What branch of accounting is evaluation of the performance of a sales department

EXERCISE 2

Procedure: Identify the following branches of accounting by selecting the

letter of the correct match given below.

1.Preparation of general-purpose financial statement.

2. Evaluation of the performance of a sales department

3.Develop standards to address a new business set up.

4.Review tax compliance of the business.

5. Evaluate whether a branch of the business complies with the

collection and deposit policy of the company.

6.Review whether the financial statements are presented fairly and in

compliance with accounting standards.

7.Reports on the total cost of materials and labor used in the production.

8.Conducting lectures on accounting topics.

9.. Report on the spending of government funds

A.Accounting Research

B. Accounting Education

C.Management Accounting

D.Financial Accounting

E.Tax Accounting

F.Internal Audit

G.External Audit

H.Government Accounting

I.Cost Accounting

Teaching Guide for Senior High School

ACCOUNTANCY,

BUSINESS, AND

MANAGEMENT 1

####### SPECIALIZED SUBJECT | ACADEMIC - ABM

This Teaching Guide was collaboratively developed and reviewed by educators from public and private schools, colleges, and universities. We encourage teachers and other education stakeholders to email their feedback, comments, and recommendations to the Commission on Higher Education, K to 12 Transition Program Management Unit - Senior High School Support Team at . We value your feedback and recommendations.

The Commission on Higher Education

in collaboration with the Philippine Normal University

This Teaching Guide by the Commission on Higher Education is licensed under a Creative Commons Attribution- NonCommercial-ShareAlike 4. International License. This means you are free to: Share — copy and redistribute the material in any medium or format Adapt — remix, transform, and build upon the material. The licensor, CHED, cannot revoke these freedoms as long as you follow the license terms. However, under the following terms: Attribution — You must give appropriate credit, provide a link to the license, and indicate if changes were made. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use. NonCommercial — You may not use the material for commercial purposes. ShareAlike — If you remix, transform, or build upon the material, you must distribute your contributions under the same license as the original.

Development Team Team Leader: Joselito G. Florendo. Writers: Carlsberg S. Andres, Arthur P. Barrido, Jr., Christopher B. Honorario Technical Editor: Daniel Vincent H. Borja Copy Reader: Fermin J. Villegas Cover Artists: Paolo Kurtis N. Tan, Renan U. Ortiz

Published by the Commission on Higher Education, 2016 Chairperson: Patricia B. Licuanan, Ph.

Commission on Higher Education K to 12 Transition Program Management Unit Office Address: 4th Floor, Commission on Higher Education, C. Garcia Ave., Diliman, Quezon City Telefax: (02) 441-0927 / E-mail Address:

Senior High School Support Team CHED K to 12 Transition Program Management Unit Program Director: Karol Mark R. Yee Lead for Senior High School Support: Gerson M. Abesamis Lead for Policy Advocacy and Communications: Averill M. Pizarro Course Development Officers: Danie Son D. Gonzalvo, John Carlo P. Fernando Teacher Training Officers: Ma. Theresa C. Carlos, Mylene E. Dones Monitoring and Evaluation Officer: Robert Adrian N. Daulat Administrative Officers: Ma. Leana Paula B. Bato, Kevin Ross D. Nera, Allison A. Danao, Ayhen Loisse B. Dalena Printed in the Philippines by EC-TEC Commercial, No. 32 St. Louis Compound 7, Baesa, Quezon City, ectec_com@yahoo

Consultants THIS PROJECT WAS DEVELOPED WITH THE PHILIPPINE NORMAL UNIVERSITY. University President: Ester B. Ogena, Ph. VP for Academics: Ma. Antoinette C. Montealegre, Ph. VP for University Relations & Advancement: Rosemarievic V. Diaz, Ph.

Ma. Cynthia Rose B. Bautista, Ph., CHED Bienvenido F. Nebres, S., Ph., Ateneo de Manila University Carmela C. Oracion, Ph., Ateneo de Manila University Minella C. Alarcon, Ph., CHED

Gareth Price, Sheffield Hallam University Stuart Bevins, Ph., Sheffield Hallam University

This Teaching Guide is mapped and aligned to the DepEd SHS Curriculum, designed to be highly usable for teachers. It contains classroom activities and pedagogical notes, and is integrated with innovative pedagogies. All of these elements are presented in the following parts:

1. Introduction
   • Highlight key concepts and identify the essential questions
   • Show the big picture and concept maps
   • Present the relevant vocabulary
   • Connect and review prerequisite knowledge
   • Clearly communicate learning competencies and objectives
2. Motivation
   • Give local examples and applications
   • Engage in a game or movement activity
   • Provide a hands-on/laboratory activity
   • Connect to a real-life problem
3. Instruction/Delivery
   • Give a demonstration/lecture/simulation/hands-on activity
   • Show step-by-step solutions to sample problems
   • Use multimedia and other creative tools
   • Give applications of the theory
   • Focus on a specific story using the case study method
4. Practice
   • Discuss worked-out examples
   • Provide easy-medium-hard questions
   • Give time for hands-on unguided classroom work and discovery
   • Use formative assessment to give feedback
5. Enrichment
   • Provide additional examples and applications
   • Introduce extensions or generalisations of concepts
   • Encourage analysis through higher order thinking prompts and reflection questions
   • Allow pair/small group discussions to summarize and synthesize the learnings
6. Evaluation
   • Supply a diverse question bank for written work and exercises
   • Provide alternative formats for student work: written homework, journal, portfolio, group/individual projects, student-directed research project

Parts of the

Teaching Guide

As Higher Education Institutions (HEIs) welcome the graduates of the Senior High School program, it is of paramount importance to align Functional Skills set by DepEd with the College Readiness Standards stated by CHED.

The DepEd articulated a set of 21st century skills that should be embedded in the SHS curriculum across various subjects and tracks. These skills are desired outcomes that K to 12 graduates should possess in order to proceed to either higher education, employment, entrepreneurship, or middle-level skills development.

On the other hand, the Commission declared the College Readiness Standards that consist of the combination of knowledge, skills, and reflective thinking necessary to participate and succeed - without remediation - in entry-level undergraduate courses in college. The alignment of both standards, shown below, is also presented in this Teaching Guide - prepares Senior High School graduates to the revised college curriculum which will initially be implemented by AY 2018-2019.

College Readiness Standards Foundational Skills DepEd Functional Skills

Produce all forms of texts (written, oral, visual, digital) based on:

1. Solid grounding on Philippine experience and culture;
2. An understanding of the self, community, and nation;
3. Application of critical and creative thinking and doing processes;
4. Competency in formulating ideas/arguments logically, scientifically, and creatively; and
5. Clear appreciation of one’s responsibility as a citizen of a multicultural Philippines and a diverse world;

Visual and information literacies, media literacy, critical thinking and problem solving skills, creativity, initiative and self-direction

Systematically apply knowledge, understanding, theory, and skills for the development of the self, local, and global communities using prior learning, inquiry, and experimentation

Global awareness, scientific and economic literacy, curiosity, critical thinking and problem solving skills, risk taking, flexibility and adaptability, initiative and self-direction

Work comfortably with relevant technologies and develop adaptations and innovations for significant use in local and global communities

Global awareness, media literacy, technological literacy, creativity, flexibility and adaptability, productivity and accountability

Communicate with local and global communities with proficiency, orally, in writing, and through new technologies of communication

Global awareness, multicultural literacy, collaboration and interpersonal skills, social and cross-cultural skills, leadership and responsibility

Interact meaningfully in a social setting and contribute to the fulfilment of individual and shared goals, respecting the fundamental humanity of all persons and the diversity of groups and communities

Media literacy, multicultural literacy, global awareness, collaboration and interpersonal skills, social and cross-cultural skills, leadership and responsibility, ethical, moral, and spiritual values

On DepEd Functional Skills and CHED College Readiness Standards

Introduction to Accounting

Content Standards The learners demonstrate an understanding of the definition, nature, function, and history of accounting

Performance Standards The learners shall be able to cite specific examples in which accounting is used in making business decisions.

Learning Competencies The learners shall be able to

• define accounting (ABM_FABM11-IIIa-1)
• describe the nature of accounting (ABM_FABM11-IIIa-2)
• explain the functions of accounting in business (ABM_FABM11-IIIa-3)
• narrate the history/origin of accounting (ABM_FABM11-IIIa-4)

Specific Learning Objectives At the end of this lesson, the learners will be able to define accounting and describe its nature; explain the functions of accounting in business; give examples of business transactions and decisions requiring the need for accounting; and narrate the history of accounting

60 MINS

####### LESSON OUTLINE

Introduction Communicating learning objectives Review types of businesses

3

Motivation Examples of Service Businesses 2 Instruction Discussion 30 Practice Problem Sets 10 Enrichment Group Discussions 5 Evaluation Quizzes 10

Materials manila paper, colored markers

• Accounting Theory (n.) Retrieved from http:// accountingtheory.weebly/nature-and-scope-of-- accouting
• Valencia, E. and Roxas, G. (2009). Basic Accounting, 3rd ed. Valencia Education Supply
• Valix, Conrado T. et. (2015). Financial Accounting, Vol. 1, First part. GIC Enterprises & Co. Inc.
• Weygandt, J. et. al. (2012) Accounting Principles 10th ed. John Wiley & Sons (Asia) Pte. Ltd.

