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Fundamentals of
Accountancy, Business &
Management I
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Quarter 1 – Module 1:
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Accounting Introduction and Information
Users
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Subject to further validation for IP compliance, this material is for first quarter use only. Circulation shall be limited to public schools within the jurisdiction of the Division of Cebu Province. LR-PIPCV
Fundamentals of Accountancy, Business & Management 1 - Grade 11
Alternative Delivery Mode
First Quarter - Module 1
Accounting Introduction and Information Users
First Edition, 2020
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Republic Act 8293, section 176 states that: No copyright shall subsist in any work
of the Government of the Philippines. However, prior approval of the government
agency or office wherein the work is created shall be necessary for exploitation of
such work for profit. Such agency or office may, among other things, impose as a
condition the payment of royalties.
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Published by the Department of Education
Secretary: Leonor Magtolis Briones
Undersecretary: Diosdado M. San Antonio
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Borrowed materials (i.e., songs, stories, poems, pictures, photos, brand names,
trademarks, etc.) included in this module are owned by their respective copyright
holders. Every effort has been exerted to locate and seek permission to use these
materials from their respective copyright owners. The publisher and authors do not
represent nor claim ownership over them.
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Development Team of the Module
Writer: Charisa C. Calo
Editor: Dr. Clavel D. Salinas
Reviewer: Dr. Arlene D. Buot
Moderator: Dr. Arlene D. Buot
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Management Team
Schools Division Superintendent:
Dr. Marilyn S. Andales, CESO V
Assistant Schools Division Superintendents:
Dr. Cartesa M. Perico
Dr. Ester A. Futalan
Dr. Leah B. Apao
Chief, CID: Dr. Mary Ann P. Flores
EPS in LRMS: Mr. Isaiash T. Wagas
PSDS/SHS Division Coordinator: Dr. Clavel D. Salinas
Printed in the Philippines by:
Department of Education, Region VII, Division of Cebu Province
Office Address: IPHO Bldg., Sudlon, Lahug, Cebu City
Telefax: (032) 255 - 6405
Email Address: cebu.province@deped.gov.ph
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Fundamentals of
Accountancy, Business &
Management I
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Quarter 1 – Module 1:
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Accounting Introduction and Information
Users
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Subject to further validation for IP compliance, this material is for first quarter use only. Circulation shall be limited to public schools within the jurisdiction of the Division of Cebu Province. LR-PIPCV
Key Message
For Educators:
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Learning is a constant process. Amidst inevitable circumstances, Department of
Education extends their resources and looks for varied ways to cater your needs and
to adapt to the new system of Education as a fortress of Learning Continuity Plan.
One of the probable solutions is the use of Teacher-made Educational Modules in
teaching.
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You are reading the Fundamentals of Accountancy, Business and Management 1Grade 11: First Quarter Alternative Delivery Mode (ADM) Module on “Define
accounting; Describe the nature of accounting; Narrate the history/origin of
accounting” as written and found in the K-12 Most Essential Learning Competencies.
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The creation of this module is a combined effort of competent educators from
different levels and various schools of Department of Education-Cebu Province. In
addition, this module is meticulously planned, organized, checked and verified by
knowledgeable educators to assist you in imparting the lessons to the learners while
considering the physical, social and economical restraints in teaching process.
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The use of Teacher-made Educational Module aims to surpass the challenges of
teaching in a new normal education set-up. Through this module, the students are
given independent learning activities, which embodies in the Most Essential Learning
Competencies based from the K-12 Curriculum Competencies, to work on in
accordance to their capability, efficiency and time. Thus, helping the learners acquire
the prerequisite 21st Century skills needed with emphasis on utmost effort in
considering the whole well-being of the learners.
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As the main source of learning, it is your top priority to explain clearly on how to
use this module to the learners. While using this module, learner’s progress and
development should be recorded verbatim to assess their strengths and weaknesses
while doing the activities presented independently in safety of their homes.
Moreover, you are anticipated to persuade learners to comply and to finish the
modules on or before the scheduled time.
For the Learners:
As a significant stakeholder of learning, Department of Education researched and
explored on innovative ways to address your needs with high consideration on social,
economic, physical and emotional aspects of your well-being. To continue the
learning process, DepEd comes up with an Alternative Delivery mode of teaching
using Teacher-Made Educational Modules.
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You are reading the Fundamentals of Accountancy, Business and Management 1
- Grade 11: First Quarter Alternative Delivery Mode (ADM) Module on “Define
accounting; Describe the nature of accounting; Narrate the history/origin of
accounting” as written and found in the K-12 Most Essential Learning Competencies.
