CHAPTER 1

COST ACCOUNTING FUNDAMENTALS

Modern Cost Accounting- it is more than a list of numbers to 3. Production
be totalled, sorted, and stored. It is a major play in 4. Marketing
management decision making. Form providing information for 5. Distribution
planning new products to evaluating the success of the latest 6. Costumer service
marketing campaign, cost accounting plays a major role.
ACCOUNTING SYSTEM
Cost Accounting information is designed for managers.
Management Accounting- measures and reports financial and
Creation of value in organization- Our discussion shall start nonfinancial information that help managers make decision to
with the concepts of value creation and the value chain fulfill the goals of an organization
because in cost accounting, our goal is to assist managers in
achieving the maximum value for their organization. One of Financial Accounting- provides reports directed to external
the fundamental services of counting is measuring the effects parties, measures and records business transactions and
of decision on the value of the organization. As providers of provides financial statements that are based on International
information (accountants) or as the uses of information Financial Reporting Standards (IFRS).
(managers), we have to understand how the information can
Cost Accounting- is the subfield of accounting that records,
and will be used to increase value. Designing accounting
measures and reports information about cost.
systems that accomplish this goal therefore becomes an
important task of cost accounting. SCOPE OF MODERN COST ACCOUNTING
The value chain is the set of activities that transforms raw Cost accumulation involves the collection of cost data in some
materials into the goods and services that end-users purchase organized way by means of accounting system.
and consume and the treatment or disposal of any waste
generated by them. Cost Assignment beyond accumulating cause the costing
system traces direct cost and allocates indirect cost to design
The value added activities that the firms in the chain perform cause objects.
are those activities that customers perceive as adding utility to
the goods or services they purchase.

Business Function in the Value Chain THE CODE OF CONDUCT

1. Research and Development -Competence, confidentiality, Integrity and Objectivity.

2. Design of products, services or processes.

CHAPTER 2
COST TERMS, CONCEPTS AND CLASSIFICATIONS
Cost at the most basic level a cost may be defined as the value A cost object is any product service or organizational unit to
of foregone or sacrifice of resources for the purpose of which costs are assigned for some management purpose.
achieving some economic benefit which will promote the
profit making ability of the firm. Cost driver is any factor that has effect of changing the level
of total cost. Cost assignment is the process of assigning cost
Cost pools are costs elected into meaningful groups. Cost to cost pools or from cost pools to cost object.
pools may be classified by type of cost, by source and by
responsibility, Cost allocation is the assignment of indirect costs to cost
pools. Allocation bases are cost drivers used to allocate cost.
CLASSIFICATION OF COSTS Finished goods consist of units of product that have been
completed but not yet sold to customers.
A.
The income statement
Manufacturing costs are all the costs associated with
production of goods. The income statement of merchandising and manufacturing
firms are very similar.
Direct materials all raw material costs that become an integral
part of the finished product that can be conveniently and -Cost of Goods Sold
economically assign to specific units manufactured.
-Cost of Good Manufactured
Direct labor or labor costs related to time spent on products
that can be conveniently and economically assign to specific -Income Statement
units manufactured.
D.
Manufacturing overhead the third element of manufacturing
Cost behavior refers to how a cost will react or respond to
costs include all cost of manufacturing except direct materials
changes in the business activity.
and direct labor.
Variable cost is the costs that change directly in proportion to
Indirect materials include materials and supplies used in the
changes in activity.
manufacturing operation that not become part of the product.
Fixed cost is the cost that are remain unchanged for a given
Indirect labor is the labor cost that cannot be identified or
time period regardless of change in activity.
traced to specific units manufactured.
Semi variable cost or mixed cost is the costs that contain both
Non manufacturing can you cost generally include the costs
fixed and variable elements.
related to selling and other activities not related to the
production of goods. E.
Marketing costs associated with marketing or selling a product Raw materials inventory- the costs of all raw material and
or all costs incurred by the marketing division. production supplies that have been purchased but not used at
the end of the accounting period.
General and administrative costs include all executive
organizational and clerical costs. Work in process inventory- the costs associated with good
partially completed at the end of the accounting.
B.
Finished goods inventory- is the cost of completed goods that
Expense is defined as the cost incurred when an asset is used
have not been sold at the end of accounting period.
up or sold for the purpose of generating revenue.
Merchandise inventory- cost of purchase merchandise by
Product costs include all costs that are involved in acquiring or
retailers or wholesale that have not been sold at the end of
making a product.
accounting period.
Period costs are all the cost that are identified with accounting
F.
periods and not included in product cost.
Direct cost- costs that can be economically traceable to a
C.
single cost object.
The statement of financial position
Indirect cost- costs that are not directly or easily traceable to
A merchandising company has only one class of inventory the cost object.
called merchandise inventory.
G.
Raw materials are materials that are used to make a product.
Controllable cost- costs that are subject to significant
Work in process consists of units of product that are only influence by a particular manager within the time period under
partially complete. consideration.
Non-controllable cost- costs over which a given manager does Incremental cost- the difference in cost between two or more
not have a significant influence. alternatives.

Sunk cost- past costs that have been incurred and are
irrelevant to a future decision.

Opportunity cost- the value of the best alternative foregone as

H. the result of selecting a different use of resource or by
choosing a particular strategy.
Standard cost- a predetermined cost estimate that should be
attained usually expressed in terms of cost per unit. Marginal cost - cost associated with the next unit or the next
project or incremental costs associated with an additional
Budgeted cost- used to present the expected or planned cost
project.
for a given period.
Value added cost- cost that add value to the product.
Absorption costing- a costing method that includes all
manufacturing costs direct materials direct labor and both
variable and fixed manufacturing overhead in the cost of a unit
of product.

Direct costing- a type of product costing were fixed costs are

charged against revenue as incurred and are not assign to
specific units of product manufactured .

Information cost- cost of obtaining information.

Ordering cost- cost that increase with the number of orders

placed for inventory.

Out-of-pocket cost- cost that must be met with a current

expenditure or cash outlet.

I.

Committed cost- cost that is invertible consequence of a

previous commitment.

Discretionary cost- costs for which the size or the time of

insurance is matter of choice.

K.

Relevant cost- future costs that are different under one

decision alternative.

CHAPTER 3
COST BEHAVIOR: ANALYSIS AND USE

DEFINITION OF COST BEHAVIOR Cost behavior means how a cost will react as changes takes
place in the level of business activity.
IMPORTANCE OF UNDERSTANDING COST BEHAVIOR 2. MIXED COST

Planning requires that management make decision based in A mixed cost is one that contains both variable and fixed cost
part on expectation as to the future. element.

Control is the process of using feedback information for COST ESTIMATION

comparison with expectations and the implementation of
action on the basis of the comparison. The fixed portion of mixed cost represent the basic minimum
cost of just having a service ready and available for used.
Cost analysis is an integral part of planning and control
function. This chapter discusses the method of estimating the relation
between cost behavior and activity levels that are commonly
TYPES OF COST BEHAVIOR PATTERNS in practice as well as a brief overview of the theory and some
important consideration for their application.
1. VARIABLE COST

Variable costs are those costs that change in total as the level
of activity changes in the short run within the relevant range.

Relevant range is the range activity within which assumptions

related to variable cost and fixed cost behavior are valid.
These are;
Activity-based is a measure of whatever causes the insurance
of variable cost. 1. Account Analysis method
2. Industrial Engineering method or Work Measurement
2. FIXED COST method
3. Conference method
Fixed costs are costs that remain constant in total regardless of 4. Quantitative Analysis of Current and Past Costs
change in the level activity within the range. relationship

TYPES OF FIXED COST CONFERENCE METHOD

CONFERENCE METHOD
Committed fixed costs related to the investment in facilities ,
Under the conference method, cost functions are
equipment and the basic organizational structure of a firm.
estimated based on the analysis and options about
Discretionary fixed cost usually arise from annual decisions cost and their driver's obtained from various
by management to spend in a certain fixed costs area. departments of an organization such as
purchasing, process engineering, manufacturing,
a.High Low Method physical forms engineering
employee relations andestimates
so on. indicate what cause
should be.
b.Regression Analysis Method The conference method allows quick
This method is so named
development of costbecause
functionit and
wascost
firstestimates
used in .
1. Scattergraph or visual fit method estimating cost for industrial
It's credibility is gainedengineers'
through thespecification
falling of of the
required inputknowledge
expert to the manufacturing process
from each value for area.
chain a unit of
2.The Least-squares regression method
manufactured output.of the cost estimates however, is
The accuracy
ACCOUNT ANALYSIS METHOD dependent largely on the objectivity, care and the
detail taken by the people providing the inputs or
Account analysis is considered a very useful and easier way to information.
estimate cost.
THE HIGH-LOW METHOD
It makes use of the experience and judgment of managers and
accountants who are familiar with company operations and the The high-low method analyzing mixed cost is
way cost react to changes in activity level. based on cost observed at both high and low
levels of activity within the relevant range.
INDUSTRIAL ENGINEERING METHOD
REGRESSION ANALYSIS METHOD
The industrial engineering method estimates cost functions by
analyzing the relationship between inputs and outputs in Regression analysis uses all available . Estimate
the cost functions it is a statistical method that
measures the average amount of change in the
dependent variable that is associated with a unit
change of one or more independent
LEAST REGRESSION METHOD

Statistical technique which is often used in separating

mixtures into their fixed and variable components is least
regression. Basically , a line of regression is determined by
solving two simultaneous linear equation which are based on
the condition that the sum of deviation above the line equals
the sum of deviation below the line .

