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Fabm 2 Module

This document provides instructions for a lesson on the Statement of Financial Position (SFP). It defines key terms like SFP, permanent accounts, and contra assets. It presents sample SFPs and differentiates the report and account forms. It also describes how to classify accounts into current/noncurrent assets, current/noncurrent liabilities, and equity. Learners will complete an activity quiz testing their knowledge and prepare SFPs in report and account form for a sample business.

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Veinraxzia Llamar
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107 views

Fabm 2 Module

This document provides instructions for a lesson on the Statement of Financial Position (SFP). It defines key terms like SFP, permanent accounts, and contra assets. It presents sample SFPs and differentiates the report and account forms. It also describes how to classify accounts into current/noncurrent assets, current/noncurrent liabilities, and equity. Learners will complete an activity quiz testing their knowledge and prepare SFPs in report and account form for a sample business.

Uploaded by

Veinraxzia Llamar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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SUBJECT: FUNDAMENTALS OF ACCOUNTANCY,

DEADLINE:
BUSINESS AND MANAGEMENT
DATE & TIME: TEACHER: VEINRAXZIA R. LLAMAR

I. TOPIC/s: Definition, Functions and Types of Management Theories

II. LEARNING COMPETENCIES


 Identify the elements of the SFP and describe each of them ABM_FABM12-Ia-
b-1
 Classify the elements of the SFP into current and noncurrent items
ABM_FABM12-Ia-b-2

III. TARGET OUTCOMES:


At the end of the lesson, the student is expected to:
1. Reflect on the importance of preparing the SFP.
2. Reflect on the separation of current and noncurrent items in the SFP.
3. Reflect on the difference of the report form and the account form.

IV. MATERIALS NEEDED:


To accomplish exercises and activities, you need the following: visual aids,
laptop/cellphone, ball pen, paper and/or other writing materials and other available
references.

V. GEAR UP YOUR MIND


1. Define the term Statement of Financial Position and introduce the term Permanent
Accounts

STATEMENT OF FINANCIAL POSITION – Also known as the balance sheet. This


statement includes the amounts of the company’s total assets, liabilities, and owner’s
equity which in totality provides the condition of the company on a specific date.
(Haddock, Price, & Farina, 2012)

PERMANENT ACCOUNTS – As the name suggests, these accounts are permanent in


a sense that their balances remain intact from one accounting period to another.
(Haddock, Price, & Farina, 2012) Examples of permanent account include Cash,
Accounts Receivable, Accounts Payable, Loans Payable and Capital among others.
Basically, assets, liabilities and equity accounts are permanent accounts. They are
called permanent accounts because the accounts are retained permanently in the SFP
until their balances become zero. This is in contrast with temporary accounts which are
found in the Statement of Comprehensive Income (SCI). Temporary accounts unlike
permanent accounts will have zero balances at the end of the accounting period.

CONTRA ASSETS – Contra assets are those accounts that are presented under the assets
portion of the SFP but are reductions to the company’s assets. These include Allowance for
Doubtful Accounts and Accumulated Depreciation. Allowance for Doubtful Accounts is a contra
asset to Accounts Receivable. This represents the estimated amount that the company may not
be able to collect from delinquent customers. Accumulated Depreciation is a contra asset to the
company’s Property, Plant and Equipment. This account represents the total amount of
depreciation booked against the fixed assets of the company.
2. Provide a sample SFP to the learners (PowerPoint or acetate or hard copy) as an
overview. Teacher can use the sample below or find a new one.
3. Differentiate the Report Form and Account Form

Report Form – A form of the SFP that shows asset accounts first and then liabilities and
owner’s equity accounts after. (Haddock, Price, & Farina, 2012)The balance sheet shown earlier
is in report form.

Account Form – A form of the SFP that shows assets on the left side and liabilities and owner’s
equity on the right side just like the debit and credit balances of an account. (Haddock, Price, &
Farina, 2012)
a. Emphasize that the two are only formats and will yield the same amount of total assets,
liabilities and equity
b. Emphasize that assets should always be equal to liabilities and equity

4. Group accounts under Current Assets, Noncurrent Assets, Current Liabilities, Noncurrent
Liabilities and Owner’s Equity

Current Assets – Assets that can be realized (collected, sold, used up) one year after year-end date.
Examples include Cash, Accounts Receivable, Merchandise Inventory, Prepaid Expense, etc.
Current Liabilities – Liabilities that fall due (paid, recognized as revenue) within one year after yearend
date. Examples include Notes Payable, Accounts Payable, Accrued Expenses (example: Utilities
Payable), Unearned Income, etc.

Current Assets are arranged based on which asset can be realized first (liquidity). Current assets and
current liabilities are also called short term assets and shot term liabilities.

Noncurrent Assets – Assets that cannot be realized (collected, sold, used up) one year after yearend date.
Examples include Property, Plant and Equipment (equipment, furniture, building, land), long Term
investments, Intangible Assets etc.

Noncurrent Liabilities – Liabilities that do not fall due (paid, recognized as revenue) within one year
after year-end date. Examples include Loans Payable, Mortgage Payable, etc.

Noncurrent assets and noncurrent liabilities are also called long term assets and long term
liabilities.

5. Difference of the Statement of Financial Position of a Service Company and of a


Merchandising
Company
The main difference of the Statements of the two types of business lies on the inventory
account. A service company has supplies inventory classified under the current assets of the
company. While a merchandising company also has supplies inventory classified under the
current assets of the company, the business has another inventory account under its current
assets which is the Merchandise Inventory, Ending.

6. Point out the different parts of the Statement of Financial Position


a. Heading
i. Name of the Company
ii. Name of the Statement
iii. Date of preparation (emphasis on the wording – “as of”)
b. Sample of a Report Form SFP – Refer to the one above

c. Sample of an Account Form SFP


Name of Learner: Section:
Grade Level: Date:

I. BOOST UP YOUR LEARNING


Title of Activity: Quiz # 1.1 Test Your Knowledge.
Directions: Preparation of the statement
‘

6. You were hired by Mr. Juan Dela Cruz to prepare his sari-sari store’s Statement of Financial Position.
In order to prepare the statement, you identified the following assets and liabilities of Mr. Dela Cruz:
a. His sari-sari store has cash deposited in a bank account amounting to P50,000
b. His sari-sari store had a lot of uncollected sales from customers amounting to P75,000
c. The total amount of merchandise left inside the store is P30,000
d. He already paid one year’s rent in advance amounting to P12,000
e. The value of all the company’s furniture amounted to P100,000
f. He bought merchandise from his supplier amounting to P25,000 and the supplier agreed that
payment can be made 2 months after year-end
g. SSS, Philhealth and Pag-ibig Payables for his one employee totaled P5,000
h. The sari-sari store had outstanding liabilities to utility companies amounting to P3,000
i. He had a loan from the bank amounting to P50,000 to be paid in 3 years

Name of Learner: Section:


Grade Level: Date:
II. LEVEL UP YOUR LEARNING
Title of the Activity: Performance #1.2 Preparation of the statement
Directions: Prepare a Statement of Financial Position for the company (one in
report form and one in account form) – This can be given as a group work which can be
taken home to be prepared using a spreadsheet program.

REFERENCES (1) Haddock, M., Price, J., & Farina, M. (2012). College
Accounting: A Contemporary Approach, Second Edition. New
York: McGraw-Hill/Irwin.
(2) Valencia, E. G., &Roxas, G. F. (2010). Basic Accounting
(3rd ed.). Mandaluyong City, Philippines: Valencia
Educational Supply.

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