Statement of Comprehensive

Income: Elements for Service

and Merchandising Business
Learner's Module in Fundamentals of
Accountancy and Business Management 2
Quarter 1 ● Module 2

DENVER G. ALIWANA
Developer

Department of Education • Cordillera Administrative Region

NAME:____________________________ GRADE AND SECTION: ____________

TEACHER: ________________________ SCORE: ________________________
 Republic of the Philippines
DEPARTMENT OF EDUCATION
Cordillera Administrative Region
SCHOOLS DIVISION OF BAGUIO CITY
Military Cut-off, Baguio City

Published by
Learning Resource Management and Development System

COPYRIGHT NOTICE
2020

Section 9 of Presidential Decree No. 49 provides:

“No copyright shall subsist in any work of the Government of the Philippines.
However, prior approval of the government agency of office wherein the work is
created shall be necessary for exploitation of such work for profit.”

This material has been developed for the implementation of K-12 Curriculum
through the DepEd Schools Division of Baguio City – Curriculum Implementation
Division (CID). It can be reproduced for educational purposes and the source must be
acknowledged. Derivatives of the work including creating an edited version, an
enhancement or a supplementary work are permitted provided all original work is
acknowledged and the copyright is attributed. No work may be derived from this
material for commercial purposes and profit.

ii
 PREFACE

This module is a project of the DepEd Schools Division of Baguio City through
the Curriculum Implementation Division (CID) which is in response to the
implementation of the K to 12 Curriculum.

This Learning Material is a property of the Department of Education, Schools

Division of Baguio City. It aims to improve students’ academic performance specifically
in Accountancy and Business Management.

Date of Development : June 2020

Resource Location : DepEd Schools Division of Baguio City
Learning Area : ABM
Grade Level : 12
Learning Resource Type : Module
Language : English
Quarter/Week : Q1/W2
Learning Competency/Code : identify the elements of the SCI and describe each
of these items for service business and a
merchandising business (ABM_FABM12-Ic-d-5

iii
 ACKNOWLEDGEMENT

The developer would like to express his deep and sincere gratitude to those
who contributed significantly in the development of this learning material.

Our assistant school head in the Senior High department, Mr. Rey D. Gapasin,
for the motivation. Our school’s supervisory office led by our school principal, Madam
Brenda M. Cariño. Thank you all for your moral and technical support in the crafting of
this learning module. To my friend, colleague and mentor Mr. Sydney Shan M. Cariño
for editing this manuscript as well as for the invaluable guidance throughout the
preparation of this humble work. To my colleagues in the ABM group of Baguio City
National High School, Baguio City National Science High School and Guisad Valley
National High School for the fruitful collaboration and for sharing their knowledge and
expertise as I developed this learning resource.

Development Team
Author/s: Denver G. Aliwana
Illustrator: Estrella Ramos (Cover Art) and Marilyn Degay-Bugatti (Label Icons)
Language Editor: Sydney Shan M. Cariño
School Learning Resources Management Committee
Brenda M. Cariño School Principal
Rey D. Gapasin Subject/ Learning Area Specialist
Sherwin L. Fernando School LR Coordinator

Quality Assurance Team

Francisco Copsiyan EPS – Mathematics
Lourdes B. Lomas-e PSDS – BCNHS District

Learning Resource Management Section Staff

Loida C. Mangangey EPS – LRMDS
Victor A. Fernandez Education Program Specialist II - LRMDS
Christopher David G. Oliva Project Development Officer II – LRMDS
Priscilla A. Dis-iw Librarian II
Lily B. Mabalot Librarian I