SCATTERGRAPH OR VISUAL FIT

This is a rough guide for cost estimation which plot the cost
against past activities level.

CORRELATION ANALYSIS

In the process of estimating and controlling costs ,

management must evaluate whether or not the factor selected
for estimating cost behavior is suitable for that purpose . Cost
may or may not react with changes in the factor selected for
cost analysis .The

degree of correlation between the level of activity and costs

may be measured by the coefficient of determination.

THE LEARNING CURVE THEORY

One assumption is estimating cost behavior is the cost of each

input is a linear function of the quantity assigned. However,
ship between cause and independent variable is not always
linear.
 CHAPTER 4
COST-VOLUME PROFIT RELATIONSHIPS

THE BASICS OF COST-VOLUME-PROFIT b. Contribution Margin ratio

ANALYSIS CM ratio= Contribution Margin/Sales

Managers are constantly faced with decisions about CVP ANALYSIS FOR BREAK EVEN PLANNING
selling prices , variable cost and fixed cost. To able to
choose from among the alternative action it is The starting point is many business plans is to
necessary to have a good estimate of the probable determine the breakeven point .
cost that would result from each choice.
Break-even point is the of sales volume where total
revenues and total expenses are equal that is very is
neither profit or loss. This point can be determined by
Long-run decision such as buying new plant and using cvp analysis. Break-even point can be
equipment will also hang on predictions of the computed as follows;
resulting cost-volume-profit relationship.
1. Break-even point (units)= total fixed
Managers, making their decision affecting the cost/contribution margin per unit
business operation must understand the 2. Break-even point (pesos)=total fixed cost/1-
interrelationship issue of cost, profit through the use variable cost/sales
of the information and analysis that the cost 3. A. Break-even sales for multi-products firm
accounting department will provide to them. =total fixed cost/weighted average
contribution Margin
SIGNIFICANCE OF COST VOLUME PROFIT B. weighted Contribution Margin per unit
ANALYSIS = Unit CM x No. of units per Mix + Unit
CM x No. of Units per Mix/ Total number of
Cost volume profit analysis is one of the most
units per Sales Mix
powerful tools that managers have at their command
4. A. Break-even sales for multi-products
it helps them understand the interrelationship
firm= total fixed cost/weighted CM ratio
between cost , you mean profit in an organization by
B. Weighted CM ratio= total weighted
focusing on interaction between the following five
CM/total weighted Sales
elements;
CVP ANALYSIS FOR REVENUE AND COST
1. Prices of products
PLANNING
2. Volume or level of activity within the
relevant range Sales= total fixed cost+ desired profit/ contribution
3. Variable cost per unit margin per unit or ratio
4. Total Fixed Costs
5. Mix of products sold SENSITIVITY ANALYSIS OF CVP RESULTS
a. Contribution Margin per unit or marginal
income per unit To examine the sensitivity of profit to changes in
Formula: sales, either of the measures may be use the margin
CM per unit= Unit Selling Price – unit safety or operating leverage.
variable costs
MARGIN SAFETY
Margins of safety measures the potential effect of the
risk that sales will fall short of planned levels. This is
the excess of actual or budgeted sales over break-
even sales and indicates the amount by which sales
could decrease before losses are incurred.

Margin of Safety ratio= margin of safety/ actual or

planned sales

The margin of safety ratio is useful for comparing the

risk of two alternative products , for assessing the
risk in east in any given product. The product with a
relatively low margin of safety ratio is the riskier of
the two products and therefore usually requires more
of management’s attention.

OPERATING LEVERAGE

The potential effect of the risk that sales will fall

short of planned levels as influenced by the relative
proportion of fixed to variable manufacturing costs
can be measured by operating leverage. Operating
leverage is the ratio of the contribution margin to
profit.

Operating leverage= contribution Margin/ Profit or

Net Operating income

A higher value of operating leverage indicates a

higher risk in the sense that a given change in sales
will have a relatively greater impact on profit. When
sales volume is strong, it is desirable to have level
average, but when sales begin to fall, a lower level of
leverage is preferable.
 CHAPTER 1
BASIC BUSINESS ENVIRONMENT
INTRODUCTION

The word business means different things to different - meeting the needs and desires of customer and
people. For some, the word conjures up a dream of making a profit.
opportunity and excitement; for others, it represent a
nightmare of grid and exploitation. But whether our - protecting employees health and well-being.
view of business is positive or negative, each of us is
- exercising community citizenship.
touch everyday by what goes on in the world of
business. - supporting laws and regulation.
Business is the process of producing (manufacturing) - protecting the quality of the environment.
goods (products) and service and then distributing or
selling them to those who desire or need them. TYPE OF BUSINESS

The four factors of production are categorized as Business establishment may also be classified
follows; according to the type of business activity in which
they are engaged. The three broad classification are
1. Natural resources. This include land and the
materials that come from the land such as timber, 1. Service
mineral deposit, oil deposit and water
2. Merchandising or trading
2. Labor or human resource. This encompasses the
mental and physical efforts of the workers regardless 3. Manufacturing
of their skills or education.
Service companies
3. Capital. This factor include the buildings,
These are companies that do not deal with tangible
machinery and tools used to produce goods and
products, but rather provide some sort of service as
services.
its major operation.
4. Entrepreneurship. These factors refers to the
Doctors, CPA'S, lawyers and engineers are example
people willing to accept the opportunities and risk of
of people who provide services instead of products.
starting and running business.
Merchandising companies
OBJECTIVE OF A BUSINESS FIRM
Merchandising companies are involved in selling of
The main objective of business firm is " to produce
finished goods produced by other businesses.
goods and services to meet the needs and desires of
customer and to do so at a profit" Wholesale merchandiser- is a company that buys its
product from the manufacturer and then sells the
Subjective is often intervened with social
product to the company that eventually sell it to the
responsibility objectives which include among others:
consumers.
Retail merchandiser- is a company that buys its 2. Additional sources of capital
product from a wholesaler or manufacturer and then
sells the product to the end customers 3. Broader management base

Manufacturing companies 4. Partnership not subject to tax

Manufacturing companies are involved in the Disadvantages

conversion of raw materials into some tangible,
1. Unlimited liability
physical products. Examples print shop, soft drink
bottling company and breakfast cereal manufacturers. 2. Lack of continuity
Hybrid companies 3. Difficult of transferring ownership
Hybrid companies are those involved in more than 4. Limitation in raising capital
one type of activity, example is restaurant.

LEGAL FORMS OF BUSINESS ORGANIZATION

Corporation
Proprietorship
A corporation is an artificial being created by law and
A sole proprietorship is a business owned by a single it's a legal entity separate and distinct from its
person who has complete control over business owners.
decisions.
Advantages
Advantages
1. Limited liability
1. Easy of entry and exit
2. Unlimited life
2. Full ownership and control
3. Ease in transforming ownership
3. Tax saving
4. Ability to raise capital
4. Few government regulations
Disadvantages
Disadvantages
1. Time and costs of formation
1, unlimited liability
2. Regulation
2. Limitations in raising capital
3. Taxes
3. Lack of continuity
CATEGORIES OF BUSINESS ACTIVITIES

A. Financing
Partnership
Financing activities are activities that include
A partnership is a legal arrangement in which two or obtaining resources from and returning resources to
more person agree to contribute capital or services to owner as well as obtaining resources through
the business and divided the profits or losses that may borrowings and repayments of the amount borrowed.
be derived therefrom.
B. Investing
Advantages

1. Ease of formation
Investing activities include the acquisition and Pure interest- is the real price one must pay for earlier
deposition of property plant and equipment and other availability
long term sets and debt and equity instrument of
other enterprises that are not considered cash Inflationary premium- components reflects the
equivalents or held for dealing or trading purposes. expectation that the loan will be repaid with peso less
purchasing power as the result of inflation.
C. Operating
Risk premium - component reflects the probability of
Operating activities are principle revenue producing default imposed on the lender by the possibility that
activities of an enterprise and include delivering or the borrower may be unable to repay the loan.
producing goods for sale and providing services.

BUSINESS STAKEHOLDERS

A business stakeholder is a person on entity that has

interest in the economic performance of the business.

The owners who have invested resources in the

business clearly have an interest in how well the
business perform.

The managers are those individuals who the owner

have authorized to operate the business.

The employees provide services to the business in

exchange for their pay.

Customers may also have an interest in the continued

success of a business.

Creditors invest resources in the business by

extending credit.

Governments have an interest in the economic

performance of business.

TAXES

The value of any financial asset including corporate

quality share, bonds, notes and mortgage as well as
the values of most real assets such as plants and even
the entire firm.

