September 28, 2022

Lesson Plan in
Fundamentals of Accountancy Business and Management 2

I. OBJECTIVES
At the end of the lesson, the learners should be able to:
1. Identify the elements of the SFP and describe each of them.
2. Classify the elements of the SFP into current and noncurrent items.
3. Prepare a SFP using the report form and the account form with proper classification of items as
current and noncurrent.

II. SUBJECT MATTER

A. Topic: Statement of Financial Position (SFP)
Sub-topic: Elements of SFP, SFP report form and account form
B. Reference: Teaching Guide for SHS - Fundamentals of Accountancy, Business and Management 2
C. Materials: Laptop, Projector, Columnar Pad, Notebook
III. PROCEDURE
A. Preparation
1. Routine Activities
a. Prayer
b. Checking of attendance
c. Welcoming the students and a short introduction about the course/subject FABM2.
d. Review
Teacher can refer to topics discussed in ABM 1 – The Accounting Equation, Types of Major
Accounts, Business Transactions and Their Analysis as Applied to the Accounting Cycle of a Service
Business
 Accounting Equation – Assets= Liabilities + Equity
 Assets – Cash, Accounts Receivable
 Liabilities – Accounts Payable, Loan Payable
 Equity – Capital
 Single/sole proprietorship business –as long as there is one owner
B. Presentation
1. Motivation

2. Unlocking difficulties
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.
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.
3. Learning Areas
Sample SFP
Report Form

Report Form

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
Group accounts under Current Assets, Noncurrent Assets, Current Liabilities, Noncurrent Liabilities
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.

C. Application/Group Activity
Classification between Current and Noncurrent
1. Materials needed: None
2. Learners will be grouped into 4 groups. Each group will start with 100 points.
3. 1st group will be the current assets. 2nd group will be the noncurrent assets. 3rd group will be the current
liabilities. 4th group will be the noncurrent liabilities.
4. Teacher will enumerate accounts (cash, accounts receivable, equipment, accounts payable, loans payable,
owners’ equity)
5. For each account, the group where the account should be classified into should stand while the other groups
should stay seated. For every member who was not able to stand when the group is required to or for every
member who stood when the group is not required to, a point will be deducted from the group.
6. Each group should reflect on the mistakes after the activity.
7. Teacher can give accounts that maybe very specific to due dates to make students think (example:
loans receivable that is due within 1 year after year-end)

D. Testing/Evaluation
Answer the following:

Easy:
1. Learning is Fun Company had current assets amounting to Php 100,000. Noncurrent assets for the year
totaled Php 76,000. How much is the company’s total assets?
Answer: P176,000.
2. Happy Selling Company’s total liabilities amounted Php 10,000. Total equity had an ending balance of Php
20,000. How much is total
assets?
Answer: P30,000.

Medium:
1. Happy Selling’s had the following accounts at year end: Cash-250,000, Accounts Payable-70,000, Prepaid
Expense-15,000. Compute for the company’s current assets.
Answer: P265,000.
2. Happy Selling’s Accounts Receivable amounted to Php 500,000. Prepaid Expense and Unearned Income
totaled Php 30,000 and Php 10,000 respectively. Cash balance amounted to Php 100,000 while Accounts
Payable and Inventory totaled to Php 20,000 and Php 10,000 respectively. How much is the company’s
current assets? Current liabilities?
Answer: P640,000 and P30,000

Difficult
1. Company’s Total Liabilities and Equity amounted to Php 285,000. Total noncurrent assets ended at Php
85,000. Cash totaled Php50,000.
Inventory amounted to Php100,000. Assuming the company had no other assets, how much is Accounts
Receivable?
Answer: P50,000.
2. Total assets amounted to Php575,000. Total equity amounted to Php 250,000. Accounts Payable amounted
to Php 50,000 while Unearned
Income totaled Php 85,000. Assuming there are no other current liabilities, compute for the company’s
noncurrent liabilities.
Answer: P190,000

E. Generalization

Remember that the two are only formats and will yield the same amount of total assets, liabilities
and equity. The assets should always be equal to liabilities and equity.
Without the SFP, the company cannot know if it truly owns anything because in case of bankruptcy, liabilities
are paid first.
- Small businesses don’t usually account for their assets and liabilities as long as the owners see that cash is
coming in. They sometimes forget that when liabilities become due, if they don’t have enough current assets
to be able to pay those liabilities, then they can get in trouble with their debts.

IV. Assignment
Prepare a Statement of Financial Position using the following accounts (one in report form and one in account
form):
Cash – 5,000
Loans Payable – 77,500
Accounts Receivable – 2,600
Supplies – 2,300
Equipment – 17,000
Owner’s equity – 40,000
Accounts Payable – 22,400
Building – 113,000

Prepared by:

ROLANDO T. AMISTOSO