The Entrepreneurial Mind

Christine Bianca Chua B November 17, 2021

Name: _______________________________________ BSA 1-_____ Date: _____________________

M3 S3.2_The Entrepreneur Tracking His Resources

1. Let’s Try This!

• PREPARE AN INVENTORY BOOK

3. Column A is for purchase transactions
4. Column B is for recording sale but based on the cost of items sold. The
sale record based on price is recorded in the Income and Expenditure
Book under in “Income” column.
5. For every transaction, complete the row of the details need, at least the
date, description, quantity, amount and balance.

Transactions:

a. Lemonade stand has a new product i.e. Iced Lemonade Juice 12 oz

b. On July 2, 2020, Lemonade stand produced 100 bottles of Iced Lemonade Juice 12 oz.
The company spent P1,000 to produce 100 bottles.
c. On July 3, 2020, the company sold 90 bottles (OR# 01) and decided to restock and
increase the production. The company produced 200 bottles on the same day.
b. On July 4, five (5) retailers bought 40 bottles each with the following OR#:
- OR#002: 40 bottles bought by Retailer 1
- OR#003: 40 bottles bought by Retailer 2
- OR#004: 40 bottles bought by Retailer 3
- OR#005: 40 bottles bought by Retailer 4
- OR#006: 40 bottles bought by Retailer 5
 Activity 1. Inventory Book

Inventory Book
Inventory: Iced Lemonade Juice 12oz

(A) (B) (A less B)

Date Description Purchase Cost of Sales Balance

2020 Quantity Amount Quantity Amount Quantity Amount

July 1 Beg, 0 0

July 2 Produced Bottles 100 P 1000 100 P 1000

July 3 Sold (OR#01) 90 P 900 10 P 100

July 3 Produced Bottles 200 P 2000 210 P 2100

July 4 Sold (OR# 002) 40 P 400 170 P 1700

July 4 Sold (OR# 003) 40 P 400 130 P 1300

July 4 Sold (OR# 004) 40 P 400 90 P 900

July 4 Sold (OR# 005) 40 P 400 50 P 500

July 4 Sold (OR# 006) 40 P 400 10 P 100

2. Let’s Try This!

1. Divide your book into two columns!

2. Extract the items from the cash book, debtor’s book and creditor’s book (see next page) which are
income and expenditures.
3. Place in the Income column all the items that bring in money to your business (income)!
4. Place in the Expenditure column all the business items that you spend your money on
(expenditure)! Activity 2. Income and Expenditures Book
 Activity 2: Income and Expenditures Book

FOR THE MONTH OF JULY 2020

Income Expenditures
To record cash sales P 75 .00 To record cash P 100 .00
expenditure

To record credit sales 150 .00 To record credit 1,000.00

expenditure 1, 100. 00

225 .00
TOTAL P_____________ TOTAL P_____________

- Extract income and expenditures from these books:

• PROFIT OR LOSS

What is your income?

What is your profit?

How do you compute for profit or loss?

The simple formula is:

PROFIT/LOSS = INCOME less EXPENSES

If income is greater than the expense, the result is PROFIT.

If income is lesser than the expense, the result is LOSS.

 • KEY POINTS

To be able to compute whether you made a profit or loss, do the following: a.

Compute total income (sales).
b. Compute total expenses.
c. Deduct the expenses from the income. (Income – expenses = Profit or Loss)
• SIMPLE FORMAT FOR PROFIT AND LOSS STATEMENT

3. Let’s Try This!

Compute the profit or loss made. Use the Income & Expenditure template and Profit or Loss Statement
template below:
 Cash sales amounted to P 24,450,000.00

Credit sales:

Cash expenditure amounted to P12,000,500

Credit expenditure:

Activity 3. Profit and Loss Statement

Income and Expenditure Book

Income Expenditures
Credit Sales P 1, 200, 000 .00 Cash Expenditure P 12, 000, 500.00
On Kibuli SSS
Credit Sales on 1, 570, 000.00 Credit Expenditure on 18, 600, 000.00
Accountancy College- Kazinga Channel
Kabale
Credit Sales on 13, 500, 500 .00 Credit expenditure on 1, 500, 000.00
Min of Gender Salaries
Cash Sales 24, 450, 000 .00 Credit expenditure on 300, 000.00
Rent
Credit expenditure on 800, 000.00
Utilities