1. Income tax, applied to both income and gains

2. Tax on transactions

3. Tax on property

4. Transfer taxes

INTERST RATES
 CHAPTER 2
ROLE OF ACCOUNTING IN BUSINESS

INTRODUCTION

Accounting is the language of business. Management accounting

Accounting is a service activity. Its function is to Management accounting involves the development
provide quantitative information. Primarily financial and interpretation of accounting information intended
in nature, about economic entities that is intended to specifically to aid management in running the
be useful in making economic decisions. business. Management accounting provide
information through internal users.
Quantitative refers to numbers and financial means
having to do with money. Tax accounting

The preparation of income tax returns is a specialized

field within accounting a great extent, tax returns are
TYPES OF ACOUNTING INFORMATION based on financial accounting information.

Financial accounting Nonprofit accounting

Financial accounting refers to information describing Nonprofit accounting is used for government agency,
the financial resources, obligations and activities of church, non-government organizations, charitable
an economic entity. Financial accounting provide institutions and schools.
information through external users.
USERS OF ACCOUNTING INFORMATION - investors

External users - employees

External decision makers present and potential - lenders

stockholders, investors, creditor, supplier, customer,
legislature, trade associations and others, who laughs - suppliers and other trade creditors
direct access to the information generated by internal
- customers
operations of the business and must rely on general
purpose financial statements to make their - government and their agencies
investment, credit and public policy decisions.
- public

Internal users A professional accountant should perform

professional services with, competence and diligence
Internal decision-makers are the managers of a and has a continuing duty to maintain professional
business entity, responsible for managing efficiently knowledge and skills
and effectively, and who have the power and
authority to obtain whatever economic information - confidentiality
they need.
A professional accountant should respect the
- managers confidentiality of information acquired during the
course of performing professional services
- owners
- professional behavior

A professional accountant should act in a

PROFESSIONAL VALUES AND ETHICS OF manner consistent with the good reputation of the
ACCOUNTANT profession and refrain from any conduct which might
bring desk credit to the profession.
In order to achieve the objectives of the accountancy
profession, professional accountant have to observe a - compliance with technical standards
number of prerequisites fundamental principles.
A professional accountant should carry out
- integrity professional services in accordance with the relevant
technical and professional standards
A professional accountant should be
straightforward and honest in performing RELATIONSHIP OF ACCOUNTING AND
professional services BOOKEEPING

- objectivity Bookkeeping is a procedural element of accounting

just as arithmetic is a procedural element of
A professional accountant should be fair and
mathematics. Bookkeeping is the process of
should not allow prejudice or bias. conflict of interest
recording financial transaction and keeping financial
or influence of objectivity
records.
- professional competence and due care

CHAPTER 1
 FAITH
Introduction - Christianity begins with FAITH acceptance. They know facts in their head, but they
have never bowed in faith in their heart. Dead
1. Faith is believing and trusting in God
faith knows right words and facts, but demonstrates
2. Believing God as He Promised in His Word Acts no real works of faith.
27:25
C. Faith without fruit is fatal
3. "We walk by faith, not by sight." 2 Corinthians 5:7
Application: A faith that is outwardly unproductive is
Two kinds of Faith: also inwardly dead. A faith that has no

accompanying works is dead as measured by its own

barrenness. Like a corpse, which may have all the
1. False Faith – Wrong faith
outward dimensions and configuration of a man, but
2. True Faith – Real Faith
if there is no evidence of life, the body is

pronounced dead. It is faith in “form only”. True faith

1. The Identification of False Faith will be energetic in displaying itself by its fruits,

A. Words without works is worthless but a faith that is merely professed without any
observable effects is a false faith.
Application: Genuine faith gives you a genuine love
for God and others. Saving faith provides 2. The Illustration of True Faith

a heart of compassion that result in action. For True, Christian faith will manifest its existence in
kindness is “love in shoe leather”. The Apostle John active obedience to God’s Word. True faith is living

wrote of this, “But whoso hath this world’s goods, faith. It is not in “word only”, but evident to others
and seeth his brother in need, and shutteth up his through obvious works. It is not in “name only” or

bowels of compassion from him, how dwelleth the “form only”, but practices obedience before God.
love of God in him? Little children, let us not love True faith is a belief that results in dynamic, active

in word, neither in tongue; but in deed and in truth” (I response to God’s grace.
Jn. 3:17-18). Our faith is to be evidenced not

just in “word only”, but in works also.

Real Faith/True Faith
B. Profession without possession is perilous
• Real faith has substance
Application: The individual that acknowledges Christ
• Real faith is precious
but never accepts Christ has “dead faith”.
• Real faith is common
It is faith in “name only”. They believe in their head
biblical and historical facts about Jesus, but have • Real faith is proven

never trusted in Jesus with their heart. They may nod • Real faith is Biblical (1Thes 2:13)
in agreement, but they have never knelt in
The Effects of Faith

• Accesses the free gift of forgiveness and salvation How to Grow in Faith
from hell (Ephesians 2:8,9)
• Constantly Feed it (Rom 10:17)
• Accesses peace with God (Romans 5:1)
• Constantly Force it
• Pleases God – not your efforts, but your faith and
confidence in Him (Hebrews 11:6) • Constantly Fight with it

• Gets answers to your needs (Mark 11:24) • Constantly Live in it

• Brings all good things into your life (2Peter 1:3) -

just by personally knowing Jesus.

WEEK 1
MANAGEMENT SCIENCE
Management Science is concerned with developing • Formulate a hypothesis about possible solutions to
and applying models and concepts that help to the problem.
illuminate management issues and solve managerial
problems. Models used can often be presented • Construct appropriate models to test the hypothesis
mathematically, but sometimes computer-based,
• Collect and analyze the results of the tests.
visual or verbal representations are used.
• Determine the best way to resolve the issue or
The Use of Management Science
address the problem based on the final results.
Business managers can make informed decisions
Fields
only when they have access to scientifically acquired
knowledge. To gain such knowledge, practitioners of Data Mining
management science undertake the major steps of
scientific inquiry: This is also known as the Analysis Step of the
‘Knowledge Discovery in Database.” Data mining is
• Identify the issue or problem the computational process of discovering patterns in
large data sets involving methods at the intersections Is a branch of engineering which deals with the
of artificial intelligence, machine learning, statistics optimization of complex processes or systems. It is
and database systems. The overall goal of the data concerned with the development, improvement,
mining process is to extract information from a data implementation of integrated systems of people,
set and transform it into an understandable structure money, knowledge, information, equipment, energy,
for further use. materials, analysis and synthesis. As well as the
mathematical, physical and social sciences together
Decision Analysis (DA) with the principles and methods of engineering
design to specify, predict and evaluate the results to
The discipline comprising the Philosophy, Theory,
be obtained from such systems or processes.
methodology and professional practice necessary to
address important decisions in a formal manner. Logistics

Logistics is the management of the flow of goods

between the point of origin and the point of
Engineering
consumption in order to meet some requirements, of
The creative application of scientific principles to customers or corporations. The resources managed in
design or develop structures, machines, apparatus or logistics can include physical items, such as food,
manufacturing processes, or works utilizing them materials, animals, equipment and liquids, as well as
singly or in combination; or to construct or operate abstract items, such as time, information, particles,
the same with full cognizance of their design; or to and energy.
forecast their behavior under specific operating
Mathematical Model
conditions; all as respects an intended function,
economics of operation or safety to life and properly. Is a description of a system using mathematical
concepts and language.
Forecasting
Probability and Statistics
Is the process of making statements about events
whose actual outcomes have not yet been observed. Probability and statistics are two related but separate
A commonplace example might be estimation of academic disciplines. Statistical analysis often uses
some variable of interest at some specified future probability distributions, and the two topics are often
date. Prediction is a similar, but more general term. studied together. However, probability theory
Both might refer to formal statistical methods contains much that is mostly of mathematical interest
employing time series, cross-sectional or longitudinal and not directly relevant to statistics.
data, or alternatively to less formal judgmental
methods. Project Management

Game Theory Project Management is the process and activity of

planning, organizing, motivating, and controlling
This is the study of strategic Decision Making. resources, procedures and protocols to achieve
Specifically, it is the study of mathematical models of specific goals in scientific or daily problems.
conflict and cooperation between intelligent rational
decision-makers. An alternative term suggested as a Simulation
more descriptive name for the discipline is interactive
Decision Theory. This is mainly used in economics, Is the imitation of the operation of a real-world
political science and psychology, as well as logic, process or system over time. The act of simulating
computer science and biology. something first requires that a model be developed;
this model represents the key characteristics or
Industrial Engineering behaviors/functions of the selected physical or
abstract system or process.
Supply Chain Management (SCM) • Management science theory has opened new
frontiers (ways) for managers.
The systemic, strategic coordination of the traditional
business functions and the tactics across these • It provides manager, plenty of decision making
business functions within a particular company and tools and techniques.
across businesses within the supply chain, for the
purposes of improving the long-term performance of • Enhanced managerial understanding of overall
the individual companies and the Supply chain as a managerial process.
whole.
Limitations:
Application of Management Science
• It ignores the people relationship and non-
Applications of management science are abundant in quantifiable factors.
industry such as airlines, manufacturing companies,
• It is useful in solving physical problems of
service organizations, military branches, and in
organization where measurement if difficult, it has
government. The range of problems and issues to
which management science has contributed insights no application.
and solutions is vast. It includes:
• It cannot account individual behavior and attitude.
• scheduling airlines, both planes and crew
• It ignores other managerial skills rather than
• deciding the appropriate place to place new management science technique.
facilities such as a warehouse or factory
• It is useful but it cannot solve all problems.
• managing the flow of water from reservoirs
• The quantitative models are not suitable for non-
• identifying possible future development paths for routine or unpredictable management decision.
parts of the telecommunications industry

• establishing the information needs and appropriate

systems to supply them within the health

service, and

• Identifying and understanding the strategies adopted

by companies for their information system.

