Fundamentals of
Accountancy, Business
and Management 1
Quarter 3 – Module 1:
Introduction to Accounting
Fundamentals of Accountancy, Business and Management 1 – Grade 11
Alternative Delivery Mode
Quarter 3 – Module 1: Introduction to Accounting
First Edition, 2020
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Fundamentals of
Accountancy, Business
and Management 1
Quarter 3 – Module 1:
Introduction to Accounting
Introductory Message
This Self-Learning Module (SLM) is prepared so that you, our dear
learners, can continue your studies and learn while at home. Activities,
questions, directions, exercises, and discussions are carefully stated for you to
understand each lesson.
Each SLM is composed of different parts. Each part shall guide you stepby-step as you discover and understand the lesson prepared for you.
Pre-tests are provided to measure your prior knowledge on lessons in each
SLM. This will tell you if you need to proceed on completing this module or if you
need to ask your facilitator or your teacher’s assistance for better understanding
of the lesson. At the end of each module, you need to answer the post-test to selfcheck your learning. Answer keys are provided for each activity and test. We
trust that you will be honest in using these.
In addition to the material in the main text, Notes to the Teacher are also
provided to our facilitators and parents for strategies and reminders on how they
can best help you on your home-based learning.
Please use this module with care. Do not put unnecessary marks on any
part of this SLM. Use a separate sheet of paper in answering the exercises and
tests. And read the instructions carefully before performing each task.
If you have any questions in using this SLM or any difficulty in answering
the tasks in this module, do not hesitate to consult your teacher or facilitator.
Thank you.
What I Need to Know
This module was designed and written to introduce accounting to help you
understand which accounting is used in making business decisions by citing
specific examples. It helps you solve exercises and problems on the identification
of users of information, type of decisions to be made, and type of information
needed by the users. This module was created so that you will be able to cite
users of financial information and identify whether they are external or internal
users (ABM_FABM11-IIIa-1-8).
At the end of this module, you are expected to:
a.
b.
c.
d.
define accounting;
describe the nature of accounting;
narrate the history/origin of accounting; and
define internal and external users and give examples.
1
What I Know
Directions: Arrange the history of accounting in chronological order using the
chart below. Write your answers on a separate sheet of paper.
Clay tablet was used in keeping accounting records.
a.
Double-entry bookkeeping was disseminated by Luca Pacioli.
b.
Development in the accounting profession happened.
c.
Modern accounting in Europe and America began.
d.
Fixed assets and mass production were given importance.
e.
Development of accounting theory began in this period.
History of Accounting
1
3
2
5
4
2
6
Lesson
1
Introduction to Accounting
Accounting is part of our daily life. It is essential in the world of business
because it functions as its language and provides information that is useful in
decision making.
It has its own characteristics, nature and origin. Simply, understanding
accounting will help an aspiring accountant or business manager understand
how the business works.
What’s In
Directions: Guess the gibberish word. Write your answers on a separate
sheet of paper.
Example: SHE IS BURG HER
- CHEESEBURGER
HIGHS CREEK OWN
- ICE CREAM CONE
1. ACT COUNT THINK
2. MAY SURE OFF ACT COUNT THINK
3. HAIRS TO RIM
4. EGGS TERM MALL
5. FIN TERM MALL
Notes to the Teacher
This module prepares students to understand the definition,
nature, function, and history of accounting. Also to know the
external and internal users of financial information.
3
What’s New
Directions: Write TRUE if the statement is correct and FALSE if it is not.
Write your answers on a separate sheet of paper.
____________ 1. The external users inside the company are those who plan,
organize and operate the business.
___________ 2. The external users are those individuals and organizations
outside a company who want financial information outside the
company.
____________ 3. There are four primary internal users of accounts.
____________ 4. Management is a primary internal user of accounting
information.
____________ 5. Owners are internal users of financial information.
____________ 6. Customers are not external users of accounts.
____________ 7. In Mesopotamia, record-keeping was done through “Clay
Triangle Drawing” as evidence of recording transactions.
____________ 8. Luca Pacioli is the Father of Accounting.
____________ 9. The British Association of Public Accountants was the initiator
to the current American Institute of Certified Public
Accountants (AICPA).
____________ 10. Accounting is a process.
____________ 11. Accounting is both an art and discipline.
____________ 12. Accounting is NOT an information system.
____________ 13. Accounting is NOT the language of business.
____________ 14. Accounting is the process of informing, repeating, and
destructing economic events.