CONSULTANTS

JULIET C. SANNAD, EdD

Chief Education Supervisor – CID

SORAYA T. FACULO, PhD

Asst. Schools Division Superintendent

MARIE CAROLYN B. VERANO, CESO V

Schools Division Superintendent

iv
 TABLE OF CONTENTS

COPYRIGHT NOTICE ................................................................................................ii

PREFACE .................................................................................................................. iii
ACKNOWLEDGEMENT .............................................................................................iv
TABLE OF CONTENTS ............................................................................................. v
What I Need to Know ................................................................................................. 1
What I Know ............................................................................................................... 2
Lesson: Statement of Comprehensive Income: Elements for Service and
Merchandising Business ............................................................................................ 4
What’s In .................................................................................................................... 4
What’s New ................................................................................................................ 5
Activity : The Kimchi Story ................................................................................... 5
What’s In It ................................................................................................................. 6
What’s More ............................................................................................................. 11
Activity 1: Service or Merchandising? ................................................................ 11
Activity 2: Classifying Expenses ........................................................................ 12
What I Have Learned ............................................................................................... 13
What I Can Do .......................................................................................................... 14
Activity 1: The Sari-Sari store ............................................................................ 14
Activity 2: The Accounts of My Business ........................................................... 15
Post-Assessment ..................................................................................................... 16
Additional Activity ..................................................................................................... 18
Activity: No Return, No Exchange! .................................................................... 18
ANSWER KEY ......................................................................................................... 19
REFERENCES ......................................................................................................... 20

v
 What I Need to Know

Hello learner! This module was designed and written with you in mind. This
module is designed to introduce you to the elements of the Statement of
Comprehensive Income for both service and merchandising business.
While going through this module, you are expected to:
1) identify and explain the elements of SCI;
2) describe the SCI accounts of a service business; and
3) describe the SCI accounts of a merchandising business.
By the way, always remember to use a separate sheet of paper for you to write
your answers of the different activities presented in this learning module. DO NOT
ANSWER here directly.
Now, here is an outline of the different parts of your learning module. The
descriptions will guide you on what to expect on each part of the module.

Icon Label Description

This states the learning objectives that you need
What I need to know
to achieve as you study this module.

This is to check what you already know about the

What I know
lesson on this module. If you answered all the
questions here correctly, then you may skip
studying this module.
This connects the current lesson with a topic or
What’s In
concept necessary to your understanding.

This introduces the lesson to be tackled through

What’s New
an activity.

This contains a brief discussion of the learning

What’s In it
module lesson. Think of it as the lecture section
of the lesson.
These are activities to check your understanding
What’s More
and to apply what you have learned from the
lesson.
This generalizes the essential ideas tackled from
What I have Learned
this module.
This is a real life application of what you have
What I Can Do
learned.

This is an evaluation of what you have learned

Post-Assessment
from this learning material.

Additional Activity This is an activity that will strengthen and fortify

your knowledge about the lesson.

1
 What I Know

If you answer all the test items correctly in this pretest, then you may skip
studying this learning material and proceed to the next learning module.

A. MATCHING TEST.

Direction: Match the description in column A with the account title in column B.
Write your answers in column C.

Column A Column B Column C

Description Account Title Answers
1. This account includes amount paid A. Bad Debts 1. _____
for water and electricity consumed for Expense 2. _____
the period B. Cost of Sales 3. _____
2. Account used to record acquisition of C. Depreciation 4. _____
merchandise inventory for reselling Expense 5. _____
3. An expense account containing items D. Interest Income 6. _____
that are infrequent or immaterial to E. Miscellaneous 7. _____
warrant a separate classification Expense 8. _____
4. The anticipated loss from receivables F. Purchases 9. _____
doubtful of collection G. Rent Expense 10. _____
5. The income received from lending H. Sales
money I. Taxes and
6. The amount of merchandise Licenses
inventory sold during the period Expense
7. This is the generic revenue account J. Utilities Expense
for a merchandising business
8. The amount paid to Bureau of
Internal Revenue and to other
regulatory agencies
9. Payments made to owners of leased
property
10. This refers to the allocated costs of
fixed asset charged as expense for
the accounting period

2
B. ALTERNATE RESPONSE.

Direction: Write the word True if the statement is correct, and False if it’s
otherwise. Write your answers on the space provided before each number

________ 1. The Statement of Comprehensive Income shows the profitability

of a business entity for a certain accounting period.
________ 2. The two primary elements of the Statement of Comprehensive
Income are assets and liabilities.
________ 3. Income includes revenues and gains
_______ 4. Gains and losses do NOT arise in the ordinary course of
business.
________ 5. Other Comprehensive Income includes realized revenues, gains,
and losses