Contribution and Limitations of Management

Science Theory

Contributions:

WEEK 2
SALES MANAGEMENT
Sales Management Sales Management is an attainment of an
organization’s sales goals in an Effective and
Efficient • Feedback – How we have to integrate and reply
back activity to activity?
manner through Planning, Staffing, Training,
Leading and Controlling organizational resources. Difference Between Sales Management, Personal
Selling, Salesmanship.
Revenue, Sales and sources of funds fuel
organizations and the management of that process is Sales Management directs the personal Selling
the efforts, which in turn is implemented largely through
salesmanship. Sales Management directs all different
most important function. Objectives of Sales marketing option to be planned and organize to
Management include: Increase in Sales Volume, achieve profits and more customers.

Monitoring Contributions to Profits, Continuing Personal selling is a broader concept than

Growth, Planning, and Proper Allocation of salesmanship, personal selling is the art of
Resources. successfully persuading prospects or customers to
buy a product or services from which they can derive
Sales Management Process
suitable benefits, thereby increasing their total
In Sales Management, there is a common process in satisfaction.
which every business follows:
Salesmanship is seller-initiated effort that provides
• Conception – What will be offered? prospective buyers with information and other
benefits, motivating or persuading them to decide in
• Planning – How? favor of the seller’s product or service.

• Execution – When and at what pace and Scale? Steps in the Selling Process

• Control – How will feedback and contingencies be 1. Prospecting –Salesperson locates and qualifies
acted upon? prospects

2. Pre-approach – The Salesperson determines sales

call objective, develops customer profile, customer
benefit program
and selling strategies. Customer’s needs are 3. Approach – Salesperson obtains interview, meets
determined. prospect and begins

individualized sales presentation. Needs are further Creating Interest – The fact that personal selling
uncovered. involves person-to-person communication makes it a
natural method for getting customers to experience a
4. Presentation – Salesperson relates product benefits product for the first time. In fact, creating interest
to needs, using demonstration, dramatizations, goes hand-in-hand with building product awareness
visuals and proof statements. as sales professionals can often accomplish both
objectives during the first encounter with a potential
5. Trial Close – Salesperson asks prospect’s opinion
customer.
on benefits during and after presentation.
Providing Information – When salespeople engage
6. Objections – Salesperson uncovers objections.
customers, a large part of the conversation focuses on
7. Meet Objections – Salesperson satisfactorily product information. Marketing organizations
answers objections. provide their sales staff with large amounts of sales
support including brochures, research reports,
8. Trial Close – Salesperson uses another trial close computer programs and many other forms of
to see if objections have been overcome, or if informational material.
presentation went smoothly before the close, to
determine if the prospect is ready to buy. Stimulating Demand – By far, the most important
objective of personal selling is to convince customers
9. Follow-Up – Salesperson provides customer to make a purchase.
service after the sale.
Reinforcing the Brand – Most personal selling is
Personal Selling Objectives intended to build long-term relationships with
customers. A strong relationship can only be built
Building Product Awareness – A common task of over time and requires regular communication with a
salespeople, especially when selling in business customer. Meeting with customers on a regular basis
markets, is to educate customers on new product allows salespeople to repeatedly discuss their
offerings. In fact, salespeople serve a major role at company’s products and by doing so helps strengthen
industry trades shows where they discuss products customers’ knowledge of what the company has to
with show attendees. But building awareness using offer.
personal selling is also important in consumer
markets.

WEEK 3
FORMS OF BUSINESS ORGANIZATION
Forms of Business Organizations
There are three forms of business organizations assets and properties such as land, building,
namely sole proprietorship, partnership and equipment, machineries and the like. Partners who
corporation. These three differ regarding their have expertise, talents and skills may also contribute
ownership and other distinct characteristics. these to the partnership.

1. Sole proprietorship Advantages

A Sole proprietorship is a business that is owned and - More Capitalization compared to sole
managed by one person. Normally, these are the proprietorship.
types of companies that a starting entrepreneur has.
Owners of this kind of business are only called owner - More pooling of skills and expertise.
or proprietor. Examples of these are the business
- Although with bigger sources of capital compared
owned by one person such as sari-sari stores,
to sole proprietorship, partnership is still easier to
bakeries, salons and carendirias.
form than a corporation.
Advantages
Disadvantages
- Sole proprietorship type of business is easy to set up
- Disagreements among partners may cause delay in
and has no complex legal processes.
decision-making.
- Requires a small amount of capital only.
- Taxable at 30%.
- Owner gets all the profit of the business.
- Easy dissolution through withdrawal , insolvency or
- For the creditors, the unlimited liability of the death of a partner.
owner if an advantage.
- Profit is not owned by one person alone.
Disadvantages
- Unlimited liability of partners.
- Limited source of capital
3. Corporation
- Owner may not be able to handle more complex
As defined by the Corporation code of the
business operations if he is alone in managing the
Philippines, a corporation is an artificial being
business
created by operation of law, having the right of
- In case of poor business performance, the owner succession and the powers, attributes and properties
will solely absorb losses expressly authorized by law or incident to its
existence. In simple terms, a corporation is separate
- Easy dissolution and distinct from its owners. It has its rights, duties,
and responsibilities as a juridical person. Investors of
- For the proprietor, the unlimited liability may be a this type of business are called shareholders.
disadvantage.
Unlike sole proprietorship and partnership where the
2. Partnership ownership and management are vested on the owners
themselves, corporations separate ownership from
Partnership is a business formed by two or more
management. In a corporation, shareholders elect the
individuals who are willing to contribute money,
Board of Directors who will manage the company.
property or talent into a joint fund with the agreement
of dividing profits among themselves. Owners of this Advantages
type of business are called Partners. Money
contribution is a common investment among partners. - Huge source of capital.
However, partners may also contribute non-cash
- Increased capacity to handle more complex and namely raw materials, work in process and finished
wider operations. goods. Some examples of these businesses are
manufacturing companies of canned goods, soaps and
- Capacity to hire skilled people to manage the other similar products.
company.

- Indefinite life. Corporations can operate for fifty

years renewable for another fifty years.

- Investors have no unlimited liability (advantage for

the investors).

Disadvantages

- More legal and tax requirements.

- More complex operations.

- Investors have no unlimited liability (disadvantage

for creditors).

- Higher risk of fraud due to personal motives of

BOD.

Forms of Business Operations

Service Business

A service type of activity earns a profit by rendering

services to clients for a fee. These types of businesses
make use of their unique talents, skills and expertise
in providing services o their customers. Some
examples of these kinds of activities are spa, schools,
hospitals, airlines and salons.

Merchandising Business

A merchandising type of business earns profit

through buying and selling of goods and
merchandise. Unlike service type of business that
renders services, merchandising businesses purchases
finished goods and sells them again to customers.
Some examples of these types of businesses are
convenience stores, bookstores and drugstores.

Manufacturing Business

A manufacturing business purchases raw materials,

processes them into finished goods and selling it to
customers. Unlike the merchandising companies that
maintain finished products only, manufacturing
companies maintain three types of inventories
 WEEK 1
INTRODUCTION TO ACCOUNTING
It is a service activity. Its function is to provide
quantitative information, primarily financial in nature
Lesson 1: Introduction to Accounting about economic entities that is intended to be useful
in making economic decisions. –Financial
Definition of Accounting
Reporting Standards Council (FRSC)
“Business is a Risk.” This phrase connotes the
uncertainties that business person would face in
operating a business. The term risk may be This definition by FRSC connotes accounting as a
synonymous with danger, hazard and uncertainty, it service activity that provides quantitative information
may even be associated with gambling. It is because about economic entities such as business
in putting up a business, one can never be certain organizations with the goal of helping users come up
about a favorable outcome. All types of businesses be with economic decisions.
it big or small constantly face the risk of losing
money and of incurring losses. However, despite Accounting is the process of identifying, measuring
business being risky, a lot of people still choose to and communicating economic information to permit
engage in it. judgement and the decision by users of information. -
American Accounting Association(AAA)
Accounting has often been associated with
mathematics and algebra. May think that accounting Identifying is the recognition or non-recognition of
is all about complex computations and equations. On accountable events. After being able to identify the
the contrary, accounting is not all about the accountable events, the next step is to assign
complexity of mathematical computations, but more monetary amounts in these transactions.
on analysis and decision making. To fully appreciate Communicating pertains to the issuance of the
what accounting is, the following are some financial statements to various users of financial
definitions provided by several accounting information. Financial statements serve as the output
organizations. of accounting.
Objective of Accounting useful for the decision making of internal users such
as the management.
The definitions provided emphasizes that the purpose
of accounting is to provide information to a wide Government Accounting - Government accounting
range of stakeholders that they can use in coming up pertains to the administration and use of public funds
with their economic decisions. Through accounting to bring service to the public.
and its output, users are provided with financial
information that they can use as a sound basis in Auditing - It is often noted that auditing starts when
coming up with informed judgement and decision. accounting ends. This is because auditing involves
the verification, examination and evaluation of
Birth of Accounting information to enhance its credibility.

