Senior High School

Fundamentals of
Accountancy, Business
and Management 1
Module 3: The Accounting Concepts and
Principles
Fundamentals of Accountancy, Business and Management – Grade 11
Self-Instructional Learning Material (SILM)
Module 3: The Accounting Concepts and Principles
First Edition, 2020

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Development Team

Writer: Calvein Theodore A. Badilles

Content Editors: George P. Fulgencio, Thirwane N. Calva, Pepito D. Gardose
Language Editors: Pepito Gardose, Catherine C. Valenzuela
Illustrator: Calvein Theodore A. Badilles
Layout Artist: Allan T. Basubas, Jaypee K. Balera, Kryss Mayven L. Fabrero,
Sammie Per S. Montero, Theodore A. Badilles
Cover Art Designer: Joseph Bacsarpa
Reviewers: Yusof A. Aliudin, Mary Joy D. Bautista, Mary Anne A. Barrientos,
Marivic D. Devibar, , Ruth J. Gumangi, Monica D. Bermejo,
Maria Jane N. Agrave
Management Team:
Isagani S. Dela Cruz, CESO V – Schools Division Superintendent
Natividad G. Ocon, CESO VI - Assistant Schools Division Superintendent
Elpidio B. Daquipil – Chief, Curriculum Implementation Division
Juvy B. Nitura – EPSVR-1, Learning Resource Management System
Marcelo A. Bocatera, CESE – ADM and SHS Coordinator
Analyn J. Madera – PDO-II, Learning Resource Management System
George P. Fulgencio - Subject Team Leader

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Office Address: DepEd-Cotabato Division, Capitol Compound, Amas, Kidapawan City

Telefax: (064) 577-7017
E-mail Address: lrcotabato@gmail.com
 11
Fundamentals of
Accountancy, Business
and Management 1
Module 3: The Accounting Concepts and
Principles
`

`
Introductory Message
For the facilitator:

Welcome to the Fundamentals of Accountancy, Business and Management 1- Grade

11 Self-Instructional Learning Material on The Accounting Concepts and Principles.

This module was collaboratively designed, developed and reviewed by educators both
from public and private institutions to assist you, the teacher or facilitator in helping
the learners meet the standards set by the K to 12 Curriculum while overcoming
their personal, social, and economic constraints in schooling.

This learning resource hopes to engage the learners into guided and independent
learning activities at their own pace and time. Furthermore, this also aims to help
learners acquire the needed 21st century skills while taking into consideration their
needs and circumstances.

In addition to the material in the main text, you will also see this box in the body of
the module:

Notes to the Teacher

Hello, dear teacher of learning! You are lucky to have this learning
material intended to easily deliver the lessons for our learners and
enhance their knowledge on the Accounting Concepts and Principles.
Please help them achieve our learning objective.

Please advise our learners to read, understand, analyze, and

answer all the activities and questions seriously as this material is
designed and made for them. This is also to inform our learners to take
some precautionary measures and some activities need extra care.
This is just a reminder dear teacher of learning, do not go beyond
our objectives and main goal for our learners. Be an agent of learning.
Have fun!

As a facilitator, you are expected to orient the learners on how to use this module.
You also need to keep track of the learners' progress while allowing them to manage
their own learning. Furthermore, you are expected to encourage and assist the
learners as they do the tasks included in the module.

ii
For the learner:

Welcome to the Fundamentals of Accountancy, Business and Management 1-Grade

11 Self-Instructional Learning Material (SILM) Module on The Accounting Concepts
and Principles.
The hand is one of the most symbolized part of the human body. It is often used to
depict skill, action, and purpose. Through our hands we may learn, create, and
accomplish. Hence, the hand in this learning resource signifies that you as a learner
is capable and empowered to successfully achieve the relevant competencies and
skills at your own pace and time. Your academic success lies in your own hands!

This module was designed to provide you with fun and meaningful opportunities for
guided and independent learning at your own pace and time. You will be enabled to
process the contents of the learning resource while being an active learner.

This module has the following parts and corresponding icons:

What I Need to Know This will give you an idea of the skills or
competencies you are expected to learn in the
module.

What I Know This part includes an activity that aims to

check what you already know about the
lesson to take. If you get all the answers
correct (100%), you may decide to skip this
module.

