Name: Hensel B.

Sevilla Course & Year: BSMA lll

Schedule: M-W 8:30 -10:00 AM

Unit 1: Financial Statements

Topic 1-General Features of Financial Statements

PRETEST

What are the components of the financial statements and provide brief description in each
component and its use?

Answer:

The financial statements are the key documents that companies use to communicate their
financial performance and position to external stakeholders. There are six main components of
financial statements: the statement of financial position (balance sheet), statement of financial
performance (income statement), statement of profit or loss and other comprehensive income,
statement of changes in equity, statement of cash flows, and notes to financial statements.
Here's a brief description of each component and its use:

1. The statement of financial position (Balance Sheet): reports a company's financial position at
a specific point in time, typically at the end of the year or quarter. The statement of financial
position reports a company's assets, liabilities, and shareholders' equity. The purpose of the
statement of financial position is to show what a company owns (its assets), what it owes (its
liabilities), and what remains for shareholders (its equity). Investors and creditors use the
statement of financial position to assess a company's liquidity, solvency, and ability to meet its
financial obligations.

2. Statement of Financial Performance (Income Statement): The statement of financial

performance, also known as the income statement or profit and loss statement, reports a
company's revenues, expenses, gains, and losses over a specific period, typically one year or
one quarter. The purpose of the statement of financial performance is to show how much money
a company earned or lost during the period, and how it made or lost that money. Investors and
creditors use the statement of financial performance to evaluate a company's profitability,
growth potential, and financial health.

3. Statement of Profit or Loss and Other Comprehensive Income: The statement of profit or loss
and other comprehensive income reports a company's revenues, expenses, gains, and losses
over a specific period, as well as any other comprehensive income items that are not included in
the income statement. The purpose of the statement of profit or loss and other comprehensive
income is to provide a comprehensive view of a company's financial performance over the
period. Investors and creditors use the statement of profit or loss and other comprehensive
income to evaluate a company's profitability and financial performance.
4. Statement of Changes in Equity: The statement of changes in equity reports the changes in
a company's shareholders' equity over a specific period, typically one year or one quarter. The
purpose of the statement of changes in equity is to show how a company's equity changed
during the period, including the effects of net income or loss, dividends, and other equity
transactions. Investors and creditors use the statement of changes in equity to evaluate a
company's financial performance and capital structure.

5. Statement of Cash Flows: The statement of cash flows shows how much cash a company
generated or used during a specific period, typically one year or one quarter. The statement of
cash flows reports a company's cash inflows (from operating, investing, and financing activities)
and cash outflows (for operating, investing, and financing activities). The purpose of the
statement of cash flows is to show how a company generates and uses cash, and whether it
has enough cash to fund its operations and investments. Investors and creditors use the
statement of cash flows to evaluate a company's liquidity, cash flow generation, and ability to
pay dividends and debt.

6. Notes to Financial Statements: The notes to financial statements provide additional

information about a company's financial performance and position, such as significant
accounting policies, contingencies, and related party transactions. The purpose of the notes to
financial statements is to provide more detailed information about the financial statements and
to help users understand the accounting policies and assumptions used by the company.
Investors and creditors use the notes to financial statements to gain a deeper understanding of
a company's financial performance and position.

ASSESSMENT

ACTIVITY 1

1. D 11. A 21. D
2. B 12. D 22. D
3. D 13. A 23. D
4. A 14. A 24. D
5. B 15. C 25. D
6. D 16. C 26. D
7. C 17. A 27. C
8. D 18. B 28. B
9. B 19. D 29. D
10. D 20. A 30. C
Topic 2- Statement of Financial Position
ASSESSMENT

PRETEST

1. True
2. False
3. True
4. True
5. True
6. True
7. True
8. False
9. False
10. False

ACTIVITY 1

1. A
2. B
3. D
4. B
5. B
6. B
7. E
8. E
9. E
10. B

ACTIVITY 2

A.