Accounting can be traced back from Ancient Tax Accounting - Tax accounting primarily focuses
Egyptian bookkeepers who kept records of their on the analysis of various tax rules and regulations
inventory. The necessity for the efficient and and involves the computation on and preparation of
effective recording was because of the penalty that tax-related documents and transactions of individuals
they have to pay for mistakes and error. and entities.
Archaeologists found evidence of records that
describes inventory owners, amounts, suppliers, Cost Accounting - Cost accounting is known to be
materials and workers. These records are believed to partially involved with financial accounting and
have eventually developed into the accounting managerial accounting at the same time as it is both
methods that are being use today. useful for internal and external purposes.

In the 14th century, Luca Pacioli, a friend and Accounting Education and Research –
contemporary of Leonardo da Vinci, wrote down the
Accounting Education and Research is a branch of
first description of the double entry system of
accounting where the accountant becomes an
accounting which is still being used today. He is
accounting teacher, reviewer or researcher. It
called the “Father of Accounting” for his
involves teaching and research in accounting,
contributions and for documenting the system
auditing, management advisory services, accounting
through the book Summade Arithmetica, Geometria,
aspects of finance, business law, taxation and other
Proportioni et Proportionalita.
technically related subjects.
The Principles set down by Lucia Pacioli is still being
followed today. However, these principles have
evolved to be a more complex set of rules known as
the Generally Accepted Accounting Principles
(GAAP) ensure that fairness and objectivity of the Users of Accounting Information
financial information.
Users of financial information or stakeholders are
The Branches of Accounting people or entities that may have an interest in the
business. These users may be classified as external or
Financial Accounting - Financial accounting pertains internal users. External users pertain to investors,
to the preparation and interpretation of financial lenders, suppliers, employees, customers and the
statements that is intended for external users such as government. Internal users, on the other hand, are
investors, lenders, suppliers, customers, government. composed of the management of the business entity.
Management Accounting - Management accounting Management - Management is interested in financial
pertains to the preparation of internal information information that will help them come up with
both financial and non-financial in nature that is decisions needed for the effective and efficient
operations of the entity. The information provided by
accounting may assist them in planning, organizing, statements and the information they provide are as
controlling and directing the company. follows:

Investors - Investors are interested in the financial Statement of Financial Position – This type of
reporting that will provide them insights about the financial statement is also called the balance sheet.
investment that they make in the entity. It will help This presents the entity’s assets, liabilities, and
them decide whether he should invest in business, capital at a given point in time. The data in this
withdraw or retain his investment in a company. statement provide information about the entity’s
financial condition or position.
Lenders - Lenders are interested in financial
information that will provide them assurance that the Statement of Comprehensive Income – This financial
amount that they lend will be paid on time. Their statement is also known as the profit and loss
concerns for payments are not limited to the principal statement. It shows the results of the company’s
amount alone but of the interest that goes along with performance as a result of operations at a particular
it as well. period of time. Also called income statement, this
type of financial statement indicates whether the
Suppliers - Suppliers are concerned on whether the entity has gained or lost from the operations by
goods and services that they sell will be paid on time. detailing its income and expenses.
If the company is a significant customer of the
supplier, it is also important for the supplier to Statement of Changes in Equity – Throughout the
determine the stability of the company as a regular organization’s existence, its capital changes as it
client. receives investments or as it experiences withdrawal
of investments, generates income, or incurs losses.
Employees - Employees are concerned with financial These activities are all recorded in the statement of
information that will provide employees insights on changes in equity.
the ability of the company to provide their salaries
and benefits. Statement of Cash Flows – The statement of cash
flows provides information about the entity’s cash
Customers - Customers are concerned with the inflows and outflows resulting from its operating,
capacity of the company to supply continuously the investing, and financing activities. Thus, it shows the
goods and services that they demand. They are also balance of cash flow from the beginning until the end
concerned with the cost and pricing of the products of a given period.
and services that they pay.
Each of these types of financial statements may or
Government - The government is concerned with may not have related notes. The Notes to Financial
financial information that pertains to tax payments Statement, which are found at the end of the financial
and compliance with government rules and statement, provide information about the business
regulations. entity (who they are and what they do), the method of
accounting of the company, and other information
Functions of Accounting in Business
that helps explain specific items in the financial
Accounting is a language of business and is primarily statement.
used to document business transactions. With many
stakeholders in a business entity, accounting serves
as the main source of financial information useful in
making economic decisions. The summary of
financial transactions is contained in the financial
statements. Financial statements are important to both
internal and external users. The types of financial
 WEEK 2
FORM OF BUSINESS ORGANIZATION
- Requires a small amount of capital only.

Forms of Business Organizations - Owner gets all the profit of the business.

There are three forms of business organizations - For the creditors, the unlimited liability of the
namely sole proprietorship, partnership and owner if an advantage.
corporation. These three differ regarding their
ownership and other distinct characteristics. Disadvantages

1. Sole proprietorship - Limited source of capital

A Sole proprietorship is a business that is owned and

managed by one person. Normally, these are the
types of companies that a starting entrepreneur has.
Owners of this kind of business are only called owner - Owner may not be able to handle more complex
or proprietor. Examples of these are the business business operations if he is alone in managing the
owned by one person such as sari-sari stores, business
bakeries, salons and carendirias.
- In case of poor business performance, the owner
Advantages will solely absorb losses
- Sole proprietorship type of business is easy to set up - Easy dissolution
and has no complex legal processes.
- For the proprietor, the unlimited liability may be a and responsibilities as a juridical person. Investors of
disadvantage. this type of business are called shareholders.

2. Partnership Unlike sole proprietorship and partnership where the

ownership and management are vested on the owners
Partnership is a business formed by two or more themselves, corporations separate ownership from
individuals who are willing to contribute money, management. In a corporation, shareholders elect the
property or talent into a joint fund with the agreement Board of Directors who will manage the company.
of dividing profits among themselves. Owners of this
type of business are called Partners. Money Advantages
contribution is a common investment among partners.
However, partners may also contribute non-cash - Huge source of capital.
assets and properties such as land, building,
- Increased capacity to handle more complex and
equipment, machineries and the like. Partners who
wider operations.
have expertise, talents and skills may also contribute
these to the partnership. - Capacity to hire skilled people to manage the
company.
Advantages
- Indefinite life. Corporations can operate for fifty
- More Capitalization compared to sole
years renewable for another fifty years.
proprietorship.
- Investors have no unlimited liability (advantage for
- More pooling of skills and expertise.
the investors).
- Although with bigger sources of capital compared
Disadvantages
to sole proprietorship, partnership is still easier to
form than a corporation. - More legal and tax requirements.
Disadvantages - More complex operations.
- Disagreements among partners may cause delay in - Investors have no unlimited liability (disadvantage
decision-making. for creditors).
- Taxable at 30%. - Higher risk of fraud due to personal motives of
BOD.
- Easy dissolution through withdrawal , insolvency or
death of a partner. Forms of Business Operations
- Profit is not owned by one person alone. Service Business
- Unlimited liability of partners. A service type of activity earns a profit by rendering
services to clients for a fee. These types of businesses
3. Corporation
make use of their unique talents, skills and expertise
As defined by the Corporation code of the in providing services o their customers. Some
Philippines, a corporation is an artificial being examples of these kinds of activities are spa, schools,
created by operation of law, having the right of hospitals, airlines and salons.
succession and the powers, attributes and properties
Merchandising Business
expressly authorized by law or incident to its
existence. In simple terms, a corporation is separate A merchandising type of business earns profit
and distinct from its owners. It has its rights, duties, through buying and selling of goods and
merchandise. Unlike service type of business that
renders services, merchandising businesses purchases
finished goods and sells them again to customers.
Some examples of these types of businesses are
convenience stores, bookstores and drugstores.

Manufacturing Business

A manufacturing business purchases raw materials,

processes them into finished goods and selling it to
customers. Unlike the merchandising companies that
maintain finished products only, manufacturing
companies maintain three types of inventories
namely raw materials, work in process and finished
goods. Some examples of these businesses are
manufacturing companies of canned goods, soaps and
other similar products.