TOTAL 40, 720, 500

P_____________ TOTAL 33, 200, 500
P_____________
 Profit or Loss Statement

P 40, 720, 500 .00

P 30, 600, 500 .00

P 2, 600, 000 .00

P 7, 520, 000 .00

Is it a profit or a loss? The business gained a profit of Php. 7, 520, 000. 00.

Good job! You made it this far! That’s a big achievement my friend! Before we continue with the last
topic i.e. keeping records of what you owned, let’s learn some important tips about savings.

• WHAT IS SAVING?

Saving (income not spent or postponed consumption)

✓ What can you do with the money if you made a profit?
✓ What are savings?
✓ For what purpose do we save?
• YOU NEED TO SAVE MONEY
Develop a saving culture. Reasons:
✓ Expand your business.
✓ Replacement and repairs.
✓ Prepare for unforeseeable events e.g. changes in prices of fuel, commodities, tax rise and
strikes that affect the business as a whole.

Ok done! Let’s go to the last topic of this session. Aja!

• ASSET REGISTER
➢ This is a book used to record fixed assets that are used to facilitate business operations.
These are items that are used in operating the business for periods over one year.
 ➢ Examples include furniture and fittings, computers, motor vehicle, buildings, machines
and so on.
• DEPRECIATION OF FIXED ASSETS
When fixed assets have been used over time, they wear out and decline in value. This
decline in value as a result of wearing out is referred to as depreciation.
Reasons for providing for depreciation:
• Reduce on tax liability
• Provide true and fair value of assets
• Plan for maintenance and replacement

One good example of depreciation of fixed assets is your brand-new smartphone. After a
few years, your smartphone is not brand-new anymore. Thus, the value or the price of it is
lesser than the price when you bought it.

• SAMPLE OF A LEAF OF A FIXED ASSET REGISTER

• HOW TO COMPUTE DEPRECIATION?

A simple way to compute depreciation would be by going through the following steps:
o Determine the cost of the asset (e.g pick up) at the time of purchase. o Estimate how
much the asset would cost at the end of that particular financial period. o Determine
the difference – this difference is the depreciation amount for the year.
o Depreciation = (cost – resale value)/estimated useful life

• DEPRECIATION SCHEDULE FORM

 One Depreciation Schedule Form per Fixed Asset

• FINANCIAL POSITION – BALANCE SHEET

➢ It is a financial statement that reports company’s ASSETS, LIABILITIES, and

EQUITY.

Assets = what your business OWNED

Liabilities = what your business OWED
Equity = what your business OWNED after paying off the liabilities.

BALANCE SHEET FORMULA: ASSETS = LIABILITIES + EQUITY

• KEY POINTS

✓ Obtain summaries from the business books.

✓ Classify your information into assets, liabilities and capital

• SIMPLE BALANCE SHEET FORMAT

Note: Current assets means assets are expected to be converted into cash within one year while current
liabilities are expected to be paid within one year.

Non-current assets are long term investments (with value more than a year) while non-current liabilities
are long term obligations (due for more than a year).

4. Let’s Try This!

Determine the financial position!

• On the left side record all the assets
• On the right side record all the liabilities and capital
• Add up both sides. The total on the left side should automatically equal the total on the right
side. If this doesn’t it shows some transactions were omitted in the computations • The totals
refer to the business worth or value or financial position

Details:
1. Company Name: XYZ
2. Period: January 1, 2020 to December 31, 2020
3. Cash = P10,000
4. Cash in Bank = P50,000
5. Debtors = P20,000
6. Stock = P5,000
7. Furniture & Fixtures = P5,000
8. Equipment = P10,000
 9. Liabilities to Suppliers = 20,000
10. Bank Loan = P50,000
11. Initial Investment = P10,000
12. Profit = 20,000