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This module has the following parts and corresponding icons:
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This module is especially crafted for you to grasp the opportunity to continue
learning even at home. Using guided and independent learning activities, rest
assured that you will be able to take pleasure as well as to deeply understand the
contents of the lesson presented; recognizing your own capacity and capability in
acquiring knowledge.
The first part of the module will keep on
tract on the Competencies, Objectives
and Skills expected for you to be
developed and mastered.
WHAT I KNOW
This part aims to check your prior
knowledge on the lesson to take
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WHAT I NEED TO KNOW
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WHAT’S IN
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WHAT’S NEW
This part helps you link the previous
lesson to the current one through a short
exercise/drill.
The lesson to be partaken is introduced in
this part of the module creatively. It may
be through a story, a song, a poem, a
problem opener, an activity, a situation or
the like.
A brief discussion of the lesson can be
read in this part. It guides and helps you
unlock the lesson presented.
WHAT’S MORE
A comprehensive activity/es for
independent practice is in this part to
solidify your knowledge and skills of the
given topic.
WHAT I HAVE LEARNED
This part of the module is used to process
your learning and understanding on the
given topic.
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WHAT IS IT
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A transfer of newly acquired knowledge
and skills to a real-life situation is present
in this part of the module.
ASSESSMENT
This activity assesses your level of
mastery towards the topic.
ADDITIONAL ACTIVITIES
In this section, enhancement activities
will be given for you to further grasp the
lessons.
ANSWER KEY
This contains answers to all activities in
the module.
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WHAT I CAN DO
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At the end of this module you will also find:
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References: Printed in this part is a list of all reliable and valid resources used in
crafting and designing this module.
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In using this module, take note of the fundamental reminders below.
The module is government owned. Handle it with care. Unnecessary marks are
prohibited. Use a separate sheet of paper in answering all the given exercises.
2.
This module is organized according to the level of understanding. Skipping one
part of this module may lead you to confusion and misinterpretation.
3.
The instructions are carefully laden for you to understand the given lessons.
Read each item cautiously.
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1.
This is a Home-Based class, your reliability and honor in doing the tasks and
checking your answers are a must.
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5.
This module helps you attain and learn lessons at home. Make sure to clearly
comprehend the first activity before proceeding to the next one.
6.
This module should be returned in good condition to your teacher/facilitator
once you completed it.
7.
Answers should be written on a separate sheet of paper or notebook especially
prepared for FABM 1 subject.
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If you wish to talk to your teacher/educator, do not hesitate to keep in touch
with him/her for further discussion. Know that even if this is a home-based class,
your teacher is only a call away. Good communication between the teacher and the
student is our priority to flourish your understanding on the given lessons.
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We do hope that in using this material, you will gain ample knowledge and skills
for you to be fully equipped and ready to answer the demands of the globally
competitive world. We are confident in you! Keep soaring high!
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WHAT I NEED TO KNOW
Good day dear learner!
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This module is solely prepared for you to access and to acquire lessons befitted
in your grade level. The exercises, drills and assessments are carefully made to suit
your level of understanding. Indeed, this learning resource is for you to fully
comprehend Lesson 1 -- Accounting Introduction. Independently, you are going to go
through this module following its proper sequence. Although you are going to do it
alone, this is a guided lesson and instructions/directions on how to do every activity
is plotted for your convenience.
Using this learning resource, you are ought to define accounting; describe the
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the K-12 Most Essential Learning Competencies.
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nature of accounting; and narrate the history/origin of accounting” as inculcated in
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At the end of this lesson, you are expected to achieve the following objectives:
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➢ define the concept of accounting;
➢ identify the nature of accounting in view of its definitions;
➢ make a timeline of the history/origin and developments of accounting; and
➢ display self-trust in carrying out all activities .
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WHAT I KNOW
PRE-ASSESSMENT
WORKOUT YOUR STOCK KNOWLEDGE!
Read each question below. Then, write the letter of your answer on your answer
sheet.
1. What do you call the reports that reflect the financial standing and economic
activities of the business?
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a. Accounting books
b. Financial Accounts
c. Financial Statements
2. Which of the following is considered the language of business?
a. Handshake
b. Accounting
c. Customers
3. Which of the following professions never uses accounting information?
a. Company managers
c. Neither of a and b
b. Government Officials
4. What refers to the interactions of a business with other businesses and
stakeholders?
a. Business Investments
c. Business Obligations
b. Business Transactions
5. Which of the following is NOT a business stakeholder?
a. Customers
c. Neither of a and b
b. Government Officers
6. Who is considered the father of modern accounting?
a. Luca Pacioli
b. Queen Victoria
c. Augustus
7. Who does the job of identifying, recording, and communicating the financial
events of a business?
a. Company owner
b. Treasurer
c. Accountant
8. What branch of accounting targets to educate students in the accounting field?
a. Financial Accounting
c. Accounting Research
b. Accounting Education
9. What government agency manages tax return filing and tax collection?
a. Bureau of Treasury
c. Department of Education
b. Bureau of Internal Revenue
10. In accounting, what term is used to refer to bills, coins, checks, deposits in banks,
and bank drafts?
a. Cash
b. Money
c. Exchangeable
11. The following are steps in the accounting process except _________.
a. Identifying
b. Recording
c. Segregating
12. Which of the following is NOT considered a feature of accounting?
a. Accounting is a process.
c. Accounting records all business
b. Accounting is an information system.
happenings.