3
Lesson: Statement of Comprehensive
Income: Elements for Service and
Merchandising Business

What’s In
Take time to review the steps in the accounting process to see how far you
have gone:
Step 1: Journalizing transactions
Step 2: Posting transactions to the Ledger
Step 3: Preparation of Trial Balance
Step 4: Adjusting Journal Entries
Step 5: Preparation of Worksheet
Step 6: Preparation of Financial Statements
a) Statement of Comprehensive Income
b) Statement of Financial Position
c) Statement of Changes in Owner’s Equity
d) Cash Flow Statement
e) Notes to Financial Statements
Step 7: Closing Entries
Step 8: Preparation of Post-Closing Trial Balance
Step 9: Reversing Entries

Recall in the previous lessons in Fundamentals of Accountancy and Business

Management 1 the five elements of accounting – Assets, Liabilities, Equity, Income
and Expenses.
The first three elements (Assets, Liabilities and Equity) are real accounts or
balance sheet accounts. They are found on the Statement of Financial Position or
Balance Sheet and their ending balances are forwarded to the next accounting period.
This means that the ending balances of these accounts become their beginning
balances in the next accounting period.
The last two elements (Income and Expenses) are nominal or income
statement accounts. They are found on the Statement of Comprehensive Income or
Income Statement and their ending balances are not forwarded to the next accounting
period. Closing entries are prepared to reduce their balances to zero. Thus, on the
next accounting period, revenues and expenses will have no beginning balances.
In each element are the different account titles unique or applicable only for a
certain type of business. Service, merchandising and manufacturing businesses will
have some account titles different from each other.

4
 What’s New

Activity : The Kimchi Story

Teresa’s mother used to work as a tutor to Korean students in one of the English
Language Schools in Baguio City. Schools offering face-to-face instruction were one
of the industries greatly affected by the COVID pandemic. Their school has been
temporarily closed for few months now.
While at home, Teresa and her mother decided to sell kimchi to friends and
neighbors. They don’t manufacture the kimchi, rather, these are bought in bulk at
wholesale prices from a supplier. They packed the products in smaller quantities of
250 grams, 500 grams and 1000 grams. Their products are posted on their product
on Facebook account and to online Buy and Sell Groups. Soon, orders started coming
in.
Teresa wants to have an accurate recording of the things related to their new-
found business. Help them use the proper terminologies.

Directions: Unscramble the letters to reveal the term described.

1. The term to describe the amount

received everytime a kimchi is ESSLA _____
sold
2. The term used to refer to the
amount paid by Teresa to the SCTOS _____
supplier of kimchi
3. The term to describe amounts
paid to various persons or entities
for items or services necessary in
the conduct of business. For SXEEPESN ________
instance, the taxi fare to deliver
the kimchi to customers or the
packaging materials used.
4. Some customers will ask for
reduction in the selling price.
DOTNSICU ________
What term is used to describe
this?

5
 What’s In It
The Statement of Comprehensive Income (SCI)
The SCI provides information about the peformance or profitability of the
business entity. Internal users, such as the owners, managers and employees, use
the SCI to make decisions and craft strategies relative to improving future performance
and increasing profitability. External users such as the Bureau of Internal Revenue
requires submission of SCI to properly determine the tax due them.
The SCI has two parts:
1. Net Income from the Income Statement.
2. Other Comprehensive Income which consists of revenues, expenses,
gains, and losses that are reported as not realized yet.

