ACC 104: Fundamentals of Accounting

and Financial Statement Analysis

Student Activity Sheet #2

Navarrete, Kendrick C'zar M.

Name: ____________________________________________________ Class #:_____________
Section: SJC-1BSBA-MM-A
____________ Schedule: ____________________________ 12/2/23
Date: _______________

Lesson Title: The Output of Accounting: Financial Statements Materials:

Lesson Objectives: Activity Sheet #2
At the end of this module, I should be able to:
1. Explain the objective of financial statements and distinguish References:
the basic financial statements of a business organization Basic Financial Accounting and
2. Identify the basic elements of financial statements and Reporting, WIN Ballada
classify the different account titles Financial Accounting and
3. Prepare chart of accounts Reporting, Zeus Vernon Millan

Productivity Tips:
Try the Pomodoro Technique! Set your timer to 25 minutes and work on the module during this time
period. After this period, take a 5-minute break and then continue working on the module again.

A. LESSON PREVIEW/REVIEW
Introduction
Good day our future entrepreneur! Please smile as we start this new session. 
Last time, you learned that accounting provides relevant and useful financial information to help the
users in making economic decisions. Today, we will give emphasis on that financial information which is
the so-called output of the accounting process commonly known as financial statements. Stay focus and
active while you are studying. Happy learning! 

Activity 1: What I Know Chart, Part 1

Do you know anything about financial statements? Try answering the questions below by writing
your ideas under the first column What I Know. It’s okay if you write key words or phrases that you think
related to the questions.
What I Know Questions: What I Learned (Activity 4)

Is the end product or main 1. What is the objective of are the means by which the information
accumulated and processed in financial
output of the financial financial statements? accounting is periodically communicated to
accounting process. the users.
2. Cite an example or components Statement of Financial Position
Statement of Changes in of a complete set of financial or Balance Sheet – is used to
Equity statements. assess the position of a
business in terms of financial
stability and potential risk.
There are 5 types of elements 3. What are elements of financial Assets – resources controlled by the entity
of financial statement. assets, statements? as result of past transactions and events
and from which future economic benefits
liabilities, equity, income and
are expected to flow to the entity.
expenses.
the different account titles can be 4. What are the different account the different account titles can be found in
found in chart of accounts are titles can be found in chart of chart of accounts are assets, liabilities,
assets, liabilities, Equity, income, Equity, income, expense
expense accounts?

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 ACC 104: Fundamentals of Accounting
and Financial Statement Analysis
Student Activity Sheet #2
B. MAIN LESSON
Activity 2: Content Notes

Accounting as information system consists of input, process and output. It collects processes
and communicates financial information of any entity.

Primary and
Other Users
Accountable  Identifying Financial
Events  Measuring Statements
 Communicating

Accounting
Cycle

Financial statements
 are the means by which the information accumulated and processed in financial accounting is
periodically communicated to the users
 are the end product or main output of the financial accounting process
 are a structured financial representation of financial position and financial performance of an
entity

Types of Financial Statements

1. General Purpose Financial Statements are those statements intended to meet the needs of
general users
2. Specific Purpose Financial Statements are those statements intended to meet the needs of
specific or particular users

Components of a Complete Set of General Purpose Financial Statements

1. Statement of Financial Position
2. Income Statement
3. Statement of Comprehensive Income
4. Statement of Changes in Equity
5. Statement of Cash Flows
6. Notes to Financial Statements

Elements of Financial Statement - are the building blocks from which financial statements are
constructed.

5 Major
Types of
Accounts

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 ACC 104: Fundamentals of Accounting
and Financial Statement Analysis
Student Activity Sheet #2
1. Elements under Financial Position
a. Assets- resources controlled by the entity as result of past transactions and events and from which
future economic benefits are expected to flow to the entity. Examples: Cash, Accounts Receivable,
Inventories, Land, Building, Equipment
b. Liabilities - present obligation of the entity arising from past transactions and events, the settlement
of which is expected to result in an outflow from the entity of resources embodying economic benefits.
Examples: Accounts Payable, Salaries Payable, Interest Payable, Utilities Payable

c. Equity - is the residual interest in the assets of the entity after deducting all its liabilities.
 Sole Proprietorship – Owner’s Equity
 Partnership - Partner’s Equity
 Corporation – Shareholder’s Equity

2. Elements under Financial Performance

a. Income - is increases in economic benefits during the accounting period
 Revenue- arises in the ordinary course of business Ex. Sales, fees, interest
 Gains - increase in economic benefits not arising from the ordinary course of business

b. Expense- decreases in economic benefits during the accounting period. Ex. Salaries Expense,
Interest Expense, Utilities expense