13. What does GAAP stand for?
a. Generally Accepted Accounting Proposals
b. Generally Accepted Accounting Principles
c. Government Accepted Accounting Principles
14. Which of the following statements about accounting is NOT correct?
a. Accounting is a process.
b. Accounting is a service activity.
c. Accounting is an activity that follows unchangeable rules.
15. Which of the following statements about accounting is correct?
a. The history of accounting can be traced back to ancient Mesopotamia.
b. There is one only acceptable definition of accounting.
c. Accounting is a one-step process.
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For making a great start on this module, congratulations! Today, you should
expect to learn the first accounting lessons through a series of activities you can be
sure you’ll be able to do well.
Accounting is deemed to be a valuable part of life: do you want to know why?
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Businesses are here and there. As a grade 11 senior high school student, it is
likely that you have dealt with one or more of the businesses operating in your
locality. There’s also chance you will be engaged into a business of your own like
selling banana cues to neighbors, selling school supplies to classmates, etc.
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A business is defined as an organization or entity that engages in commercial,
industrial, or professional activities. It is also being generally referred to as the
organized efforts and activities of individuals to produce and sell goods and services
for profit.
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There are so many types of businesses. Amid all, there’s one common factor that
contributes to their success – accounting.
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How does accounting do that? Or you might first ask: What is accounting?
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You will find the answer to these and more questions as you move along the
activities. Are you ready?
AGREE OR
DISAGREE?
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Read the statements with care. On your answer sheet, write AGREE if you agree
with what the statement say about accounting; otherwise, write DISAGREE.
___________ 1. Accounting is a tool in achieving the goals of the business.
___________ 2. Accounting is a process that involves a number of steps.
___________ 3. The highest aim of all businesses is to follow accounting rules and
standards.
___________ 4. Accounting began only after World War II.
___________ 5. Managers are able to know if the company is doing well through
accounting.
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CONCEPT
MAPPING
GENERATE AND LINK!
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What thoughts come out of your mind when you hear the word ‘accounting.’
What terms you think it is related to? On your answer sheet, copy the graphic
organizer below. Then using your prior knowledge, generate ideas about accounting
and write them inside the empty shapes. Add and connect more shapes if you have
to.
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ACCOUNTING
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WHAT’S NEW
DEFINING BY CONNECTING
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On your answer sheet, copy the accounting definition fragments placed under
columns A and B below. Then read each one carefully. Using a line, connect one
fragment in column A to another fragment in column B to form one correct
accounting definition. Do it from number 1 through 5.
A
B
1)
measuring, and communicating
economic information.
Accounting is a service activity
that functions
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3)
Accounting is the process of
identifying, measuring, and
communicating
The process of accounting
includes identifying economic
events,
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recording those events, and
communicating the
summarized results of such
events to information users.
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Accounting is a system that
aids
businesses in tracking their
financial transactions.
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5)
by providing quantitative
information which are
financial in nature.
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economic information to
permit informed judgment
and decisions by users of the
information.
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Accounting is the process of
identifying,
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PUZZLES
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GRASPING FROM CUES!
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Accounting definitions present features that describe the very nature of
accounting. Figure out what these features are by completing the letters of each
puzzle below. Write the complete word on your answer sheet.
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Note that corresponding to each puzzle are phrase clues for your additional help.
Have fun!
1.
a collection of financial data
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Subject to further validation for IP compliance, this material is for first quarter use only. Circulation shall be limited to public schools within the jurisdiction of the Division of Cebu Province. LR-PIPCV
involves a series of steps
3.
requires creativity and skill
4.
serves as tool for success
5.
relating to money
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2.
TRACE BACK TO HISTORY!
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ORDERING EVENTS
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When did accounting start? Who were the people who contributed to its
development? Order the following events in accounting history and development by
writing 1 for that which happened first, 2 for that which happened next, and so on
until 5. Be sure to be on watch for clues along each item. Write your answers on your
answer sheet.
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1. Luca Pacioli wrote his Summa de Arithmetic, Geometria, Proportioni
et Proportionalita which introduced double-entry bookkeeping in 1400s.
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2. A remarkable leap in accounting took place in the 19th century when
Queen Victoria of Scotland gave a royal charter to the Institute of Accountants in
Glasgow.