####### INTRODUCTION (3 MINS)

Communicating learning objectives

1. Introduce the following learning objectives: a. I will be able to define accounting. b. I will be able to describe the nature of accounting. c. I will be able to explain the functions of accounting in business. d. I will be able to narrate the history/origin of accounting.
2. Ask the learners the following questions: a. Do your parents ask how you spend your allowance every day? b. When deciding between buying a bottle of soft drinks or fruit juice, what is the basis of your decision? Do you compare the prices of both and then decide? c. When going home, do you sometimes choose to walk from school rather than riding a jeepney because you want to save?
3. Acknowledge all the answers of the learners and make a conclusion that accounting is involved in all of these.
4. Relate the connection of accounting to our daily activities.

####### MOTIVATION (2 MINS)

Ask the learners “Is accounting important to you?”. Leave this question unanswered. Remind the learners that you will ask this question again after you discuss the introduction to accounting.

####### INSTRUCTION (30 MINS)

Define accounting “Accounting is the process of IDENTIFYING, RECORDING, and COMMUNICATING economic events of an organization to interested users.” (Weygandt, J. et. al)

Explain the three highlighted words in the graphic:

IDENTIFYING – this involves selecting economic events that are relevant to a particular business transaction

The economic events of an organization are referred to as transactions. Examples of economic events or transactions - In a bakery business:

• sales of bread and other bakery products

Teacher tip Acknowledge the answers of the learners. As an alternative, ask the learners to write anything they know about accounting on the board.

industry standards or to a leading competitor to determine how the business is doing. Business owners may also use historical financial accounting statements to create trends for analyzing and forecasting future sales.

Accounting helps the users of these financial reports to see the true picture of the business in financial terms. In order for a business to survive, it is important that a business owner or manager be well-informed.

Let us now discuss the function of accounting in business. Mr. Juan is a retired government employee who is good at baking. One day he decides to put up a bakery shop in your barangay. He renovates a portion of his house to serve as the area for the production of bread. He purchases baking equipment and raw materials to produce five different types of bread. Mr. Juan also hires Jose to help him with the baking and, at the same time, to be in-charge of sales. Mr. Juan pays Jose on a weekly basis. Every day, Mr. Juan’s wife deposits the daily cash sales in their bank account at XY Savings Bank. With the help of accounting, what possible decisions or questions of Mr. Juan can accounting provide an answer to? _Possible Answers:

• Is my business earning? (profitability)
• How much daily or monthly sales do I need in order to recover my fixed cost? (break-even)
• Do I need to hire additional workers to help me with my production?
• Can I afford to set up a new store in another place? Where do I get the funds?
• Can I afford to pay a bank loan?_

Discuss the history of accounting Accounting is as old as civilization itself. It has evolved in response to various social and economic needs of men. Accounting started as a simple recording of repetitive exchanges. The history of accounting is often seen as indistinguishable from the history of finance and business.

Following is the evolution of accounting:

• The Cradle of Civilization Around 3600 B., record-keeping was already common from Mesopotamia, China and India to Central and South America. The oldest evidence of this practice was the “clay tablet” of Mesopotamia which dealt with commercial transactions at the time such as listing of accounts receivable and accounts payable.

• 14th Century - Double-Entry Bookkeeping The most important event in accounting history is generally considered to be the dissemination of double entry bookkeeping by Luca Pacioli (‘The Father of Accounting’) in 14th century Italy. Pacioli was much revered in his day, and was a friend and contemporary of Leonardo da Vinci. The Italians of the 14th to 16th centuries are widely acknowledged as the fathers of modern accounting and were the first to commonly use Arabic numerals, rather than Roman, for tracking business accounts. Luca Pacioli wrote Summa de Arithmetica, the first book published that contained a detailed chapter on double-entry bookkeeping.

• French Revolution (1700s) The thorough study of accounting and development of accounting theory began during this period. Social upheavals affecting government, finances, laws, customs and business had greatly influenced the development of accounting.

• The Industrial Revolution (1760-1830) Mass production and the great importance of fixed assets were given attention during this period.