JiChangWook Grocery
Statement of Financial Position
As of December 31, 2020

CURRENT ASSETS:
Cash In Bank P780,000
Accounts Receivable 120,000
Estimated Uncollectible Accounts (5,000)
Merchandise Inventory 960,000
Prepaid Rent 25,000
Unused Supplies Inventory 25,000
Accrued Income 30,000
 P1,935,000

NONCURRENT ASSETS:
Store Equipment P150,000
Accumulated Depreciation-Store Equipment (15,000)
Building 500,000
Accumulated Depreciation – Building (100,000)
P 535,000

TOTAL ASSETS P2,470,000

CURRENT LIABILITIES:
Accounts Payable P102,000
Accrued Expense 20,000
Note Payable 50,000
Unearned Income 30,000
P 202,000

NONCURRENT LIABILITES:
Note Payable, due in 3 years P300,000
Chattel Mortgage 50,000
P350,000

TOTAL LIABILITIES P552,000

EQUITY:
SJK, Drawing P(20,000)
SJK, Capital 1,938,000
TOTAL EQUITY P 1,918,000

TOTAL LIABILITIES AND EQUITY P2,470,000

B.

LeeMinHo Company
Statement of Financial Position
As of December 31, 2020
CURRENT ASSETS:
Cash and Cash Equivalents P800,000
Accounts Receivable 450,000
Prepaid Rent 150,000
Inventories 900,000
Office Supplies Unused 50,000
P2,350,000
NONCURRENT ASSETS:
Property, Plant and Equipment P5,600,000
Accumulated Depreciation (1,200,000)
Patent 800,000
Long-term investments 950,000
P6,150,000

TOTAL ASSETS P8,500,000

CURRENT LIABILITIES:
Accounts Payable P 350,000
Accrued Expenses 100,000
Note Payable, Short Term Debt 200,000
P 650,000
NONCURRENT LIABILITIES:
Note Payable, Long Term Debt P 500,000
Mortgage Payable, due in 5 years 1,500,000
P2,000,000

TOTAL LIABILITIES P2,650,000

EQUITY:
Share Capital, P100 par P4,000,000
Share Premium 500,000
Retained Earnings 1,350,000
P5,850,000

TOTAL LIABILITIES AND EQUITY P8,500,000

ACTIVITY 3

1. True
2. True
3. True
4. False
5. True
6. False
7. True
8. False
9. False
10. True

ACTIVITY 4

1. D 11. B 21. D 31. C

2. C 12. D 22. B 32. A
3. D 13. D 23. D 33. B
4. D 14. D 24. D 34. D
5. B 15. D 25. D 35. A
6. C 16. D 26. B 36. B
7. B 17. C 27. D 37. C
8. C 18. B 28. C 38. C
9. D 19.D 29. C 39. B
10. B 20.B 30. D 40. B
ACTIVITY 5

1. Asset Section: Current Assets: The current assets of Jollibee Corporation are valued at Php
65,382,067 in the current year and Php 80,040,557 in the previous year. These include cash
and cash equivalents, accounts receivable, inventories, and prepaid expenses, among others.
Current assets are those that are expected to be converted to cash within a year or the
company's operating cycle, whichever is longer. Non-Current Assets: Non-current assets of
Jollibee Corporation include property, plant, and equipment, investment properties, intangible
assets, and other non-current assets. These assets are expected to provide economic benefits
to the company for more than one year.

2. Liability Section: Current Liabilities: The current liabilities of Jollibee Corporation amount to
Php 45,846,091 in the current year and Php 58,928,475 in the previous year. These include
accounts payable, short-term loans, and other current liabilities. Current liabilities are those that
the company is expected to settle within a year or its operating cycle, whichever is longer. Non-
Current Liabilities: The non-current liabilities of Jollibee Corporation include long-term loans,
deferred tax liabilities, and other non-current liabilities. These are the obligations that are not
due for payment within a year or the operating cycle of the company.

3. Equity Section: The equity section of Jollibee Corporation includes the following: Retained
Earnings/Deficit: This represents the accumulated profits or losses of the company since its
inception. Stockholders' Equity: This represents the residual interest in the assets of the
company after deducting its liabilities. Stockholders' Equity - Parent: This represents the equity
attributable to the parent company. Book Value per Share: This represents the amount of equity
attributable to each outstanding share of the company's common stock. Jollibee Corporation
offers two types of shares: common and preferred shares. Common shares represent
ownership in the company and provide voting rights to the shareholders. Preferred shares, on
the other hand, have priority over common shares in terms of dividend payments and liquidation
preferences.