_______
3. Philippines has started to be completely compliant with the
International Financial Reporting standards to the present.
_______
4. Egyptians invented the abacus of bead and wire and were making
and keeping accounting records.
_______
5. The beginning of accounting can be traced back to income
calculation and taxation activities of Ancient Mesopotamia.
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WHAT IS IT
Engage into Reading!
Definitions of Accounting
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Accounting is a system that allows businesses to trace its financial activities
and evaluate results. There are three major steps involved in accounting: (1)
identifying financial events, (2) recording financial events, and (3) communicating
the summarized results of all financial events to different parties for
decision-making. All these steps are performed by the accountant.
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The American Accounting Association (AAA) defines accounting as the
process of identifying, measuring, and communicating economic information to
permit informed judgment and decisions by users of the information.
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The Accounting Standards Council (ASC) considers accounting as a service
activity which functions by providing quantitative information, primarily financial
in nature, about economic entities, that is intended to be useful in making
economic decisions.
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The American Institute of Certified Public Accountants (AICPA) also defines
accounting as the art of recording, classifying, and summarizing in a significant
manner and in terms of money, transactions and events which are in part or at
least of financial character, and interpreting the results thereof.
Nature of Accounting
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From the definitions above, you can determine what features accounting
has. These features describe the nature of accounting.
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1. Accounting is a process. In accounting, a series of logical and organized steps
are involved such as identifying, recording, measuring, and summarizing financial
data. After, the summarized results are communicated to different parties or
“stakeholders”.
2. Accounting is an art. It takes creativity, skill and expertise to perform all the
accounting steps and activities. Accounting education prepares students for the
accounting career.
3. Accounting is concerned with financial information and transactions.
Accounting is a system in business that is concerned with “money matters.”
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Hence, it involves a step called identifying, where events of the business are
identified as whether they are financial and material in nature or not.
4. Accounting is a means, not than an end. You have read that accounting
contributes to the success of every business. Hence, accounting serves as a tool
to achieve business goals rather than being the goals themselves.
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5. Accounting is an information system. Accounting is a repository of a collection
of information which are financial in kind. These information are dealt with
through a series of steps. Period by period, this accounting information are
summarized for the preparation of accounting reports or financial statements.
History of Accounting
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When did accounting begin?
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It is said that the beginning of accounting can be traced back to as early as
when people learned to trade, tax and develop a system of counting money.
According to history, in 4000B B.C., the income of temples was recorded in lower
Mesopotamia. The Phoenicians also in 1000 B.C. created an alphabet with
accounting to help them in their trades with the ancient Egyptians and avoid
being cheated. In 500 B.C. history recorded the invention of the first bead and
wire abacus by the Egyptians who were already making and keeping accounting
records during the time.
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In the 14th century, Luca Pacioli became a prominent person in accounting
history due to writing a book that introduced and disseminated the double-entry
bookkeeping. The Summa de Arithmetica, Geometria, Proportioni et
Proportionalita of Pacioli is the first book to introduce bookkeeping. Pacioli is
considered as the father of modern accounting.
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Another event in accounting history and development took place in Scotland
in the 19th century where the modern profession of chartered accountants
originated. This became possible by the granting of Queen Victoria of a royal
charter to the Institute of Accountants in Glasgow.
Currently, accounting standards are available to provide guidance to
accountants in their professional practice. Some of these are the Philippine
Accounting Standards (PAS), the Generally Accepted Accounting Principles
(GAAP), and the International Financial Reporting Standards (IFRS). Since 2005,
the Philippines became completely compliant with the IFRS.
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WHAT’S MORE
FACT
SHEETS
TIME TO USE YOUR MAGNIFYING GLASS!
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On your answer sheet, copy the following statements about accounting
definition, nature and history, and draw a bin as what appears below. Crash out the
wrong statements and rewrite them on the bin. Leave the correct ones as is.
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Luca Pacioli is a prominent person in
the history of accounting.
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The three major steps in the
accounting process are identifying,
recording and communicating.
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No one becomes an accountant unless
he or she knows how to paint.
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Accounting standards are available to
date to guide accountants in their
profession.
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Accounting helps business
stakeholders make better decisions.
What I Have Learned
MY
LEARNING
JOURNAL
THINK AND WRITE!
Accounting definition, nature and history are three of the most important topics
to learn in this subject. With them, you find there’s a point moving forward with
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What I Can Do
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accounting. Now please share what’s on your mind. On your answer sheet, write
your insights about how accounting can be play an important role in life. Have a great
time pondering and writing!
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BECOME TOUGHER!