Chart of Accounts is the listing of all the account and account titles used by an entity.
Entity A
Chart of Accounts
ASSETS EQUITY
Current Assets 301 Capital
101 Cash 302 Withdrawal
102 Accounts Receivable
103 Notes Receivable INCOME
104 Merchandise Inventory 401 Service Revenue
105 Prepaid Expense 402 Sales
106 Supplies 403 Rent Revenue
Noncurrent Assets 404 Gains
111 Land
112 Building EXPENSE
113 Machinery 501 Supplies Expense
114 Equipment 502 Rent Expense
115 Furniture and Fixtures 503 Repairs and Maintenance
116 Intangible Assets 504 Salaries Expense
505 Depreciation Expense
LIABILITIES 506 Insurance Expense
Current Liabilities 507 Utilities Expense
201 Accounts Payable 508 Miscellaneous Expense
202 Notes Payable - 1 year 509 Doubtful Account Expense
203 Salaries Payable 510 Interest Expense
204 Accrued Expense 511 Transportation Expense
205 Unearned Income 512 Other Expense
Noncurrent Liabilities
211 Notes Payable - long term 601 Income Summary
212 Mortgage Payable

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 ACC 104: Fundamentals of Accounting
and Financial Statement Analysis
Student Activity Sheet #2
Activity 3: Skill-building Activities
Let’s practice! After completing each exercise, you may refer to the Key to Corrections for feedback.
Try to complete each exercise before looking at the feedback.

Exercise 1: Chart of Accounts Preparation.

On the space provided below, prepare your own personal chart of accounts with different account titles
and posting reference (PR). The items to be included are only those account titles which really exist
and available in your life. You may add other items but make sure to classify these appropriately.

Account Description Account Type Statement

Phone Asset Balance sheet

Cash Asset Balance sheet

Rent Expense Income statement

Tuition fee Expense Income statement

Food Expense Income statement

Transpo Expense Income statement

Exercise 2: Identification
Identify the word or phrase being described in the following statement below:

Financial 1. These are a structured financial representation of financial position and

Statements financial performance of an entity
2. These are the building blocks from which financial statements are
Elements of FS
constructed.
Revenue 3. It is an income arising in the ordinary course of business
General Purpose FS 4. these are the statements intended to meet the needs of general users
5. It is the residual interest in the assets of the entity after deducting all its
Equity
liabilities.
6. These resources controlled by the entity as result of past transactions and
Assets events and from which future economic benefits are expected to flow to the
entity
7. It is an increase in economic benefits not arising from the ordinary course of
Gain
business
Chart of Accounts 8. It is the listing of all the account and account titles used by an entity.
Accrued Expense 9. These are expenses already incurred but not yet paid.
Prepaid Expense 10. These are expenses already paid but not yet incurred.

Activity 4: What I Know Chart, part 2

It’s time to answer the questions in the What I Know chart in Activity 1. Log in your answers based on
what you now know in the third column of the chart.

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 ACC 104: Fundamentals of Accounting
and Financial Statement Analysis
Student Activity Sheet #2
Activity 5: Check for Understanding
Short Quiz:
For each of the following item presented below, classify whether they are asset, liability, equity, income
or expense.
Asset 1. Prepaid Rent Expense Liability 6. Deferred Income
expense 2. Depreciation Expense asset 7. Merchandise Inventory
asset 3. Service Vehicle Expense 8. Used Office Supplies
income 4. Sales Equity 9. Owner’s drawing
Liability 5. Accrued Expense Liability 10. Notes Payable

C. LESSON WRAP-UP
Activity 6: Thinking about Learning
Congratulations for finishing this module! Shade the number of the module that you finished
answer the questions below.
You are done with the session! Let's track your progress.
Period 1 Period 2 Period 3

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

1. What could you have done better to improve your learning today?
______________________________________________________________________________
none
__________________________________________________________________________________
__________________________________________________________________________________
2. What surprised you about the lesson today?
______________________________________________________________________________
Chart of account
__________________________________________________________________________________
__________________________________________________________________________________

3. Some question/s I want to ask my teacher about this module is/are:

______________________________________________________________________________
none
__________________________________________________________________________________
__________________________________________________________________________________

FAQ
1. Is physical possession of asset necessary for control to exist?
Answer: No. Physical possession of asset is not necessary for control to exist. For example the
money deposited to a bank remains your asset even if you have transferred physical possession. This
is because you still control the economic benefits by withdrawing it or spending it through electronic
means

KEY TO CORRECTIONS

Answers to Skill-Building Exercises

Exercise 2:
1. Financial Statements 6. Assets
2. Elements of FS 7. Gain
3. Revenue 8. Chart of Accounts
4. General Purpose FS 9. Accrued Expense
5. Equity 10. Prepaid Expense

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