To illustrate, assume that an entity has 1,000 US dollars on hand. The foreign
currency was received when the exchange rate was 1 US dollar is equivalent to 50
pesos. At this point, how much is the peso value of the foreign currency? It’s 50,000
pesos. At the end of the accounting period, the exchange rate is now 1 US dollar is to
55 pesos. How much now is the peso value? It’s 55,000 pesos. With this scenario, is
there a gain or loss? The business actually had a gain of 5,000 pesos.
Will this gain be reported as Other Comprehensive Income? It depends if this
was realized or not. If the US dollar was converted or exchanged into peso bills, then
the gain was realized. However, if it remains to be in dollar form, then the gain is
unrealized. Realized gains and losses are reported as part of Income Statement while
the unrealized ones form part of the Other Comprehensive Income.
You might want to refresh your understanding of the Monetary Unit
Assumption you learned in the previous accounting subject. The assumption
requires business entities in the Philippines to record transactions in Philippine Peso.
All transactions involving foreign currencies must be translated at prevailing exchange
rates at the time of recording or reporting.
A business having no Other Comprehensive Income is not required to prepare
SCI. They may limit the reporting requirement to only the Income Statement or the
Statement of Profit and Losses.

Elements of the SCI

The SCI has two primary elements – Income and Expenses
INCOME
Income are increases in economic benefits during the accounting period in the
form of inflows or enhancements of assets or decreases of liabilities that result in
increases in equity, other than those relating to contributions from business owners.
Income includes both revenues and gains.
a. Revenues are income arising from the normal operating activities of the
enterprise or in the ordinary course of business.
b. Gains are those income not arising from the ordinary course of business.
For instance, a service business wants to retire an old laptop. The laptop

6
 has a net book value of P5,000. It was sold for P6,000. Is there a gain?
The selling price is higher than the net book value. Thus, the business
has a Gain on Sale of Equipment amounting to P1,000. Is this an
ordinary business activity? No, because selling laptops is not the usual
or day-to-day activity of the firm.

Revenues Defined
The International Financial Reporting Standards (IFRS) defines revenue as the
gross inflow of economic benefits during the period arising from the course of the
ordinary activities of an entity when those inflows result in increases in equity.
Depending on the nature or activities of the business entity, revenues may arise
from one or more of the following:
a. sale of goods;
b. rendering of services; and
c. use by others of entity’s assets yielding interest, royalties and dividends.

Revenue Accounts of a Service Business

Service Revenue is the generic revenue account of a service business.

Service Fee or Service Income may also be used. However, it is better if a business
customizes its revenue account to better capture the essence of revenue-generating
transaction. Here are examples of service businesses and their corresponding
revenue accounts.

Type of Business Revenue Accounts

Medical/ Dental Clinic Professional Fee
Doctor’s Fee
Consultation Fee
Dental Fee
Laboratory Fee
School Tuition Fees
Miscellaneous Fees
Automotive Repair Shop Repair Revenue
Auto Shop Revenue
Auto Service Fee
Laundry Shop Laundry Income
Dry Cleaning Service Income
Computer Shop Computer Rental Fee
Printing and Scanning Revenue
Installation Fee
Credit Cooperative Interest Income
Processing Fee
Errand Services Errand Fee
Shipping Fee
Handling Fee

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Revenue Accounts of a Merchandising Business

a. Sales is the generic revenue account of a merchandising business. This

can also be customized to differentiate the sales revenue of one item to
that of another. A clothing store, for instance, may have two revenue
accounts – Sales-Pants and Sales-Jackets. What could be the reason
for having two accounts? It is, basically, to determine which items are
selling faster than the others.
b. Sales Returns and Allowances is an account that is used to record the
selling price of goods returned by a customer. Why would a customer
return? It could be that the goods were defective, damaged, or not within
the agreed specifications.
c. Sales Discounts – reduction from the selling price of an item. It has two
types: Cash Discount and Trade Discount
i. Cash Discount is given to customers on account who paid earlier
than their due dates.
ii. Trade Discount is the typical reduction in price given to all
customers. This is a common scenario in malls, supermarkets or
groceries where items are marked “Sale”, “20% Off”, “Buy 1-Take
1” and other similar promotional schemes. Take note, however,
that Trade discount is not recorded in the books of the business.

The amounts of Sales Returns and Allowances and Cash Discounts are
deducted from Sales to arrive at Net Sales.