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In this activity, you are going to imagine yourself a mayor of your own town,
having the opportunity and responsibility to oversee the town residents. Decide
whether you are going to approve or disapprove the following actions of the
following individuals. On your answer sheet, simply write A if you approve, and D if
you disapprove.
________ 1. The accountant of Q Company falsified the data of their financial
statements.
________ 2. When Mario, the owner of ABC company found out that his business is
prospering and needs more manpower, he hired many qualified town people.
________ 3. Ms. Shena, the accountant of XYZ Co., keeps track of all financial
transactions of the business to make sure she produces accurate financial
statements.
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________ 4. MNM enterprise processes business permit but is not honest in
declaring the company’s yearly income to the government.
________ 5. Jane takes up BS Accountancy and treats her schooling seriously to
acquire needed knowledge and skill that would be helpful in her future accounting
career.
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Assessment
QUIZ
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LET’S CHECK WHAT YOU’VE LEARNED!
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Read each item or question carefully. Then, write the letter that corresponds to
your answer.
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1. Which of the following is a correct listing of the steps in the accounting process?
a. identifying, recording, communicating
b. identifying, segregating, communicating
c. segregating, recording, verifying
2. Accounting serves as channel of success for businesses. What nature of accounting
is meant by this?
a. Accounting is a process.
c. Accounting is a means not an end.
b. Accounting is an art.
d. Accounting is an information system.
3. Who signed the royal charter for the Institute of Accountants in Glasgow.
a. Luca Pacioli
c. Phoenician
b. Queen Victoria
d. Egyptian Traders
4. Which among the steps in the accounting process is most important?
a. Identifying
c. Communicating
b. Recording
d. All are equally important.
5. Which of the following business transactions is not financial in nature?
a. Company A borrowed money from bank to buy additional equipment.
b. Company B hired employees.
c. Company C sold P10,000 worth of inventories.
d. Company D paid its hired employees for the month of November.
6. Which of the following statements is NOT correct?
a. Luca Pacioli is considered as the father of modern accounting.
b. Today, accounting rules and standards are available to help accountants in the
practice of their profession.
c. In 2006, Philippines have fully complied with the IFRS.
d. Phoenicians invented an alphabet with accounting to avoid being cheated by
Egyptians in their trading.
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7. Accounting being a service activity is applicable only to businesses rendering
services.
a. The statement is true.
b. The statement is false.
8. There is only one definition of accounting that can be considered acceptable.
a. The statement is true.
b. The statement is false.
9. Accountants communicate the summarized results of all company financial
events to interested parties to help them in ________.
a. making relevant decisions
c. selling products
b. choosing job applicants
d. extending the life of the business
10. Accounting keeps a record of all financial transactions done by the company
period after period. What nature of accounting is shown in this?
a. Accounting is a process.
c. Accounting is an art.
b. Accounting is a means rather than an end. d. Accounting is an information
system.
11. Which of the following is a chronologically ordered listing of accounting history
events?
a. Income of temples was recorded in lower Mesopotamia → Origination of the
profession of chartered accountants in Scotland → Invention of the first
bead and wire abacus by the Egyptians
b. Creation of alphabet with accounting by the Phoenicians → Formulation of
GAAP, PAS and IFRS → Luca Pacioli wrote a book that introduced
double-entry bookkeeping
c. Income of temples was recorded in lower Mesopotamia → Creation of
alphabet with accounting by the Phoenicians → Luca Pacioli wrote a book
that introduced double-entry bookkeeping
d. None of the above
12. The PAS, GAAP and IFRS are accounting ________.
a. steps
c. standards
b. features
d. events
13. Two of that which accountants must possess are mathematical skill and
analytical skill. This statement presents what feature of accounting?
a. Accounting is a process.
c. Accounting is an art.
b. Accounting is a means rather than an end. d. Accounting is an information
system.
14. One of the features of accounting is that it is concerned with financial
information and transactions. Which of the following is not similar in meaning
with the underlined phrase?
a. economic information
c. money matters
b. material information
d. managerial information
15. Accounting is considered a ship that carries the company to its destination. What
feature of accounting is meant by this?
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a. Accounting is a process.
c. Accounting is an art.
b. Accounting is a means rather than an end. d. Accounting is an information
system.
MAKING
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TIMELINE
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ADDITIONAL ACTIVITY
Build Up Your Skill!
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Were you amazed by when and how accounting started? As your final task, make
a timeline of the history/origin and developments of accounting. Do it as creatively as
you can using any tools available at home. Utilize a separate sheet for this task. Do it
with fun!
TERM CRACKER
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A timeline is a listing of important events and the time they occurred
arranged in chronological order or according to the time they happened. It
can be by a table, through a line or any other.
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WHAT I NEED TO KNOW
Hi again learner!