____________ 15. Recording is a part of accounting process.
What is It
Do you know that accounting is one of the oldest professions in the world? It
has evolved throughout time addressing the needs of society. In all walks of life,
its relevance can be seen. It has system and process that help business owners
to understand the flow of their transaction. It truly plays a necessary role in the
business.
4
Let us first define accounting, its nature, history, and users of the accounting
information. Being an ABM student, you wanted to deepen your knowledge and
skill in accounting.
Accounting is a process of identifying, recording, and communicating
economic events such of an organization to related users (Weygandt, 2005).
Economic events include purchase of materials, sale of goods, and acquisition of
machinery which are measured in monetary terms and are recorded in the
financial statements.
Identifying – involves in the selection of the economic events which are
important to a particular business transaction. Examples of transactions in a
merchandising store are sales of merchandise, purchases of merchandise, and
purchases of delivery truck.
Recording – is the act of keeping a chronological record of events that are
measurable in accounting documents like journals and ledgers.
Communicating – refers to the process of communicating financial reports to
the users of financial information.
Nature of Accounting
1.
Accounting is a service activity. It helps decision makers by giving
them financial reports that will guide them in making sound decisions.
2.
Accounting is a process. It refers to the method of performing any
specific job step-by-step according to the objectives. It performs the
specific task of collecting, processing, and communicating financial
information.
5
3.
Accounting is both an art and a discipline. It is considered an art
because one records, classifies, summarizes, and finalizes financial
data. The way something is done is referred to as “art”. It is a behavioral
knowledge involving an established creativity and skill to help one
achieve distinct objectives.
4.
Accounting deals with financial information and transactions. It
records financial transactions and data, categorizes these, and finalizes
the results given for a specified period. Accounting only deals with
financial and not with non-monetary or non-financial aspects of an
information.
5.
Accounting is known and characterized as a storehouse of
information. It collects, processes, and communicates financial
information of any entity.
History of Accounting
In history, accounting is as old as civilization. It was developed in response
to various social and economic needs of men. It started as a simple recording of
monotonous exchanges. Its history shares the similarity with that of finance and
business.
Evolution of Accounting
• The Cradle of Civilization (3600 B.C.) – In Mesopotamia, record-keeping was
done through “Clay Tablet” as evidence of recording transactions. From India
and China to Central and South America, the clay tablet records the
business transactions like accounts receivable and accounts payable.
• Double-Entry Bookkeeping (14th Century) - The most relevant event in
accounting history is generally considered to be the dissemination of doubleentry bookkeeping-by Luca Pacioli (Father of Accounting, in 14th century
Italy). Pacioli was much revered in his day, and was a friend and fellow of
Leonardo da Vinci. The Italians of the 14th to 16th centuries are recognized
as the fathers of modern accounting and were the first to use Arabic
numerals than Roman, and for following business accounts. Summa de
Arithmetica was written by Luca Pacioli, the first book issued that contained
a detailed chapter on double-entry bookkeeping.
• French Revolution (1700s) – In this period, the development of accounting
theory has begun and was influenced by social upheavals.
• The Industrial Revolution (1760-1830) – The focus on this era are fixed
assets and mass production.
•The Beginnings of Modern Accounting in Europe and America (19th
Century) - The modern and formal accounting profession emerged in
Scotland in 1854. Most accountants stayed in the U.S., establishing
accounting practices and becoming the origins of several U.S. accounting
firms. The first national U.S. accounting society was established in 1887.
6
The American Association of Public Accountants was the initiator of the
current American Institute of Certified Public Accountants (AICPA).
• The Present (20th Century) – In the present time, accounting standards were
established and practitioners follow the rules of international organizations
or groups like AICPA. Modern accounting standards were given more
attention and time.
History of Accounting
The Cradle of Civilization (3600 B. C.)
Clay tablets was used in keeping accounting records.
Double-entry bookkeeping (14th Century)
Double-entry bookkeeping was disseminated by Luca Pacioli (The Father of
Accounting)
French Revolution (1700)
Development of accounting theory began during this period.
The Industrial Revolution (1760-1830)
Fixed assets and mass production were given importance.
The Beginnings of Modern Accounting in Europe and America (19th
Century)
Modern Accounting in Europe and America began.
The Present (20th Century)
Development in the accounting profession was developed.