WEEK 3
 Accounting Assumptions and Concepts
I. Accrual Assumption III. Business Entity Concept

The accrual assumption states that income is The business entity concept states that the personal
recognized when earned regardless of when it is transactions of the owner should be distinct and
received, and expenses are recognized when they are separate from the operations of the enterprise. This
incurred regardless of when it is paid. concept is necessary to be able to measure the
performance of a company entity. Mixing the
Income is recognized when earned regardless of personal and business transaction will make it
when it is received. The accrual assumption states difficult for various stakeholders to evaluate properly
that accounting records income as long as the income the company.
has already been earned even if the customer
payment is already received or not. Income is made IV. Monetary Unit Concept
once the service has already been rendered.
Recording income commences not on the time of Money is the unit of measurement used in
collection of payment but at the time of the earning accounting. Under the monetary unit concept,
of the income. Expenses are recognized when business activities that are financial in nature are
incurred regardless of when it is paid. The accrual recorded with the corresponding amounts expressed
assumption states that accounting should be in the country’s currency – in our case, the
recognized once it has been incurred or used Philippines peso. Money is quantifiable and is the
regardless of whether this expense has already been generally recognized or accepted medium of
paid or not. Recording costs do not depend on the exchange. This is why both accountants and business
timing of the payment made but on the timing of owners have chosen to use money as the common
incurrence or usage. unit of measurement to quantify business
transactions. However, money has no constant value
II. Going Concern Assumption because its value changes over time due to different
economic events, such as inflation. The monetary
This assumption views the life of the business as unit concept tells that money is stable, although in
something indefinite. It assumes that the entity will reality it is not. In accounting, Economic events that
continue to operate for an indefinite period. The change the purchasing power of money are ignored.
financial statements are said to be a going concern This is to ensure objectivity in data recording in
entity in the assumption that it will not yet cease its financial statements.
operations. Any question on the going concern ability
of the company should be clearly disclosed in the
financial statements.

calendar year as their accounting period. However,

other entities choose fiscal year to align with the
V. Time Period or Periodicity Concept closing of their normal operation.

the concept of time period or periodicity tells that the

business entity’s indefinite time of existence is
divided into time periods or accounting periods with IV. Qualitative Characteristics
equal lengths. Usually, this time period is 12 months
long, which can be classified as calendar period or
fiscal (or financial) period. The calendar period refers
to the time from 1 January to 31 December. The
fiscal period is any twelve-month period that ends
other than 31 December. Most entities choose
Besides the financial information contained in the 3. Reliability - The information to be relevant should
financial statements, it is also important to make sure be free from material error and bias. It should be able
the financial statements are prepared to keep the to represent faithfully what it purports to represent.
following qualitative characteristics of financial To be reliable, information should also be supported
statements are understandability, relevance, by evidence such as various supporting documents
reliability and comparability. like official receipts and vouchers.

1. Understandability - The information 4. Comparability - The information contained in the

contained in the financial statements should financial statements should be comparable to the
be presented in a way that is most financial declarations of the entity in the previous
understandable to users of the information. years. To achieve this entities should consistently
This is one of the reasons why of all account apply the same accounting principles unless changes
are presented on the face of the financial can be justified.
statements but are instead
Five Major Accounts
presented separately in the notes to the financial
statements. The five top accounts are assets, liabilities, capital,
income, expense. Real accounts or permanent
2. Relevance - The information contained in the accounts are the assets, liabilities and capital that can
financial statements should be relevant for the users. be seen in the Statement of Financial Position. On the
Information is relevant if it can influence the decision other hand, Nominal accounts or temporary accounts
of stakeholders. The absence and presence of the are the income and expenses that can be seen in the
information should be able to make a difference in income statement.
the ruling of the users.

1. Asset - Resources controlled by the entity as a

result of part transactions and events from which
future economic benefits are expected to flow to the
entity.

Ex: Cash, Receivables, Supplies, Investments,

Furniture, Machines, Building and Land.

2. Liabilities - Present obligations of the entity arising

from past transactions and events, the settlement of
which is expected to result in a n outflow from the
entity of resources embodying economic benefits.

Ex: Accounts Payable, Notes Payable, Loans

Payable and Mortgage.

3. Capital or Equity - The residual interest in the

assets of the entity after deducting all of its liabilities.

Ex: Owners Equity (Sole proprietorship),

Partners Equity (Partnership), Stockholders
Equity (Corporation).
 WEEK 4
BASIC ACCOUNTING EQUATION

The basic accounting equation is illustrated as: Asset = Liabilities + Capital

Assets = Liabilities + Capital P200,000 = P50,000 + P150,000

The basic accounting equation connotes that the total This means that the total assets of the company
of all the assets of a company should be equal to the should be P200,000, P50,000 of which came from
company's total liabilities and capital. This is because creditors and the remaining P150,000 came from the
the assets of a company are either claimable by the owner. It can also be implied that out of the P200,000
creditors (liabilities of the company) or by the owners assets of the company, P50,000 of which is claimable
(capital of the company). For this reason, total assets by the creditors while P150,000 is claimable by the
are always equal to those claimable by the creditors owners.
and those claim able by the owners.
This basic equation represents the financial structure
Example: of the company. It provides insights as to the
composition of the total assets of the entity as to
The owner of ABC Company borrowed funds whether it is geared towards more liabilities or
amounting to P 50,000 and invested capital capital.
amounting to P150, 000. How much are the total
assets of the company? Following the basic rules of algebra, the basic
accounting equation can also be illustrated as:
Using the equation, the example above can be
illustrated as: Liabilities = Assets – Capital
Or... The two other formulas are derived from the main
accounting equation of Assets = Liabilities + Capital.
Capital = Assets - Liabilities The first derived formula shows that Liabilities is
computed as the residual amount after deducting all
the capital from the total assets of the company.
Simply put it, the claim of the creditors over the
assets after deducting the claim of the owners.

WEEK 5
THE EXPANDED ACCOUNTING EQUATION

The basic accounting equation discussed in the previous lesson was illustrated as:

Assets = Liabilities +Capital

Only three major accounts were shown in this formula. However, the expanded accounting equation now
incorporates income and expenses in the formula.

In the previous problems presented, capital increases whenever there is an investment of the owner and capital
decreases whenever there is a withdrawal. In the expanded accounting equation also increases whenever there are
income and capital also decreases whenever there is an expense.

This can be summarized as follows:

Increase Investment=Income

Decrease Withdrawal=Expenses

Table analysis: Statement of Financial Position:

 Income Statement:

LESSON 1
INTRODUCTION TO NSTP
 Requirement for baccalaureate degree for
both male and female students
I. CWTS and LTS – 2 of the 3 components of NSTP.  Students are expected to learn and acquire
the values and skills in Community
 Offered for 2 semesters as a three unit
Organization and Development through
subject for CWTS/LTS-1 and CWTS/LTS2
Management, Empowerment , and Social
respectively.
Mobilization

B. Program Components of the NSTP  DND-AFP - through major service

commands and their
a. Reserve Officers’ Training Corps (ROTC)–  ROTC-Shall oversee and monitor the
designed to provide military training to tertiary level implementation of the
students in order to motivate, train, organize, and
 NSTP under their respective jurisdiction to
mobilize them for national defense preparedness.
determine if the trainings conducted are in
b. Literacy Training Service (LTS)-designed to train consonance with RA 9163.
the students to teach literacy and numeracy skills to
GUIDELINES FOR ESTABLISHMENT OF THE
children out-of-school-youth and other segments of
NATIONAL SERVICE RESERVE CORPS (NSRC)
society in need of their services.
A. Background
c. Civic Welfare Training Service (CWTS)-refers to
activities contributory to the general welfare and Section 11 of RA 9163/ or the National Service
betterment of life for the members of the community Training Program Act 2001 specifically provides for
or the enhancement of its facilities, especially those the creation of a National reserve Corps (NSRC),
devoted to improving health, education, environment, composed of graduates of the non-ROTC
entrepreneurship, safety, recreation and moral of the Components: the Civic Welfare Training Service
citizenry and other social welfare service. (CWTS) and Literacy Training Service (LTS).
Members of this Corps may be tapped by the State
What lead agencies will monitor the implementation
for literacy and civic welfare activities, through the
of the NSTP?
joint efforts of DND, CHED, and TESDA.
 CHED - regional offices, B. The National Service Reserve Corps (NSRC)
 TESDA - provincial and district offices
1. Mission  HEI- Higher Education Institution

To provide a trained and motivated manpower pool

that can be tapped by the State for civic welfare,
literacy, and other similar endeavors in the service of
nation.

2.Function

a.) To assist in the disaster preparedness, mitigation,

response, and rehabilitation programs.

b.) To serve as an auxiliary to the Disaster

Coordinating Council (DCC) response units.

c.) To assist in the promotion of civic welfare

activities

d.) To assist in socioeconomic development

e.) To assist in environmental protection

f.) To perform other similar endeavors

Inter-Agency Relationship of the NSRC Concerned

Agencies.