This Lesson 2 – Accounting Information Users has the following learning
2.0
fundamentals for you:
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K-12 Most Essential Learning Competencies:
ER
➢ Define external users and give examples (ABM_FABM11- IIIa-7)
➢ Define internal users and give examples (ABM_FABM11- IIIa-8)
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Learning Objectives:
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➢ Define external and internal users of accounting information;
➢ Classify users of accounting information as external or internal;
➢ Solve exercises on the identification of users of accounting information;
and
➢ Show sincerity in carrying out all tasks.
PRE-ASSESSMENT
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WHAT I KNOW
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Uncover Your Prior Knowledge!
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Read each statement or question below. Then, write the letter that corresponds
to your answer.
1. What are the two classifications of accounting information users?
a. Owners and Creditors
c. Private and Public Users
b. Internal and External Users
2. Which of the following is an accounting information user that is employed by the
business to plan, run, and evaluate its operations?
a. Managers
b. Stockholders
c. Employees
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3. Which of the following uses accounting information on behalf of the company?
a. Government
b. General Public
c. Managers
4. They are composed of banks, lenders and rich individuals who lend money or
resources to the business.
a. Investors
b. Owners
c. Creditors
5. Which of the following will need to check the financial statement of a company?
a. Owner of the company
c. Both a and b
b. Government
6. The income of the business comes mainly from its transactions with _________.
a. Customers
b. Lenders
c. Employees
7. Which of the following is FALSE about accounting information users?
a. Accounting information users are classified into internal and external users.
b. Company owners and tax authorities both use accounting information but for
different reasons.
c. The general public doesn’t have interest in accounting information of
businesses.
8. These are hired workers of a company that view its financial statements for
personal reasons.
a. Supervisors
b. Managers
c. Employees
9. What is likely to be the reason why an employee would want to check the financial
statement of the company where he is working?
a. To know if the company is paying taxes to the government regularly
b. To know if the company can pay its loans to banks
c. To know if the company is in good condition and can pay his salary
10. The company accountant should only communicate accounting data to company
owners.
a. The statement is true.
b. The statement is false.
11. Accounting information is communicated to different users for them to make
appropriate decisions.
a. The statement is true.
b. The statement is false
12. The Bureau of Internal Revenue is what example of accounting information user?
a. Supplier
b. Academe
c. Taxing Authority
13. The manager, owner and customers of Double V company are all examples of
internal user of accounting information.
a. The statement is true.
b. The statement is false
14. The customers, creditors and prospective investors of New Clothes Company are
all examples of external users of accounting information.
a. The statement is true.
b. The statement is false
15. What is likely to be the reason why a bank would want to check the financial
statement of a company applying to borrow money from it?
a. To know if the company has the ability to pay the amount it is borrowing
b. To know if the company is a reliable supplier of a particular product
c. To verify if the company is honestly paying taxes to the government
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How do you do? Great job for reaching this another lesson in FABM 1! You’ve
just learned that communicating is one of the steps involved in the accounting
process. Today, you will find out to whom accounting information will be
communicated and why. So, get yourself ready for another set of learning tasks and
activities.
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WHAT’S IN
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Given Best School Supplies Center which sells school and office supplies to
customers. After six months of operation, its owner Beverly asks her
accountant to prepare and present the financial statements of the business.
As an owner, Beverly has reasonable interest of knowing through the financial
statements if her business is profiting or losing.
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Other than Beverly, who else do you think will use the financial statements of
Best School Supplies Center?
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Making guesses now? You’ll find out no sooner about the different accounting
information users!
SEARCH
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WORD
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Open Your Eyes, Activate Your Mind!
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Find 10 words that are related to accounting inside the word square and write
them on your answer sheet. Cue: Some words may be in vertical-downward position,
horizontal-forward position, and slanting-downward position.
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WHAT’S NEW
MYSTERY BOX
2.0
Figure It Out!
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The mystery box now opens, and inside it are some of the stakeholders or
accounting information users of Best School Supplies Center whose owner is Beverly.
Why do you think these stakeholders need to see and use the financial statements of
Best School Supplies Center? Share your opinion and write them on your answer
sheet.
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Beverly
(Company
Owner)
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Manager
Public
Best School Supplies
Center
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Government
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Customers
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Beverly (Company Owner)
__________________________________________________________________
Manager
__________________________________________________________________
Customers
__________________________________________________________________
Government
__________________________________________________________________
Public
_________________________________________________________________
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WORDS OVER
DOTS
Get Ready to Fill In!
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Read each item. Then, identify the word or words that would fill in over the dots
and make each statement about accounting information users correct. Choose your
answers from the pool of words provided and write them on your answer sheet.
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1. Customers refer to those who
or acquire services from a company
at a price.
2. Potential investors are individuals or other businesses planning to
in
the company.