• 19th Century – The Beginnings of Modern Accounting in Europe and America The modern, formal accounting profession emerged in Scotland in 1854 when Queen Victoria granted a Royal Charter to the Institute of Accountants in Glasgow, creating the profession of the Chartered Accountant (CA). In the late 1800s, chartered accountants from Scotland and Britain came to the U. to audit British investments. Some of these accountants stayed in the U., setting up accounting practices and becoming the origins of several U. accounting firms. The first national U. accounting society was set up in 1887. The American Association of Public Accountants was the forerunner to the current American Institute of Certified Public Accountants (AICPA). In this period rapid changes in accounting practice and reports were made. Accounting standards to be observed by accounting professionals were promulgated. Notable practices such as mergers, acquisitions and growth of multinational corporations were developed. A merger is when one company takes over all the operations of another business entity resulting in the dissolution of another business. Businesses expanded by acquiring other companies. These types of transactions have challenged accounting professionals to develop new standards that will address accounting issues related to these business combinations.

• The Present - The Development of Modern Accounting Standards and Commerce The accounting profession in the 20th century developed around state requirements for financial statement audits. Beyond the industry's self-regulation, the government also sets accounting standards, through laws and agencies such as the Securities and Exchange Commission (SEC). As economies worldwide continued to globalize, accounting regulatory bodies required accounting practitioners to observe International Accounting Standards. This is to assure transparency and reliability, and to obtain greater confidence on accounting information used by global investors. Nowadays, investors seek investment opportunities all over the world. To remain competitive, businesses everywhere feel the need to operate globally. The trend now for accounting professionals is to observe one single set of global accounting standards in order to have greater transparency and comparability of financial data across borders.

Branches of Accounting

Content Standards The learners demonstrate an understanding of the varied branches and areas of accounting, particularly:

• Financial Accounting
• Management Accounting
• Government Accounting
• Auditing
• Tax Accounting
• Cost Accounting
• Accounting Education
• Accounting Research

Performance Standards The learners shall be able to

• make a list of business within the community on the types of accounting services they require.
• solve exercises in the identification of the branches of accounting described through the types of services rendered.

Learning Competencies The learners shall be able to

• Differentiate the branches of accounting. (ABM_FABM11-IIIa-5)
• Explain the kinds/types of services rendered in each of these branches. (ABM_FABM11-IIIa-5)

60 MINS

####### LESSON OUTLINE

Introduction Introduce the learning objectives 5 Motivation Trees and branches 5 Instruction Branches of Accounting 30 Practice Boardwork 10 Enrichment One question 10

Materials manila paper, colored markers Resources Accounting Basics: Branches of Accounting (n.) Retrieved from investopedia/university/accounting/ accounting2

• Valencia, E. and Roxas, G. (2009). Basic Accounting, 3rd ed. Valencia Education Supply
• Valix, Conrado T. et. (2015). Financial Accounting, Vol. 1, First part. GIC Enterprises & Co. Inc.
• Weygandt, J. et. al. (2012) Accounting Principles 10th ed. John Wiley & Sons (Asia) Pte. Ltd.

####### INTRODUCTION ( 5 MINUTES)

Introduce the following learning objectives:

• I will be able to differentiate the different branches of accounting
• I will be able to explain the types of services rendered on the different branches.

####### MOTIVATION (5 MINUTES)

Draw a big tree with eight branches. As you discuss the topic, write the particular branch of accounting you are discussing on each branch. Label the root of the tree as ’Accounting’.

####### INSTRUCTION (30 MINUTES)

Branches of Accounting Discuss the branches of accounting: According to Investopedia, (investopedia/university/accounting/accounting2.asp: “Accounting is divided into several branches to better serve the needs of different users with varying information needs. These branches sometimes overlap and they are often closely intertwined.”

Financial Accounting

Financial accounting is the broadest branch and is focused on the needs of external users. Financial accounting is primarily concerned with the recognition, measurement and communication of economic activities. This information is communicated in a complete set of financial statements. It is assumed under this branch that the users have one common information need. Financial accounting conforms with accounting standards developed by standard-setting bodies. In the Philippines, there is a Council created to set these standards.

Examples of these financial reports include:

• the balance sheet (statement of financial condition)

• income statement (the profit and loss statement, or P&L)

• statement of cash flows Financial accounting is primarily concerned with processing historical data. Although financial accounting generally meets the needs of external users, internal users of accounting information also use these information for their decision-making needs.

Management (or Managerial) Accounting

Cost Accounting

Sometimes considered as a subset of management accounting, cost accounting refers to the recording, presentation, and analysis of manufacturing costs. Cost accounting is very useful in manufacturing businesses since they have the most complicated costing process.

Cost accountants also analyze actual and standard costs to help managers determine future courses of action regarding the company's operations.

Cost accounting will also help the owner set the selling price of his products. For example, if the cost accounting records shows that the total cost to produce one can of sardines is PHP50, then the owner can set the selling price at PHP60.