 DCC- Regional Disaster Coordinating

Council
 PDCC- Provincial Disaster Coordinating
Council
 CDCC- City Disaster Coordinating Council
 MDCC- Municipal Disaster Coordinating
Council
 BDCC- Barangay Disaster Coordinating
Council
 CHEDRO-CHED Regional Office
 OCD- Office of Civil Defense
 TESDA RO- TESDA Regional Office
 TESDA PO- TESDA Provincial Office

LESSON 2
CITIZENSHIP TRAINING
CITIZENSHIP TRAINING -a program wherein it develops our characters to
become more mindful of our responsibilities, rights,
and roles in the society.
PREAMBLE PLEDGE TO THE NATIONAL FLAG

Latin “Praeambulus” = walking before or what’s SEC. 29 The following shall be the Pledge of
coming? Allegiance to the National Flag:

*introduction “Panunumpa ng Katapatan sa Watawat ng

Pilipinas”
A constitution can exist even without Preamble but it
tells us the General purposes of Constitution. Ako ay Pilipino

PREAMBLE 1987 Buong Katapatang nanunumpa

We, the sovereign Filipino people, imploring the aid Sa watawat ng Pilipinas
of Almighty God, in order to build a just and humane
society and establish a Government that shall embody At sa bansang kanyang sinasagisag
our ideals and aspirations, promote the common
Na may dangal, Katarungan at Kalayaan
good, conserve and develop our patrimony, and
secure to ourselves and our posterity the blessings of Na pinakikilos ng sambayanang
independence and democracy under the rule of law
and a regime of truth, justice, freedom, love, equality, Maka-Diyos
and peace, do ordain and promulgate this
Constitution. Maka-Tao

PREAMBLE 1987 Makakalikasan at

We, the sovereign Filipino people, imploring the aid Makabansa.

of Almighty God, in order to build a just and humane
The Philippine National Motto
society and establish a Government that shall embody
our ideals and aspirations, promote the common MAKA-DIYOS, MAKA-TAO,
good, conserve and develop our patrimony, and MAKAKALIKASAN AT MAKABANSA
secure to ourselves and our posterity the blessings of
independence and democracy under the rule of law The eight-rayed sun symbolizes the eight provinces
and a regime of truth, justice, freedom, love, equality, (Batangas, Bulacan, Cavite, Manila, Laguna,
and peace, do ordain and promulgate this Nueva Ecija, Pampanga and Tarlac) which were
Constitution. placed under martial law by Governor-General
Ramón Blanco during the Philippine Revolution, and
PHILIPPINE CONSTITUTION the three five-pointed stars representing the three
primary geographic regions of Luzon, Visayas, and
 Constitution of Government
Mindanao.
 Constitution of Sovereignty
 Constitution Liberty
 Law
 Liberty

Volunteer Act of 2007 (RA 9418)

“Volunteerism” refers to an act involving a wide

range of activities, including traditional forms of
mutual aid and developmental interventions that
provides an enabling and empowering environment
both on the part of the beneficiary receiving.
 LESSON 3
FILIPINO VALUE SYSTEM
WHAT IS VALUES? - define values as “things, persons, ideas or goals
which are important to life; anything which enables
“value” Latin word “valere” which means to be life to be understood, evaluated, and directed.”
strong and vigorous. This proceeds from the premise
that a human person has to have strength or valor in Edgar Sheffield Brightman
every endeavor. It is the basis on which his strength
in facing the challenges of life should be directed. -He defines value as “whatever is liked, prized,
esteemed, desired approved, or enjoyed by anyone at
Filipino values can be translated as: any time. It is the actual experience of enjoying a
desired object or activity. Hence, value is an existing
-buti realization of desire.”

-ganda There are three (3) main traits that underlie the
Filipino values and value-orientation
-pamantayan
1. Personalism
-halaga
2. Familialism
Dr. Tomas Q. D. Andres (1986)
3. Particularism C. MAÑANA HABIT

1. Personalism is a Filipino trait wherein they give Mañana Habit can be traced back in the Spanish
importance to interpersonal relations or face-to-face colonization “Mañana” is a Spanish word that means
encounters. Filipinos usually extends their work or “tomorrow”. This is a Filipino trait that enforces
services through “personal touch” or handles problem procrastination - practice of putting off work to be
solving through good personal relations. done in the near future or in the last minute. This
habit is exemplified through the “Mamaya na” or
2. Familialism focuses on the welfare and interest of “Bukas na”.
the family over those of the community. The family
is the basis of group action and almost all community D. NINGAS KUGON
activity centers on the family.
The term Ningas Kugon translates to “burning of
3. Particularism relates to the strong family influence cogon grass”. As a Filipino trait, it means that
on the individual or group behavior. This is shown Filipinos tend to have a strong enthusiasm in the
when an individual strive to promote their own and beginning of each work or endeavor but gradually
their family’s interest over the community’s interest. slows down and lose their drive to work and finish
Popularity among peers is prevalent and observable. the job. It is said that in work Filipinos tend to do
their job halfbaked or leave it unfinished.
Ex. Pakikisama
E. AMOR PROPIO
It is also important to know that there are three (3)
main obligations that underlie the Filipino value As a reinforcement to the Philippine trait of “Hiya”
orientation namely: or shame, Filipinos are akin to the traditional attitude
of saving “face”. Amor propio is another Spanish
– relational (pakikipagkapwa), term that means a sense of self-esteem or self-respect
that prevents a person from swallowing his pride. It
– emotional (damdamin) and
also means ego defensiveness or maintaining one’s
– moral (karangalan). dignity and personal pride.

A. UTANG NA LOOB F. BAYANIHAN

There is no specific translation that can approximate

the meaning of this Filipino value of utang na loob.
Debt of gratitude is a lean excuse of a translation
because it does not even approximate the fertile
concept of the Filipino. Utang na loob is a situation
where an individual is required to return a favor or
service received. However, the return of such service
or favor cannot be translated into monetary
equivalent, and may reciprocated in a month of
service or even a lifetime.

B. BAHALA NA

The term bahala na comes from the words Bathala

na. It reflects the Filipino's dependence on the
supernatural being and on fate. This tends to move
toward the commonly conceived procrastination
character of the Filipino.
 TOPIC 1
THE PHILOSOPHICAL VIEW OF LIFE
Socrates: Know Yourself self; more specifically, he should live a life of virtue
in which true human perfection exists. Happiness,
 He considers man from the point of view of his which is the fruit of virtue, is attained by the constant
inner life. imitation of the divine exemplar of virtue, embodied
in man’s former perfect self.
 The famous line of Socrates, “Know Yourself,”
Immanuel Kant: Respect for Self
 A bad man is not virtuous through ignorance; the
man who does not follow the good fails to do so  Man is the only creature who governs and directs
because he does not recognize it. himself and hisactions, who sets up ends for himself
and his purpose, and who freely orders means for the
 The core of Socratic ethics is the concept of virtue
attainment of his arms.
and knowledge. Virtue is the deepest and most basic
propensity of man. Since virtue is innate in the mind  Every man is thus an end in himself and should
and self-knowledge is the source of all wisdom, an never be treated merely as a means – as per the order
individual may gain possession of oneself and be of the Creator and the natural order of things.
one’s own master through knowledge.
 This rule is a plain dictum of reason and justice:
Plato: The Ideal Self, the Perfect Self Respect others as you would respect yourself. A
person should not be used as a tool, instrument, or
 Man was omniscient or all-knowing before he
device to accomplish another’s private ends. Thus, all
came to be born into this world.
men are persons gifted with the same basic rights and
 With his separation from the paradise of truth and should treat others as equals.
knowledge and his long exile earth, he forgot most of
Renē Descartes: “I think, therefore I am”
the knowledge he had. However, by constant
remembering through contemplation and doing good,  Descartes states that the self is a thinking entity
he can regain his former perfections. distinct from the body. His first famous principle was
“Cogito, ergo sum,” which means “I think, therefore I
 Man who is now exile on earth has a guiding star,
am.” although the mind and the body are independent
a model, or a divine exemplar which he must follow
from each other and serve their own function, man
to reach and attain his destiny. In practical terms,this
must use his own
means that man in this life should imitate his former

mind and thinking abilities to investigate, analyze, experiment, and develop himself.

John Locke: Personal Identity

 John Locke holds that personal identity (the self) is a matter of psychological community. For him, personal
identity is founded on consciousness (memory), and not on the substance of either the soul or the body.
 Personal identity is the concept about oneself that evolves over the course of an individual’s life. It may include
aspects of life that man has no control over, such as where he grew up or the color of his skin, as well as the choices
he makes, like how he spends his time and what he believes.

The Biblical View of Self

Sigmund Freud: The Psychoanalytic Theory of Self

PARTS OF PERSONALITY

• Id (internal desires). Also called internal drives or instinctive drives, it consistof body’s primitive biological drives
and urges which are concerned only withachieving pleasure and self-satisfaction. Id lives completely in thun
conscious.

• Ego (reality). Is the “I” part of the individual that gives him/her the sense of his/her own identity. The ego is the
rational part of the personality.

• Superego (conscience). It is the part of the personality concerned with morals, precepts, standards, and ideas. The
superego is also the critical faculty of the personalit.

Freudian Stages of Psychosexual Development

1. Oral. From birth to the end of the first year, the mouth becomes the part of the body through which gratification is
secured.