4. Jollibee Corporation presents its Statement of Financial Position in a classified format. The
assets and liabilities are categorized into current and non-current sections, while the equity
section is presented separately. The balance sheet shows the company's financial position at
the end of the current year and the previous year for comparison purposes.
Topic 3- Statement of Comprehensive Income

PRETEST

1. False
2. True
3. False
4. True
5. False

ASSESSMENT

ACTIVITY 1

1. True 11. True

2. False 12. True
3. False 13. True
4. True 14. True
5. True 15. True
6. True 16. True
7. False 17. True
8. False 18. False
9. True 19. True
10.True 20. True

ACTIVITY 2

1. A
2. A
3. C
4. D
5. A
6. A
7. C
8. D
9. A
10. A
ACTIVITY 3

1.B 11. A
2. D 12. D
3. C 13. D
4. D 14. B
5. B 15. A
6. B 16. B
7. D 17. D
8. B 18. A
9. D 19. C
10. A 20. D

ACTIVITY 4

Problem 1

January 1 December 31

Assets P240,000
80,000 + 31,000
Liabilities 150,000
Stockholder’s Equity P 90,000 P 111,000

Computation of net income:

Stockholder’s equity December 31 P 111,000
Stockholder’s equity January 1 90,000
21,000
Add: Dividend declared 13,000
Less: Common stock sold (10,000)
Net Income P 24,000
Problem 2
Fill in the appropriate blanks for each of the independent situations below.
Company A Company B Company C
Sales (a) P261,000 P343,400 P540,000
Beginning inventory 52,600 (d) 97,800 90,000
Net purchases 175,300 255,600 (g)380,000
Ending inventory 52,200 108,000 63,000
Cost of goods sold (b)175,700 (e) 245,400 407,000
Gross profit 85,300 98,000 (h) 133,000
Operating expenses (c)79,300 50,000 48,000
Income before taxes 6,000 (f)48,000 (i) 85,000
Problem 3
Farr Company
Income Statement
For the year ended, December 31, 2020

Sales P 1,400,000
Cost of Goods Sold (780,000)
Gross Profit 620,000
Selling and Administrative Expenses (240,000)
Income from operations 380,000
Other revenue 120,000
Other expenses (100,000)
Income before taxes 400,000
Income taxes (120,000)
Income before extraordinary item 280,000
Extraordinary loss, net of applicable (203,000)
income taxes of 87,000 (290,000x0.70)
Net Income P 77,000

Activity 5
Topic 4- Statement of Changes in Equity

PRETEST

1. True
2. False
3. True
4. True
5. True

ASSESSMENT

ACTIVITY 1

1. True 11. False

2. False 12. True

3. True 13. True

4. False 14. False

5. True 15. False

6. False 16. True

7. True 17. True

8. False 18. False

9. False 19. False

10. True 20. True

ACTIVITY 2

21. C 31.A 41.B 51.C 61.B

22.B 32.B 42.C 52.D 62.A
23.A 33.A 43.C 53.B 63.A
24.B 34.D 44.B 54.D 64. A
25.C 35.B 45.B 55.D
26.C 36.A 46.C 56.A
27.D 37.D 47.C 57.C
28.D 38.C 48.B 58.A
29.D 39.A 49.C 59.B
30.B 40.A 50.C 60.B

Topic 5- Statement of Cash Flows

PRETEST

1. False
2. False
3. True
4. True
5. True
6. True
7. False
8. False
9. True
10. False

ASSESSMENT

ACTIVITY 1

1. False 11. True

2. True 12. False
3. True 13. False
4. False 14. True
5. True 15. False
6. False 16. False
7. True 17. True
8. False 18. True
9. True 19. False
10. True 20. True
ACTIVITY 2

21.C 31.D 41.A 51.D

22.C 32.C 42.B 52.D
23.C 33.C 43.C 53.A
24.B 34.B 44.C 54.B
25.D 35.B 45.B 55.A
26.D 36.C 46.B 56. B
27.C 37.B 47.D 57. B
28.B 38.C 48.A 58. C
29.B 39.C 49. D 59.D
30.B 40.A 50.C 60. A