External and Internal Users of Accounting Information
External Users –are the individuals or organizations outside the company who
are not involved in operating the business.
1. Creditors – users who need accounting information to determine the
credit integrity, worthiness of the organization, and credit
terms.
7
2. Tax Authorities (Bureau of Internal Revenue) - a government agency
that verifies the accuracy of financial data to ensure the
credibility of the tax returns filed by the business.
3. Investors – users who need accounting information to evaluate and
examine the feasibility of investing in a company.
4. Customers – users who evaluate the financial information of its supplier
to keep stable source of supply in the long term.
5. Regulatory Authorities -government agencies like Securities and
Exchange Commission (SEC), Department
of Trade and Industry (DTI), Department of
Labor and Employment (DOLE) were
established to supervise if businesses
comply with legal requirements in running
a business.
Internal Users – individuals inside the organization who plan, organize, and run
the business. They are directly involved in managing and
operating the business. Internal users are also called as
“primary users” of accounting information and some of these
users are the marketing managers, supervisors, finance
directors, company officers, and owners.
The following are the internal users of accounting:
1. Management - to know the income/earnings for the period, sales,
available cash, and production cost are the reasons why
the management needs the accounting information. They
also analyze the organization's performance and position
and take appropriate measures to improve the company
results, sufficiency of cash to pay dividends to
stockholders as well as the pricing decisions.
2. Employees – for job security, they use financial information as factor to
consider in staying employment or to look for other
employment opportunities.
3. Owners – they use financial information to know the profit or income for
the period, resources, or assets of the business. Liabilities of the
business are needed by the owners. They also use financial
information in considerations regarding additional investment,
expanding the business, and borrowing funds to support any
expansion plans.
8
What’s More
Directions: Identify whether the given is a process or nature of accounting.
Write your answers on a separate sheet of paper.
1.
Accounting is a storehouse of information.
2.
Accounting deals with financial information.
3.
Recording events in a chronological order.
4.
Communicating the financial reports to the users.
5.
Accounting is a process.
6.
Accounting is a service activity.
7.
Identifying the economic events.
8.
Accounting is both an art and a discipline.
9.
Recording the sale of merchandise.
10.
Recording the purchase of merchandise
What I Have Learned
Directions: Read each statement below and choose your answers from the box.
Write your answers on a separate sheet of paper.
Customers
Creditors
Owners
Management
The Present
French Revolution
Accounting is an information system
Accounting is a process
Communicating
Identifying
___________ 1. This involves selecting economic events that are relevant to a
particular business transaction.
___________ 2. This occurs through the preparation and communicating of
financial and other accounting reports.
___________ 3. This nature of accounting refers to the method of performing
any specific job step-by-step according to objectives.
9
___________ 4. This nature of accounting tells accounting is known and
characterized as a storehouse of information.
___________ 5. During this period, thorough study and development of theory
of accounting began. Social upheavals affect the government,
finances, laws, customs, and business which greatly
influenced the development of accounting.
___________ 6. During this period, the Modern Accounting Standards and
Commerce were developed. The accounting profession
developed the requirements for financial statement audits
around the states.
___________ 7. This user analyze the organization’s performance and position
and take appropriate measures to improve the company’s
results.
___________8. These users need accounting information to know the profit or
income for the period as well as the assets and liabilities of the
company.
___________9. These users need accounting information to determine the
credit integrity, worthiness of the organization, and credit
terms.
___________10. These are the users of accounting information that need to
assess the financial position of its suppliers which is
necessary for them to maintain a stable source of supply in
the long term.
What I Can Do
Directions: Make a timeline of the history of accounting and provide a brief
explanation (three to five sentences). Write your answers on a
separate sheet of paper.
Rubric
Ideas
Excellent:
5pts.
Average: 3pts.
The answer
contains the
complete
history of
accounting.
The answer
provides three
details of the
history of
accounting.
10
Needs
Improvement:
2pts.
The answer
provides one to
two details of the
history of
accounting.
Assessment
Direction. Choose the letter that corresponds to the correct answer. Write your
answers on a separate sheet of paper.
1.
He was known as the “Father of Accounting”.
A.
B.
C.
D.
2.
It refers to the method of performing any specific job step-by-step
according to the objectives.
A.
B.
C.
D.
3.
creditors
employees
owners
suppliers
These users need accounting information to evaluate and examine the
feasibility of investing in a company.
A.
B.
C.
D.
5.
Accounting is a process.
Accounting is a service activity.