Activity 4. Balance Sheet

XYZ Company
As of December 31, 2020

Assets Equity & Liabilities

Current assets Current liabilities

Stock P 5, 000 Suppliers P 20, 000

Debtors 20, 000 Utilities 0
Bank 50, 000 Subtotal P 20, 000
Cash 10, 000
Subtotal P 85, 000
Non-Current liabilities
Non-Current aass ts Bank Loan 50, 000
e
Machinery & P 0
Tools
Equipment & 10, 000 Capital
Fittings
Buildings 0 Initial Investment P 10, 000

Furniture and 5, 000 Add: Profit for the Month 20, 000
Fixtures
Subtotal 15, 000 Less: Drawing during the 0
month
Subtotal 30, 000

TOTAL ASSETS P 100, 000 TOTAL EQUITY & LIABILITIES P 100, 000
Congratulations! You have finished the session! Now you are more ready to get into the next module.
But before that, let’s assess how much have you learned from this session.

LET’S REFLECT

You have learned in this module to manage properly your finances. This is the focused of Module
Three the Entrepreneur and His Finances. This about finding start-up capital, managing your finances, and
acquiring skills on tracking your resources this is what you need to respond and to exploit to a given
opportunity.

As Jean-Baptiste Say said, “The best scheme of finance is, to spend as little as possible; and the best tax
is always the lightest.” This is your challenge after you finished this module make sure that money
hatches the money. You need this module to create your business plan, followed after this module. Enjoy
Writing on your next module!

DEFINITION OF TERMS

Asset - Something that an entity has acquired or purchased, and that has money value.

(Current) Assets - An asset such as cash, raw materials, parts, or products that are still being made,
which a company will use up or sell during the same year.

(Fixed) Assets - A long-term tangible piece of property that a firm owns and uses in its operations to
generate income. Fixed assets are not expected to be consumed or converted into cash within a year.

Balance sheet - A condensed statement that shows the financial position of an entity on a specified date.

Business Angels - Individuals who use their personal wealth to provide capital to start-up and early-stage
businesses in return for a share of the company’s equity.

Boot Strapping - Refers to a self-starting process that is supposed to proceed without external input.
Bootstrapping means less or no money has to be borrowed to start a business.

Capital - Money invested in a business to generate income.

Cash - At hand & in bank: Ready money. For accounting purposes, cash includes money in hand, petty
cash, bank account balance, customer checks, and marketable securities.
Creditors (payables) - People who are owed money by the business.

Debtors (receivables) - People and organizations that owe the business money.

Depreciation - Reduction in the value of an asset over time.

Equity - The difference between the value of the assets and the value of the liabilities.

(Less) Drawings - Withdrawal of owners’ capital or other assets for personal business.

Liabilities - Liability refers to the state of being responsible for something, and this term can refer to any
money or service owed to another party.

(Current) Liabilities - Obligations arising in the normal course of a business and due for payment within
a year.

(Long-term) Liabilities - Financial obligations of a company that are due after a year or more.

Financial Year - Any annual period at the end of which a firm's accounts are closed.
Liability - Liability refers to the state of being responsible for something, and this term can refer to any
money or service owed to another party.

Liquidity - The state of having enough money or assets to pay any money that is owed.

Negotiation - The process of discussing something with someone in order to reach an agreement.

Persuasion - To make someone do or believe something by giving them a good reason to do it.

Profitability - The situation in which a company, product, etc. is producing a profit.

Return on Investment - A performance measure used to evaluate the efficiency of an investment or to

compare the efficiency of a number of different investments.

Stock (inventories) - The total amount of goods or the amount of a particular type of goods available in a
shop.

Turnover Period - Ratio showing how many times a company‘s inventory is sold and replaced over a
period of time.

Venture Capitalists - Investor, who provides capital to start-up ventures or supports small companies
that wish to, expand.
REFERENCE

Banares C., Lorenzana E., Ansano M.,Redoblado R.,Agonos E, (2015) Philippine - Student Training for
Entrepreneurship Promotion (P-STEP). Bicol University Legazpi City.