Other Revenue Accounts

Apart from selling goods or rendering services, a business may also directly or
indirectly engage in some activities that may result to generating revenues. Here are
some of the activities.
a. Interest Income – this may be the main revenue account of entities engaged
in lending money such as banks, credit cooperatives, pawnshops and other
lending companies
b. Royalty Income – this is the income derived from allowing another person
or entity to use one’s tangible or intangible property. For instance, a book
author who holds copyright receives royalty income from the publisher for
every book sold by the publisher.
c. Dividends – these are revenues derived from stocks of other corporations
held by the business

EXPENSES
IFRS also defines expenses as decreases in economic benefits during the
accounting period in the form of outflows or depletions of assets or incurrences of
liabilities that result in decreases in equity
Expenses include both expenses and lossess.
a. Expenses are costs incurred in the ordinary course of business. These are
necessary in the process of generating revenues.

8
 b. Losses, on the other hand, satisfy the definition of expenses but may not
arise in the ordinary course of business. Example of losses are Loss due
to Theft, Loss on Sale of Fixed Asset, Loss on Calamity.

Expense Accounts of a Service Business

Expenses incurred by an entity in the ordinary course of business maybe
numerous. Thus, it maybe necessary to group or classify them into one common
account title. Here are some of the commonly used account titles.
a. Salaries and Wages Expense – payment for salaries and wages of
employees
b. Utilities Expense – includes cost of electricity and water
c. Rent Expense – for the amount paid or incurred for use of property of
another person or entity. This is usually associated with office or store
space or premises occupied by the business entity
d. Advertising Expense – costs incurred in promoting the business in various
media (newspaper, radio, TV, social media)
e. Repairs and Maintenance Expense – incurred in the repair and
maintenance of machineries, equipment and other fixed assets
f. Taxes and Licenses Expense – amounts paid to BIR for tax due and to
other government regulatory agencies for license to conduct a certain type
of business or to operate within a barangay, city or municipality
g. Supplies Expense – cost of supplies used for the period. This may be
specified as Office Supplies (paper, inks, stationeries, clips) or Store
Supplies (packaging materials, receipts)
h. Interest Expense – cost of borrowing a sum of money or its equivalent
i. Communications Expense – this includes telephone and internet bills,
phone cards, cellphone loads and postage stamps
j. Insurance Expense – this account represents the expired portion of the
insurance premiums paid. Business entities will usually acquire fire and
calamity insurance for their properties or medical insurance for their
employees
k. Transportation or Travel Expense – this represents those incurred by
employees or management to travel to places on official business functions
l. Depreciation Expense – this refers to that part of the cost of fixed assets
allocated as expense for the period
m. Bad Debts Expense – the amount of accounts receivable estimated to be
doubtful of collection
n. Miscellaneous Expense – this is a catch-all account for all other expenses
that are not recurring and minimal or immaterial to warrant a separate
account title

The given expense accounts maybe modified or specified to capture the real
essence of the expense. Some related accounts may also be merged into one
account.

9
Expense Accounts of a Merchandising Business
Expenses incurred by a merchandising business are quite similar with that of a
service business. The following are account titles unique to such type of business.

a. Cost of Sales – this is the cost of goods or merchandise inventory. A sari-

sari store, for instance, purchases canned goods from a supplier for a unit
price of P20. One item was sold for P25. How much is the cost of sales? It’s
20 pesos because that is the buying price of the goods to the business.
b. Purchases – this account is used to record acquisition of merchandise
inventory. Merchandise inventory are those that are intended for reselling.
Other items acquired not for reselling purposes must be classified
accordingly (e.g. supplies).
c. Freight-In – this refers to costs incurred in bringing the goods to the buyer’s
place of business. This is recognized only if the buyer carried the burden of
paying for the shipping cost. The seller may opt to pay for freight costs
depending on their agreement. Freight-in is added to purchases.
d. Freight-Out or Delivery Expense – the cost of transporting goods to
customers. While Freight-In is added to purchases, freight-out is not. It is
reported alongside all the other expenses enumerated earlier.
e. Purchase Returns and Allowances is an account that is used to record
amounts of purchases returned to supplier.
f. Purchase Discounts – reduction from the purchase price of an item. Just
like Sales Discounts, it also has two types: Cash Discount and Trade
Discount
a. Cash Discount is the reduction in the amount to be paid to the
supplier for paying earlier than the due date.
b. Trade Discount is the typical reduction in the price of goods
purchased provided to all buyers. Similarly, trade discount on
purchases are not recorded in the books of the business.