2. Anal (exclusive phase). From the age of 2 to 3 years, the child derives the feelings of pleasure or pain from
defecating. It covers the toilet-training period.

3. Phallic. From the age of 3 to 6 years, the child gets curious about his/her genitals and becomes attached to the
parent of the opposite sex. The attraction of a boy to his mother is called Oedipus complex, while that of a girl to her
father is called Electra complex.

4. Latency. From the age of 7 to puberty, sexual motivations presumably recede in importance as the child becomes
preoccupied with developing skills and other activities.

5. Genital. After puberty, the deepest feelings of pleasure presumably come from heterosexual relations.
The Psychological View Of Self
 TOPIC 2
The development of the individual is caused by two the father and meets the X chromosome from the
interacting forces: heredity and environment. mother, the resulting combination is XX which
indicates a female offspring. However, when the
 Heredity (nature) is the transmission of traits or father produces a Y chromosome which pairs with
characteristics from parents to offspring. It provides the X chromosome from the mother, the resulting
the raw materials of which the individual is made up. combination is XY, signifying a male offspring.
Through the genes, hereditary potentials like
physical, mental, social, emotional, and moral traits Both male and female chromosomes contain several
are passed down to generations. thousands of genes. Genes are small particles in a
string-like formation. They are true carriers of
 Environment (nurture) is the sum total of the hereditary characteristics of the parents. Within the
forces or experiences that a person undergoes from gene is a substance called deoxyribonucleic acid
conception to old age. It also includes family, school, (DNA) which is the code of heredity. It contains
nutrition, and other agencies one is in contact with. information and instructions about the newly created
organism, and programs the traits that should be
The Beginning of Life
inherited. Maturation is the unfolding of the inherent
Life begins at fertilization. Fertilization refers to the traits.
meeting of the female sex cell and the male sex cell.
Stages in the Life Span
These sex cells are developed in the reproductive
organs called gonads. The male sex cells are called An individual undergoes definite stages of
spermatozoa (singular: spermatozoon) are produced development. In each phase, the child experiences
in the male gonads called testes. On the other hand, developmental characteristics to prepare him/her for
the female sex cells called ova are produced in the the next.
female gonads known as ovaries. The fertilized egg
cell known as zygote contains all the hereditary
potentials from parents. This zygote goes to the
uterus and continues to grow during the gestation
period of about 280 days or 36 weeks or 9 calendar
months.

Each parent contributes one sex chromosome to the

offspring. A male parent may pass either an X or a Y
chromosome while a female always gives the x
chromosome. When an X chromosome comes from

Taking Care of My Physical Self

Since the self is inseparable from the body, you should take very good care of your physical self. Whether you plan
to lose, gain, or maintain weight, the most important thing to do is to keep yourself fit. To achieve this goal, a rigid
plan has to be made.

Balanced Diet

To keep fit and healthy, one needs to have a balanced diet. Eating a balanced diet means consuming the right kind of
food at the right time and in the right proportion. One’s food intake should contain the necessary nutrients essential
for growth and survival. This practice prevents malnutrition and diseases. It is also important to keep mealtimes
pleasant and enjoyable. Thus, an individual should be encourages and motivated to eat more nutritious food. It
should also be remembered that junk food must be avoided.

Water

An individual should drink at least eight glasses of water every day. It allows the body to function efficiently. It also
washes away wastes to keep the skin clear and healthy. With a high-protein diet, the body utilizes the water properly
and avoids water retention. Liquids such as coffee, tea, or milk should not be counted as water. Although they
contain lots of water, there is also a build-up of caffeine, acid, or fat.

Sleep

Sleep gives the bones, muscles, and the mind time to recover. An individual needs eight or more hours of sleep a
day. One every important requirement for a refreshing sleep is a firm mattress that is too soft, body aches may
develop. A soft and lumpy mattress should be replaced with a firmer one. Another way to improve the bed is to raise
the lower part of the mattress so as to elevate the feet.

TOPIC

TABLE TENNIS
 MIDTERM TOPIC 1
FOURTEEN INTELLIGENT BEHAVIOR

Fourteen Intelligent Behaviors a person conducts himself/herself in various

circumstances. When a person is behaving
Performance can be greatly influenced by one’s intelligently, he/she is said to manifest 14 behaviors
behavior. Behavior is defined as the manner in which or dispositions (Costa, 2000).

The following are 14 intelligent behaviors indicative 8. Applying past knowledge to new situations. It
of an efficient and effective problem- solver, many of refers to the act of calling upon one’s store of
which were originally compiled by Costa (2000): knowledge and experience as source of data, theories,
or processes to solve each new challenge.
1. Persistence. It means not giving up when the
answer to a problem is not immediately known. 9. Precision of language and thought. A person with
this behavior uses descriptive terms to distinguish
2. Overcoming impulsiveness. It involves planning, objects, and provide criteria for value judgments.
clarifying goals, exploring alternative strategies, and
considering consequences before one begins a task. 10. Using all the senses. The senses of feeling,
seeing, hearing, or even tasting are utilized to solve
3. Listening to others. Some cognitive psychologists problems more effectively.
think that the ability to listen to another person and
understand their point of view is one of the highest 11. Creativity. It means applying ingenuity,
forms of intelligent behavior. originality, and insight. Creativity develops one’s
capacity to generate original, unique, clever, or useful
4. Flexibility in thinking. It is when one considers products, solutions, and techniques.
other points of view rather than running with the first
thought that comes to mind. 12. Living with a sense of wonderment. Involved in
this behavior are inquisitiveness, curiosity, and
5. Metacognition. It refers to the awareness of how openness to beauty, intricacy, complexity, and
one is thinking or the knowledge of what is going on simplicity.
in one’s head.
13. Cooperation. It refers to taking advantage of the
6. Checking for accuracy and precision. It is the knowledge and insights that can only come as a result
behavior of not letting speed surpass the desire of of social relationships.
craftsmanship.
14. Sense of humor. It refers to being able to look at
7. Questioning and problem-posing. It means asking situations, opportunities, problems, and relationships
questions and finding out problems for oneself. with nonchalance and fun.
 MIDTERM TOPIC 2
Wheel of emotion

Fundamentals of Emotion Plutchick’s wheel of emotion demonstrates how

emotions are related to one another. Emotions
Based on Plutchick’s (1980) configuration of adjacent to one another in the wheel are closely
emotion, there are eight fundamental emotions, related and can be combined. The combinations can
namely joy, trust, fear, surprise, sadness, disgust, be found on the outer part of the wheel; for instance,
anger, and anticipation. love is the combination of joy and trust.
Meanwhile, emotions across each other are 6. Breathe. Perform diaphragmatic or deep breathing
conceptual opposites. For example, sadness is the by contracting your diaphragm. Let your lower lungs
opposite of joy, and anticipation is the opposite of fill with oxygen to pass around your body and brain.
surprise. The eight fundamental emotions also come You will feel a tingly sensation and your belly will
in a variety of intensities. Those nearest to the center expand. Do this exercise for at least 60 seconds. The
signify the most in a variety of intensities. Those body cannot sustain anger when you are breathing
nearest to the center signify the most intense forms of deeply.
while those farthest from the center are the weaker
forms. 7. Talk to someone. It is healthier to vent your anger
and frustrations to a friend rather than to suppress
Emotion Management Strategies them. Express your feelings so you can start to
resolve the situation.
In any interaction, feelings may arise. These
emotions may be positive or negative and may affect 8. Disengage and re-engage emotions. Learn to park
relationships as well. Thus, people should always your emotions to deal with at a later time, but do not
keep their emotions in check to avoid avoid them. You must acknowledge your feelings
misunderstanding and miscommunication. then utilize your emotional intelligence to improve
them.

9. Label your emotions. After acknowledging your

emotions, label them. This activity reduces the
intensity of your emotions. The part of the brain that
Langley (2012) lays out some tips on managing
feels the emotion is the same part that names it.
emotions:
10. Label the emotions for others. You can defuse a
1. Smile to make yourself feel good. Face a mirror
tense situation by acknowledging the feelings of
and smile. After some time, your mood will be better
others. When you ask, “I sense that you are angry.
and you might eve laugh naturally. Do it for at least
Can you tell me how you feel?” the other person will
30 seconds.
be encouraged to consider and label his/her emotion
2. Smile to make others feel good. Smiling opens up as well. He/She may respond with “Yes, I feel
your connection with others. It also leads to angry,” or
experiencing empathy.
“No, I am not angry; I am annoyed.”
3. Get up and move. Exercise activates happy
What are the best strategies for managing emotions?
hormones that include endorphin, dopamine, and
How can you avoid outbursts and negative feelings
serotonin, among others. Movement is also important
towards other?
for the lymphatic system to get toxins out of your
body. Get up from your desk and jump and bounce
regularly.

4. Check in with your body. Scan your body by

feeling the tensions building up. Learn to relate these
tensions with the emotion you feel to understand how
your feelings affect your physiology.

5. Physically remove tension. If you feel tense in

your arms, shake them. Likewise, if there is tension
in your chest, stretch and breathe deeply.