Identifying the events
Recording the events
These users need accounting information as a factor to consider in staying
employment or to look for other employment opportunities.
A.
B.
C.
D.
4.
Stepehen Zeff
Barry Melancon
Leonardo De Vinci
Luca Pacioli
creditors
employees
investors
suppliers
Mass production and the great importance of fixed assets were given
attention during this period. What part of evolution of accounting history
is this?
A.
B.
C.
D.
Cradle Civilization
French Revolution
Industrial Revolution
The Present
11
6.
Accounting provides assistance to decision makers by providing them
financial reports that will guide them in coming up with sound decisions.
What nature of accounting is this?
A.
B.
C.
D.
7.
This involves keeping a chronological diary of events that are measured in
pesos.
A.
B.
C.
D.
8.
evaluating
recognizing
recording
summarizing
Managers, production supervisors, owners, and finance directors are in
this group who are into planning, organizing, and operating the business.
Who are these users?
A.
B.
C.
D.
9.
finance
recognition
recording
service
external users
keepers
internal users
recorders
These are individuals and organizations outside a company who want
financial information about the company. These users are not directly
involved in managing and operating the business.
A.
B.
C.
D.
external users
keepers
internal users
Recorders
10. It is known as the language of business because it communicates the
financial information to the users.
A.
accounting
B.
communicating
C.
recording
D.
identifying
12
Additional Activities
Directions: Compose and record a song with two to three stanzas with four
lines in every stanza. Write the song in separate sheet of paper
and submit the recorded audio via email.
Rubric
Cohesiveness
Excellent:
Average:
5pts
The song goes
perfectly together
and there is unity
between lines and
stanzas which
connect with the
topic.
Creativity
The song uses 5 or
more unique
metaphors and
similes to describe
situations, objects,
and people.
Rhythm
The
song
uses
rhythm
throughout, which
contributes to the
poetic tone.
Needs
Improvement:
3pts.
The song
somewhat goes
together but needs
more cohesiveness
and the poem’s
lines and stanzas
sometimes sway
from the topic.
The song uses 3 or
2 unique
metaphors and
similes to describe
situations, objects,
and people.
1pt.
The song does not
go together and the
poem’s lines and
stanzas sway from
the topic.
The
song
uses
minimal
rhythm
and there is an
occasional
distraction
that
affects the tone.
The song does not
have any rhythm at
all
and
total
distraction
that
affects the tone.
13
The song does not
use unique
metaphors and
similes.
14
What I know:
1.
2.
3.
4.
5.
6.
A
B
F
E
D
C
What I have learned:
1. Identifying
2. Communicating
3. Accounting is a process
4. Accounting is an information
system
5. French revolution
6. The present
7. Management
8. Owners
9. Creditors
10. Customers
What’s In:
1. accounting
2. nature of accounting
3. history
4. external
5. internal
What I Can Do:
What’s New:
Answers may vary.
1. False
2. True
3. False
4. True
5. True
6. False
7. False
8. True
9. False
10. True
11. True
12. False
13. False
14. False
15. True
Assessment:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
D
A
B
C
C
D
C
C
A
A
Additional Activities:
Answers may vary.
What’s More
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Nature
Nature
process
process
nature
nature
process
nature
process
process
Answer Key
References
Anastacio, Ma. Flordeliza. 2011. Financial Management (With Industry Based Perspective).
Manila: Rex Book Store.
Deped K To 12 Curriculum Guide, Fundamentals Of Accountancy, Business And Management 1.
2016.
Gilbertson, Claudia. 2010. Fundamentals Of Accounting. 8th ed. Australia: Cengage Learning.
Teaching Guide For Senior High School, Fundamentals Of Accountancy, Business And
Management 1. 2016. Quezon City: Commission on Higher Education.
Pefianco, Erlinda C. 1996. The Accounting Process: Principles And Problems. Makati: Goodwill
Trading.
Padillo, Nicanor, Jr. 2011. Financial Statements Preparation, Analysis And Interpretation.
Manila: GIC Enterprises.
Young, Felina C. 2008. Principles Of Marketing. Manila: Rex Book Store.
15
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Department of Education – Region III,
Schools Division of Bataan - Curriculum Implementation Division
Learning Resources Management and Development Section (LRMDS)
Provincial Capitol Compound, Balanga City, Bataan
Telefax: (047) 237-2102
Email Address: bataan@deped.gov.ph