Purchase Returns and Allowances and Purchase Discounts are deducted from
Purchases to arrive at Net Purchases.

10
 What’s More
Activity 1: Service or Merchandising?

Directions: Given the following income and expense accounts, classify them by
writing I if it’s an Income account or E if it’s an Expense account. Classify them further
whether they are used exclusively by a service, merchandising business or both. Use
these codes:
S – exclusively for service business
M – exclusively for merchandising business
B – can be used by both service and merchandising

Type of Type of
Account Title
Account Business
Ex. Purchases E M
1. Notarial Fee (for a Law Office)
2. Sales
3. Freight-out
4. Utilities Expense
5. Bookkeeping Fees (for a Bookkeeping business)
6. Salaries Expense
7. Purchase Discounts
8. Cost of Sales
9. Advertising Expense
10. Loss on Theft
11. Gain on sale of old equipment
12. Freight-in
13. Repairs and Maintenance Expense
14. Office Supplies Expense
15. Depreciation Expense

Assessment 1:
Direction: Answer the following questions. Write your answers on the space
provided.
1. Between Income and Expenses, which one has more accounts common to
both service and merchandising business? ______________________
2. Which expense accounts are applicable only for merchandising business?
Identify the account number/s_____________________________________

11
Activity 2: Classifying Expenses

Direction: The owner of a CTRL-S Computer Shop asked you to classify the list of
expenses made by his shop attendant. An example is provided for your guidance.

Particulars Amount Account Title

Salaries and Wages
Ex. Salary for the week (P350 x 6 days) 2,100.00
Expense
1. PLDT Internet bill for June 3,999.00
2. Fee of technician for repairing CPU #12 700.00
3. Payment to BENECO 4,852.75
4. 6 bottles black ink 720.00
5. 10 reams long bond paper 5,000.00
6. Taxi fare from Session Road to shop 64.00
7. Payment to Baguio Water District for June
467.00
bill
8. Payment to Bombo Radyo (1 week radio
2,300.00
ads)
9. Donations to Brigada Eskwela 1,000.00
10. Rental payment for the month 10,000.00

Assessment 2:
Direction: Answer the following questions. Write your answers on the space
provided.
1. Which expense accounts can have several items under it?
________________________________________________________
2. Why is item #9 classified as Miscellaneous Expense? Choose the letter of the
correct answer. ____________
a. This item occurs infrequently
b. There is no account title suitable for it
c. The amount involved is material enough

12
 What I Have Learned

Directions: Fill-in the Blanks with the key concept or term learned in this module.
Choose the correct word or phrase from the box. Some words/ phrases in the box
may not be used as answers.
1. The SCI shows the _____________ of a business entity for a given period
2. A ____________ business is engaged in purchasing goods and selling them at a
higher price
3. The SCI has two basic elements, namely: _____________ and _____________
4. The income arising from the ordinary course of business is ______________
5. The income that may not arise from the ordinary course of business is ________
6. Expenses that may not arise from the ordinary course of business are _________
7. _____________ are reductions in the buying or selling price of goods purchased
or sold
8. The amount of goods sold is ____________________________
9. The Other Comprehensive Income portion of the SCI contains ______________
income, expenses, gains and losses

Cost of Sales Income Profitability

Discounts Losses Financial Position
Expenses Merchandising Revenue
Gains Service Purchases
Realized Unrealized

13
 What I Can Do
Activity 1: The Sari-Sari store

Directions: Read carefully the given scenario then identify the appropriate income or
expense account to be used. An example is provided for your guidance.

Scenario: The owner of your favorite neighborhood store, Three Brothers Sari-Sari
Store, asked you to help her understand the terminologies used in the Income
Statement. Use the given transactions to explain the accounts.

