Bank Loan Payable _______________ _______________
10. Original Investment by the owner _______________ _______________
11. Equipment ________________ ______________
12. Merchandise Inventory _______________ _______________
13. Account Payable ______________ ________________
14. Land ______________ ________________
15. Owner’s Drawing _______________ _______________
Pre-lesson Remediation Activity:
1. For Students with Insufficient Level on Prerequisite Content-knowledge and/or Skill(s):
2. For Students with Fairly Sufficient Level on Prerequisite Content-knowledge and/or Skill(s):
Introduction:
TIME FRAME: 12 MINS
OBJECTIVES:
At the end of the lesson, the students are able to:
1. Identify the elements of SFP and describe each of them (ABM_FABM12-ia-b-1)
2. Prepare an SFP using the report form and account form with proper classifications of forms as current and non-current (ABM_FABM12-ia-b-4)
OVERVIEW
The statement of financial position is another term for the balance sheet. The statement lists the assets, liabilities, and equity of an organization as of the report date. As such, it
provides a snapshot of the financial condition of a business as of a specific date. Preliminary preparation of the Statement of Financial Position will be performed through the guide of
accounting equation: A = L + OE; where assets is on the left side of the equation are debits and L+C is on the right side of equation are the credits. This is their normal position and can be
interchanged depending on the transactions that has transpired.
Student’s Experiential Learning:

CHUNK 1: What are the accounting principles and assumptions which are necessary in analyzing business transactions?
Activity 1: True or False!
Activity 2: Amazingly Yours!
CHUNK 2: What is Statement of Financial Position?
SFP is a “statement that shows the financial condition of the business as of a particular date”? It presents the three (3) accounting elements which are Assets, Liabilities and Owner’s
Equity or Capital. These elements are considered permanent accounts, why? A permanent account, also called a real account, is a balance sheet account that is used to record activities
that relate to future periods. The reason they are called permanent accounts is because they are never closed (zero balance) at the end of an accounting period. The ending balances of
one month becomes the beginning balance of the following month.
1.Assets – are all resources controlled by the business as a result of past transactions and events which economic benefits are derived. In other words assets are things of value that are
owned and used by the business in its operations like: Cash, Accounts Receivables, Inventory, PPEs (Property, Plant and Equipment) , Land and soon. These assets are classified as current
and noncurrent.
Current Assets – all the assets of a company that are expected to be sold or used as a result of standard business operations over the next year. These include cash, cash equivalents,
accounts receivable, stock inventory, marketable securities, prepaid liabilities, and other liquid.
Noncurrent Assets – these are long-lived assets or all other assets that do not qualify as current assets. Plant and Equipment are called depreciable assets, except Land. Depreciation is
defined as a reduction in the value of an asset that occurs over time as the asset gets older or as wear and tear occurs, or the decline of one currency in relation to others. Example, a
property and equipment which has a cost of P150,000.00 with an estimated life of 10 years was acquired Dec. 2019.
2. Liabilities – are financial obligations of the business to its creditors. They have the claim over the assets of the business. These liabilities are classified also as current and noncurrent the
same as assets. Current Liabilities – are financial obligations of the business to their creditors and which are expected to be settled in the normal course of the operating cycle and due to
be settled within one year from the Statement of Financial Position date.
These include Accounts Payable – an oral or verbal promise to pay. This is often called as “ trade payable” because it usually paid to the named-payee or creditor. This can also be
evidenced by a note made by the owner of the business, certifying that this will be settled within one year. Accrued expense, account title used for expenses incurred or used up but not
yet paid at the end of the accounting period such as rent payable, utilities payable, salaries payable, taxes and licenses payable, etc and usually smaller in amount as compared to trade
payable. Unearned income- account title used for cash collected or received in advance but services have not been rendered (servicing) or good have not yet delivered (merchandising)
Example: a computer technician as demanding P5,000 for repair of a computer. He was asking from your a down payment of P3,000 cash and the balance payable upon completion of the
repair. While the repair is ongoing, the P3,000 cash received by the computer technician is recorded in his book as Unearned Service Income (in servicing) and later be recorded as Service
Income upon receipt of P2,000 for the completion of repair work. Please take it is not automatic to change entries, but it should undergo an adjustment. You will encounter this during the
closing of the books. Relax! This will be tackled step by step as we do bookkeeping – in accounting cycle.
Noncurrent Liabilities - are long-term liabilities like: Notes Payable (long term)- the financial obligation that will be settled for more than one year. Common example is Bank Loan. Usually
this loan req uires post-dated checks (PDC) upon release of the loan or even requires a collateral.
3. Owner’s Equity – is the residual interest in assets of the business after deducting all its liabilities. It is expressed in accounting equation as Assets - Liabilities = Owner’s Equity (A-L=
C/OE). This OE will increase also if there is profit, additional contribution by the owner, and decreased when there is loss or withdrawal by the owner. In other words OE is the amount of
money and value of property put by the owner into his business to start with the operation which is referred to initial investment, or initial capital. This is also called as Proprietorship,
Proprietary Interest or Net worth. Hereunder are example of SFP presented in two forms: Account Form: Assets appear on the left-hand side while Liabilities and OE appear on the right-
hand side. This SFP is in a horizontal position which is used when there are plenty of accounts involved.
SYNTHESIS
From now on let’s remember that SFP has three elements: Assets, Liabilities, and Owner’s Equity represented in Accounting Equation A= L+OE where assets normally belong to debit side
and the sum of Liabilities and Owner’s Equity normally on the credit side. Any changes on this equation depends on the business transactions that transpired in the course of its business
operations. Expanded Accounting Equation is A=L+OE/C – Expenses -Drawing by the owner - net loss + net income + additional investment. SCI is prepared first before SFP to get the Net
income.
RUA of a Student’s Learning:

Instruction: Classify the following accounts into the five major components of SFP (see expanded accounting equation). Write “A” for assets, “L” for liability, “OE” for owner’s equity. “R”
for revenue, and “E” for cost and expenses. For contra account (remember your FABM1: contra accounts are deduction from the related account title), enclose your answer in a
parenthesis. ( Ex. (A) for doubtful accounts expense) Answers should be written on the line provided before each number.
_____ 1. Salaries Payable
_____ 2. Interest Income
_____ 3. Doubtful Accounts Expense
_____ 4. Prepaid Insurance
_____ 5. MLG, Drawing
_____ 6. Freight- out
_____ 7. Sales Return and Allowances
_____8. Purchase Discount
_____9. Interest Expense
_____10. Unearned Sales Commissions
For the foregoing 5 items make a complete journal entries and post to the ledger or “T” account.
July 1 – F. Zayde, the owner, invested the following into his business:
Cash of P500,000;
merchandise worth P60,000;
and store furniture and fixtures P100,000.
3 – Purchased merchandise from Ram’s Bombay Bazaar worth P20,000 cash.
4 – Sold merchandise to Gab worth P 50,000 on account
5 – Collected the partial account of Gab, P35,000
Post-lesson Remediation Activity:

Instruction: Answer what are being asked for and follow the built-in instructions. Goodluck!
1. At the end of the first month of operations for Matipuno’s Delivery Service, the business had the following accounts: Accounts Receivable, Php.1, 200; Prepaid Insurance, Php.600;
Equipment, Php.40, 200 and Cash Php. 50, 650. On the same date, Matipuno owed the following creditors: Pepe’s Supply Company, Php12, 000; Grands Equipment, Php11, 500.The
current assets for the Matipuno’s Delivery Service are _________.
2. If during the year total assets increase by Php75,000 and total liabilities increase by Php10,000, by how much did owner's equity increase decrease? ________________
3. If assets are Php. 37,000 and Liabilities is Php. 10,000, owner's equity s are ___________________.

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QUEEN ANNE SCHOOL

Prerequisite Content-knowledge: Fundamentals of Accounting

Student’s Experiential Learning:

RUA of a Student’s Learning:

Post-lesson Remediation Activity:

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