3.
is concerned about the effects of businesses to the economy and
checks the accuracy of financial statements submitted by businesses for the
computation of correct tax payable.
4. The
are people not connected with the company, but use accounting
information to know how the business affects the economy, as well as identify
opportunities for employment.
5.
users refer to parties who do not belong to the company but make
important decisions based on the company’s accounting information.
borrow
public
Internal
Government
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buy goods
Academe
External
invest
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WHAT IS IT
Users of Accounting Information
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Crashing in With Text!
Accounting information is communicated to different stakeholders who use
such accounting information in making decisions. Users of accounting
information are classified into internal and external users.
Internal users are those who make decisions on behalf of the organization.
They are the following:
1. Managers/Management - They are people employed by the company to
perform management functions such as planning, organizing and running the
business affairs.
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2. Employees/Labor Unions - They are ordinary company employees who assess
the company’s profitability and stability, and their consequence on future salary
and job security.
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3. Owners/Stockholders - They provide capital to the business. They need
accounting information to check if the business is well. Accounting information
also helps them in deciding whether to withdraw or increase their investments.
Overall, they are interested to know if the business is profiting and how much.
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External users are those who are not part of the company but need to use
accounting information to be able to make decisions. They are the following:
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1. Potential Investors - They are individuals or other business planning to invest
in the company. To be able to make sure that the company is worth putting
their money in, they check its financial statements and make decisions based
on the accounting information gathered.
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2. Creditors and Potential Creditors - They are individuals, institutions or banks
who have lent or are planning to lend money to the company. They need to
check the company’s financial statements in order to assess its credit
worthiness and the capability of the business to pay its obligations including
related interests on maturity date.
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3. Customers - They refer to people who buy goods or acquire services from the
company at a price. They check the financial statements of their suppliers in
order to determine if they are a stable source of supply over a long period.
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4. Suppliers - They are businesses that provide supplies to other businesses.
They check the financial statements of their customers in order to determine if
debts owed to them will be paid when due.
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5. Government - The government is concerned about regulating businesses and
their effects to the economy. They also want to check if businesses are paying
their taxes honestly. Thus, they check the financial statements of businesses.
Examples are the Bureau of Internal Revenue, which is a tax authority, and the
Securities and Exchange Commission which is a regulatory body.
6. Academe - Educational institutions use accounting information from the
financial statement of a company for academic purposes.
7. Public - The general public is composed to individuals who are not related to
the company. However, they use the financial statements of a company to
determine how it affects the economy, and pinpoint possible prospects for
employment.
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WHAT’S MORE
LEFT
- RIGHT
2.0
Sort It Out!
LEFT
RIGHT
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Management
Suppliers
Company Owner
General Public
Academe
Customers
Labor Unions
Creditors
Government
Employees
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Classify the users of accounting information inside the circle as internal or
external. If the user is internal, rewrite it on the left box; if the user is external,
rewrite it on the right box. Do this on your answer sheet.
GROUPING
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Get Ready for Some Kicking!
Identify which does not belong to group of internal or external users and cross it
out. Do this on your answer sheet.
1. Top Management, Owner, Stockholder, Government
2. Laborer, Public, Potential Investors, Clients
3. Academe, Supervisor, Lending Company, Taxing Authority
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4. General Public, Existing Investor, Company Proprietor, Manager
5. Researcher, Academe, Regulatory Bodies, Labor Union
T W O,
ONE
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What I Have Learned
Think Aloud!
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Two Challenges
You Have Encountered
in the Lesson
One Question You Have
about the Lesson
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Three Realizations You
Have Acquired from the
Lesson
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What can you say about your journey through this lesson? On your answer sheet,
copy the labelled boxes below and fill them out.
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What I Can Do
INSIGHT
LOG
2.0
From Mind to Hand!
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You’ve gone through a series of uphills and downhills from task 1 to here! Impart
your practical learning out of this lesson by writing a short essay based on the starter
below. Do this on your answer sheet.
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After having learned about internal and external users of
accounting information, I am planning to…
Write in
English.
Express your
ideas clearly.
Watch on your
spelling.
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Assessment
LESSON
QUIZ
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Read each item carefully, then write the letter of your answer.
2.0
Gauge Your Learning!
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1. Which of the following is not an internal user of accounting information?
a. Business Owners
b. Suppliers
c. Field Workers
2. Which of the following is not an external user of accounting information?
a. Accountancy Student
b. BIR Officials
c. Manager
3. Employees are users of accounting information. What do you think they are
primarily concerned with?
a. The ability of the company to provide continuous employment opportunities
b. The amount of returns the owners have earned
c. The ability of the company to pay its debts
4. Internal users of accounting information are those who make decisions on behalf
of the organization.
a. The statement is true.
b. The statement is false.