Transaction Account Title

Ex. The business bought 5 boxes of canned goods for reselling
Purchases
from Tiongsan Supermarket
1. Sold 3 packs of powdered milk to a customer who paid in cash.
2. Sold 1 cavan of rice worth P1,500 to a neighbor. The neighbor
agreed to pay after 30 days. However, the rice will be P1,400
only when paid within 15 days.
3. The customer who bought powdered milk returned one pack
because it is already beyond expiration date. A refund was
made.
4. The customer who bought 1 cavan of rice paid after 10 days. A
P100 discount was granted to him
5. The business paid P700 to a jeepney driver for the
transportation of goods from Tiongsan Supermarket to the
store.
6. Returned 6 pieces of canned goods to Tiongsan Supermarket.
The cans have dents. A refund for the returned goods was
received.
7. The business bought P50,000 worth of merchandise from a
dealer of Nestle products. The amount will be paid after 20
days.
8. Paid P48,000 to the dealer of Nestle products. P2,000 was
taken as a discount for early payment of account.

14
Activity 2: The Accounts of My Business

Directions: Think of a business that you want to establish. Limit your business to a
service or merchandising type of business. Do NOT choose manufacturing (e.g. food
production and processing). Your business should have a capital of less than one
million pesos and with less than 3 employees. Identify all possible revenue and
expense accounts for your business. Be specific as possible.
1. Name of the business: _________________________________
2. Type (Service or Merchandising): ____________________________
3. Revenue Accounts:
_____________________________________
_____________________________________
_____________________________________
4. Expense Accounts:
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________

RUBRIC
CRITERIA DESCRIPTION
All the reasonable 1 – 2 account titles are 3 – 4 account titles are 5 or more account titles
Completeness
account titles either inappropriate either inappropriate are either inappropriate
and
appropriate to the and/or are significantly and/or are significantly and/or are significantly
Appropriateness
nature of the business missing with respect to missing with respect to missing with respect to
of
are included. the nature of the the nature of the the nature of the
Revenue
business. business. business.
Accounts
(10) (8) (6) (4)
All the reasonable 1 – 2 account titles are 3 – 4 account titles are 5 or more account titles
Completeness
account titles either inappropriate either inappropriate are either inappropriate
and
appropriate to the and/or are significantly and/or are significantly and/or are significantly
Appropriateness
nature of the business missing with respect to missing with respect to missing with respect to
of
are included. the nature of the the nature of the the nature of the
Expense
business. business. business.
Accounts
(10) (8) (6) (4)

15
 Post-Assessment

A. MATCHING TEST.

Direction: Match the description in column A with the account title in column B.
Write your answers in column C.

Column A Column B Column C

Description Account Title Answers
1. Payments made to owners of leased A. Bad Debts 1. _____
property Expense 2. _____
2. This account includes amount paid B. Cost of Sales 3. _____
for water and electricity consumed for C. Depreciation 4. _____
the period Expense 5. _____
3. Account used to record acquisition of D. Interest Income 6. _____
merchandise inventory for reselling E. Miscellaneous 7. _____
4. An expense account containing items Expense 8. _____
that are infrequent or immaterial to F. Purchases 9. _____
warrant a separate classification G. Rent Expense 10. _____
5. This refers to the allocated costs of H. Sales
fixed asset charged as expense for I. Taxes and
the accounting period Licenses
6. The anticipated loss from receivables Expense
doubtful of collection J. Utilities Expense
7. The income received from lending
money
8. The amount of merchandise
inventory sold during the period
9. This is the generic revenue account
for a merchandising business
10. The amount paid to Bureau of
Internal Revenue and to other
regulatory agencies

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B. ALTERNATE RESPONSE.

Direction: Write the word True if the statement is correct, and False if it’s
otherwise. Write your answers on the space provided.

________ 1. Income includes revenues and gains

________ 2. The Statement of Comprehensive Income shows the profitability
of a business entity for a certain accounting period.
________ 3. The two primary elements of the Statement of Comprehensive
Income are assets and liabilities.
_______ 4. Gains and losses do NOT arise in the ordinary course of
business.
________ 5. Other Comprehensive Income includes realized revenues,
expenses, gains and losses

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 Additional Activity

Activity: No Return, No Exchange!

