Application of the Basic Accounting Concepts Performance Task GENERAL INSTRUCTIONS: Read the storyline below. After reading the storyline, in a One Whole Sheet of paper, list down all the accounting concepts and principles you find alongside its designated sentence(s) in the story that accompanies the principle. WRITE DOWN AS MANY PRINCIPLES AS YOU CAN IF YOU FIND THEM TO BE APPLICABLE. An example is given after the story on how you will answer the activity. The second paragraph is used as an example, please follow the format carefully. Any confusions and questions will be entertained through Messenger. Answer accountingly, Luca Pacioli is watching. The Business, *bow* A short story pero taas gyud siya During your Grade 11 year, your teacher in FABM1 had a meeting with other faculty members so he left you a performance task to make your life busy so that you will not jump out of the gate and escape school. After reading the performance task instructions you got bored and hungry, so you decided to take your classmate who is answering the performance task and you make damay with them so that you can eat siomai. So after convincing your classmate nga “Tara na ba librehan taka”, you went down at the street so order siomai. After eating siomai, you said “Wow yummy” and decided that you also wanted to start your own siomai business. Hence, you started your business of selling siomai-ala-ilaga. You opened a separate bank account of the business and deposited your initial investment of P250,000 to this business account. The business acquired a siomai-ala-ilaga making machine. The regular selling price is P100,000 for the machine, however, you were able to acquire it at a discounted price of P90,000. You will record the machine at its acquisition cost of P90,000 rather than the selling price stated at the store. The business acquired initial inventory of rats and siomai wrappers for the siomai-ala-ilaga recipe for a total cost of P50,000. You will record the cost as an asset rather than as expense because you have not earned income yet. All the siomai-ala-ilaga goods were sold to your classmates on “Bayran ra taka ugma” promises for P300,000. So you immediately record the sales as revenues rather than waiting for them to pay you. Also, since the goods have been sold, you now recognize the once recorded as assets into expense. You collected P290,000 of the P300,000 total credit sales from your classmates. You will now deposit your collections into the separate bank account of the business rather than in your own personal account. The debtor for the remaining P10,000 is in financial difficulty due to the many amots for the school and also because they just recently paid for their Shopee orders, hence they have no money. This raised doubts whether the debtor can pay the remaining P10,000. You, then, immediately recognized his doubtful account as expense. At the end of the year, you prepared financial statements of your siomai-ala-ilaga business to determine whether the business earned profit or not. When preparing the financial statements, you discovered that the business has 10 South Korean Won (due to your alarming addiction to Kipap idols). You then translated this to Philippine Peso using the current exchange rate. The amount that you will report in the financial statements is the translated amount. Also you found out that the regular selling price of the siomai-ala-ilaga making machine has increased from P100,000 to P120,000. You ignored this information of the change due to inflation. You still reported this on your financial statements at its acquisition cost of P90,000. This is due to the fact that you expect that your business will go on forever and you don’t have any intention of closing it down in the foreseeable future. During the year, the business bought small razors for P80 to shave the hair out of the rats. You expect to use this razor for many years. However, because you are a master of FABM1 and a super idol in accounting, you used your professional judgment and deemed the cost razors as immaterial, you then recorded this as an expense rather than as an asset. Moreover, when you prepared the financial statements, you decided to include the cost of the razors in a “Miscellaneous Expense” account together with other immaterial expenses. You don’t expect users of the financial statements to have the same benefit from reporting immaterial cost separately as compared to other items in the financial statement, so you expended lesser time preparing this part. However, you will make a brief description of the “Miscellaneous Expense” account in the notes of the financial statements, sufficient for users to understand the nature of this account. You then adopted an accounting policy of expensing outright all acquisitions of equipment costing P5,000 and below. You applied this policy consistently in the future periods. And that ends the story. Ang business, bow. ACCOUNTING CONCEPTS AND PRINCIPLES I HAVE FOUND: 1. Separate Accounting Entity – “You opened a separate bank account of the business and deposited your initial investment of P250,000 to this business account.”