Accounting Education

This branch of accounting deals with developing future accountants by creating relevant accounting curriculum. Accounting professionals can become faculty members of educational institutions. Accounting educators contribute to the development of the profession through their effective teaching, publications of their research and influencing students to pursue careers in accounting. Accounting teachers share their knowledge on accounting so that students are informed of the importance of accounting and its use in our daily lives.

Accounting Research

Accounting research focuses on the search for new knowledge on the effects of economic events on the process of summarizing, analyzing, verifying, and reporting standardized financial information, and on the effects of reported information on economic events. Researchers typically choose a subject area and a methodology on which to focus their efforts. The subject matter of accounting research may include information systems, auditing and assurance, corporate governance, financials, managerial, and tax. Accounting research plays an essential part in creating new knowledge. Academic accounting research "addresses all aspects of the accounting profession" using a scientific method. Practicing accountants also conduct accounting research that focuses on solving problems for a client or group of clients. The Accounting research helps standard-setting bodies around the world to develop new standards that will address recent issues or trend in global business.

####### PRACTICE (10 MINUTES)

Boardwork Prepare eight flashcards with the branches of accounting written in every card.

Write the following on a sheet of Manila paper and ask a learner to identify what branch of accounting renders this service:

1. Preparation of general-purpose financial statements Answer: Financial

2. Evaluation of the performance of a sales department Answer : Managerial

3. Develop standards to address a new business set up Answer: Accounting Research

4. Review tax compliance of the business Answer: Tax Accounting

5. Evaluate whether a branch of the business complies with the collection and deposit policy of the company Answer: Auditing (Internal)

6. Review whether the financial statements are presented fairly and in compliance with accounting standards Answer: Auditing (External)

7. Report on the spending of government funds Answer: Government Accounting

8. Report on the total cost of materials and labor used in the production Answer: Cost Accounting

9. Conducting lectures on accounting topics Answer: Accounting Education

####### ENRICHMENT (10 MINUTES)

Ask the learners what branch of accounting do you want to focus on and why?

####### INTRODUCTION (5 MINUTES)

Introduce the following learning objectives:

• I will be able to define external users of accounting information and give examples
• I will be able to define internal users of accounting information and give examples
• I will be able to identify the types of decisions made by each group of users
• I will be able to identify the types of information needed by each group of users

####### MOTIVATION (5 MINUTES)

1. Ask the learners to recall the definition of accounting and why accounting is considered as the language of business. Accounting information helps users to make better financial decisions.
2. By emphasizing on the communicating part of the definition of accounting, ask the learners what business they would want to enter into. Possible answers: - buying and selling of cars - boutique - gasoline station - bakery
3. From the businesses enumerated, choose one business and use this as your example. Ask the learners: “If you are the owner, what do you want to know about the business? What possible decisions can accounting support?” Possible answers on information needs: - How much income have I earned for a certain period? - How much receivables do I have? - How much do I owe my suppliers? - How much is the value of my inventory?

_Possible answers on decision support

• Will I be able to pay my liabilities if I earn this much?
• Can I expand my business? Will I be able to afford buying new equipment?
• Do I need to adjust my selling price?
• Do I need to cut costs?_

1. “What if you are from a Local Government Unit (City/Municipality)? Do you think the Local Government ( City/Municipality) will be interested with your accounting reports/records?” Leave this question hanging and introduce to the topic for this lecture. Emphasize to the learners that the focus of your discussions are the users of accounting information and their information needs.

####### INSTRUCTION (30 MINUTES)

Branches of Accounting Discuss the internal users of accounting information.

“Who uses accounting data or information?”

There are two broad categories of users of financial information: internal and external users.

INTERNAL USERS

Internal users of accounting information are those individuals inside a company who plan, organize, and run the business. These users are directly involved in managing and operating the business. These include marketing managers, production supervisors, finance directors, company officers and owners

Engage the learners in a question-and-answer type lecture.

Ask the learners to give examples of internal users and follow up with a question: “what information will that user need that can be answered by accounting?”

Internal users (Primary Users) of accounting information include the following:

Management

Information need: income/earnings for the period, sales, available cash, production cost

Decisions supported: analyze the organization's performance and position and take appropriate measures to improve the company results. sufficiency of cash to pay dividends to stockholders; pricing decisions

Employees

Information need: profit for the period, salaries paid to employees

Decisions supported: job security, consider staying in the employ of the company or look for other employment opportunities

What branch of accounting is evaluate whether a branch of the business complies with the collection and deposit policy of the company?

What branch of accounting is review whether the financial statements are presented fairly and in compliance with accounting standards?

What branch of accounting is preparation of general purpose financial statements?

What are the branches of accounting?