Directions: In the implementing rules and regulations of Republic Act 7394, or the
Consumer Act of the Philippines, the words “No Return, No Exchange”, or words to
such effect must not be written into the contract of sale, official receipts or invoices.
Business should neither post such notice in the vicinity of their business establishment.
Interview three (3) owners or employees of any of these businesses:
1. Ukay/ Wagwagan Shop (second-hand clothing store)
2. Clothing Store (Brand New items)
3. Sari-sari Store/ Grocery
4. Fish/ Meat Shop
5. Fruits/ Vegetable Stall
6. Appliance Store
7. Restaurant/ Eatery/ Fastfood
8. Online Seller of food products
9. Pharmacy
10. Bakery/ Baked Products

Here are the guide questions.

1. What are the instances or situations in which a customer may return an item
bought and ask for refund?
2. What are the instances or situations in which a customer may exchange an
item? (Change item only, return is not allowed)
3. What are the instances, conditions or situations in which a customer is NOT
allowed to return or exchange an item?
4. How long (number of days) can a customer return or exchange an item bought?

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 19
What I Can Do What I know
A. Matching Test
Activity 1: The Sari-Sari Store 1. J
1. Sales 2. B
2. Sales 3. F
3. Sales Returns and Allowances 4. A
4. Sales Discounts 5. D
5. Freight-In 6. E
6. Purchase Returns 7. H
7. Purchases 8. I
8. Purchase Discounts 9. G
10. C
Activity 2: The Accounts of My Business B. Alternate Response
(answers may vary) 1. True
2. False
What I have Learned 3. True
1. Profitability 4. False
2. Merchandising 5. False
3. Income and Expenses
4. Revenue
5. Gain What’s More
6. Losses
7. Discounts Activity 1: Service of Merchandising
8. Cost of Sales 1. I, S
9. Unrealized 2. I, M
3. E, M
Assessment
4. E, B
A. Matching Test
1. G 5. I, S
2. J 6. E, B
3. F 7. E, M
4. E 8. E, M
5. C 9. E, B
6. A
7. D 10. E, B
8. B 11. I, B
9. H 12. E, M
10. I 13. E, B
14. E, B
B. Alternate Response
1. True 15. E, B
2. True
3. False Assessment 1:
4. False 1. Expense
5. False 2. 3,7,8,12
Activity 2: Classifying Expenses
1. Communication Expense
2. Repair and Maintenance Expense
3. Utilities Expense
4. Supplies Expense
5. Supplies Expense
6. Transportation Expense
7. Utilities Expense
8. Advertising Expense
9. Miscellaneous Expense
10. Rent Expense
Assessment 2:
1. Utilities Expense, Supplies Expense
2. A
ANSWER KEY
 REFERENCES
Aliling, Leonardo E. Fundamentals of Basic Accounting. Quezon City: Rex Bookstore,
2013.
Deloitte. Conceptual Framework for Financial Reporting 2018. IASPlus. March 2018.
https://www.iasplus.com/en/standards/other/framework
Ferrer, Rodiel C., and Zeus Vernon B. Millan. Fundamentals of Accountancy, Business
and Management Part 2. 2nd ed. Baguio City: Bandolin Enterprise, 2018.
Financial Accounting. Minneapolis: University of Minnesota Libraries Publishing.
Accessed July 8, 2020. https://open.umn.edu/opentextbooks/textbooks/4. 2016
Franklin, Mitchell. Principles of Accounting, Volume 1: Financial Accounting. Houston,
Texas: Rice University. May 2019. https//openstax.org/details/books/financial-
accounting-principles
International Accounting Standards Board. IAS 1 Presentation of Financial
Statements. IFRS. Jan. 23, 2020. https://www.ifrs.org/issued-standards/list-of-
standards/ias-1-presentation-of-financial-statements/
Manalaysay, Benedick G. Fundamentals of Accountancy, Business and Management
2. Mandaluyong City: Anvil Publishing, 2017.

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