5. Of the following external users, which would rarely examine a company’s financial
statements?
a. Creditors
b. Clients
c. General Public
6. External users of accounting information are those who are not part of the
company but need the company’s accounting information to make decisions.
a. The statement is true.
b. The statement is false.
7. Who of the following carries the responsibility of planning, organizing and running
a business?
a. Creditors
b. Accountant
c. Manager
8. What refers to institutions that use accounting information from the financial
statement of a company for academic purposes?
a. Academe
c. Securities and Exchange Commission
b. Bureau of Internal Revenue
9. For creditors, what information from a company’s financial statements is the most
important?
a. Profit of the Company
b. Current Borrowings
c. Both a and b
10. Which of the following refers to accounting information users planning to invest
in the company?
a. Creditors
b. Employees
c. Potential Investors
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_______________________________________________________________________________________________________________________________________________________________
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11. The difference between internal and external accounting users is that________.
a. Internal users deal with the company daily.
b. Internal users are affected by the activities of the company.
c. Internal users make decisions on behalf of the company.
12. A business that invests money in another business is considered to be an internal
user of accounting information of the business it invests in.
a. The statement is true.
b. The statement is false.
13. The difference between a stockholder and a potential investor is that________.
a. Stockholders have already invested their money into the business.
b. Stockholders are considered owners of the business.
c. Both a and b.
14. Collectively, clients, buyers, and patrons are called________.
a. Creditors
b. Employees
c. Customers
15. Which of the following correctly states the difference between managers and
laborers vis-a-vis using accounting information?
a. Managers are internal users while laborers are external users.
b. Laborers are employed by the company while managers are not.
c. Managers use the company’s accounting information to make decisions for
the company, while laborers use it to make personal decisions.
ON
ADDITIONAL ACTIVITY
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SOLVING EXERCISE
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Do the Last Blow!
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Hover through the cases below. Answer them on your answer sheet.
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Case #1: Joshua is a BS Accountancy student. He also is a stockholder of Imperial Inc.
On the part of Imperial Inc., is Joshua an internal user or external user? Support your
answer.
____________________________________________________________________
Case #2: Ryan is a collection officer of HAMA Motor Dealer company. But he also is a
supplier of construction nails to different hardware shops in his locality. Can Ryan be
classified as an external accounting information user? How?
____________________________________________________________________
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Lesson Quiz, pp. 11-13
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1. A
2. C
3. B
4. D
5. B
6. C
7. B
8. B
9. A
10. D
11. C
12. C
13. C
14. D
15. B
Only second statement is
wrong.
Ordering Events, p. 6
3,4,5,2,1
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Pre-Assessment
pp. 1-2
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Letter Puzzles
pp. 5-6
Defining by Connecting
pp. 4-5
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1. information
2. process3
3. art
4. means
5. financial
1st box ------ 3rd box
2nd box ------ 1st box
3rd box ------ 2nd box
4th box ------ 4th box
5th box ------ 5th box
1. C
2. B
3. C
4. B
5. C
6. A
7. C
8. B
9. B
10. A
11. C
12. C
13. B
14. C
15. A
LESSON 1
ANSWER KEY
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Lesson Quiz, pp. 22-23
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Left-Right, pp. 19-20
Suppliers
General Public
Academe
Customer
Creditors
Government
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Management
Company Owner
Labor Unions
Employees
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1. B
2. C
3. A
4. A
5. C
6. A
7. C
8. A
9. C
10. C
11. C
12. A
13. C
14. C
15. C
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Pre-Assessment, pp. 14-15
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1. B
2. A
3. C
4. C
5. C
6. A
7. C
8. C
9. C
10. B
11. A
12. C
13. B
14. A
15. A
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Grouping, p. 19
Words Over Dots, p. 17
1. Government
2. Laborer
3. Supervisor
4. General Public
5. Labor Unions
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1. buy goods
2. invest
3. Government
4. public
5. External
LESSON 2
ANSWER KEY
REFERENCES AND RESOURCES:
Most Essential Learning Competencies (MELCs)
Tugas, F., Salendrez, H., & Rabo, J., Manaligod, M.G., ed. Senior High School
Fundamentals of Accountancy, Business and Management 1 Textbook. Vibal Group
2.0
Florendo, J. (2016) Fundamentals of Accountancy, Business and Management 1. Rex
Book Store
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https://www.investopedia.com/terms/b/business.asp
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https://www.abcteach.com/documents/clip-art-box-bw-I-abcteachcom-29846
For inquiries or feedback, please write or call:
Department of Education: DepEd-Cebu Province
Office Address: Sudlon, Cebu City, 6000 Cebu
Telefax: (032) 255 - 6405
Email Address: cebu.province@deped.gov.ph
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