What’s In This is a brief drill or review to help you link

the current lesson with the previous one.

What’s New In this portion, the new lesson will be

introduced to you in various ways such as a
story, a song, a poem, a problem opener, an
activity or a situation.

What is It This section provides a brief discussion of the

lesson. This aims to help you discover and
understand new concepts and skills.

What’s More This comprises activities for independent

practice to solidify your understanding and
skills of the topic. You may check the
answers to the exercises using the Answer
Key at the end of the module.

What I Have Learned This includes questions or blank

sentence/paragraph to be filled into process
what you learned from the lesson.

What I Can Do This section provides an activity which will

help you transfer your new knowledge or skill
into real life situations or concerns.

iii
 Assessment This is a task which aims to evaluate your
level of mastery in achieving the learning
competency.

Additional Activities In this portion, another activity will be given

to you to enrich your knowledge or skill of the
lesson learned. This also tends retention of
learned concepts.

Answer Key This contains answers to all activities in the

module.

At the end of this module you will also find:

References This is a list of all sources used in developing

this module.

The following are some reminders in using this module:

1. Use the module with care. Do not put unnecessary mark/s on any part of the
module. Use a separate sheet of paper in answering the exercises.
2. Don’t forget to answer What I Know before moving on to the other activities
included in the module.
3. Read the instruction carefully before doing each task.
4. Observe honesty and integrity in doing the tasks and checking your answers.
5. Finish the task at hand before proceeding to the next.
6. Return this module to your teacher/facilitator once you are through with it.
If you encounter any difficulty in answering the tasks in this module, do not
hesitate to consult your teacher or facilitator. Always bear in mind that you are
not alone.

We hope that through this material, you will experience meaningful learning and
gain deep understanding of the relevant competencies. You can do it!

iv
 What I Need to Know

Hello students? How are you? I hope you are doing well today! In this
particular module, you will be acquainted with the different concepts and principles
in accounting known as GAAP that stands for Generally Accepted Accounting
Principles. As you know, accounting is popular as the language of business language.
With this language, it is easy to examine the financial conditions and performances
of the business. Yet, understanding this language is not that easy. Nevertheless,
some people are aware of this concept and principles profoundly. This module is one
of the ways that you will know the basic accounting assumptions rule.

Moreover, the GAAP that stands for Generally Accepted Accounting Principles
is helpful and substantial in grasping the foundation of the accounting. It helps in
determining the standard rules and concepts of the accounting world. Thus, it is
important to learn and understand the concepts to use in real life.

Most Essential Learning Competencies:

1. Explain the varied accounting concepts and principles

(ABM_FABM11-IIIb-c-15)

2. Solve exercises on accounting principles as applied in various cases

(ABM_FABM11-IIIb-c-16)

After going through this module, you are expected to:

1. determine the varied accounting concepts and principles;

2. apply the different accounting concepts and principles in real-life
situations;
3. solve exercises on accounting principles as applied in various cases;
and
4. appreciate the different accounting principles as applied in real life
scenario.

1
 What I Know

Directions: Choose the correct answer from the given options. Write your answer on
a separate sheet of paper.

1. What is the accounting guideline that requires financial statement information

to be supported by independent, unbiased evidence other than someone's belief
or opinion?
a. Cost principle
b. Going-concern principle
c. Objectivity principle
d. Monetary unit principle

2. The principle that requires every business to be accounted for separately and
distinctly from its owner or owners is known as the ____________________.
a. revenue recognition principle
b. business entity principle
c. going-concern principle
d. objectivity principle

3. The rule that requires financial statements to reflect the assumption that the
business will continue operating instead of being closed or sold, unless evidence
shows that it will not continue, is the:
a. Business entity principle
b. Going-concern principle
c. Objectivity principle
d. Cost Principle

4. The idea that states, “To include the personal assets and transactions of a
business's owner in the records and reports of the business would be in conflict
with the”, portrays what principle?
a. Business entity principle
b. Going-concern principle
c. Realization principle
d. Objectivity principle

5. Tobin Badilles is the owner of Badilles Accounting Services. Which accounting

principle requires Tobin to keep his personal financial information separate
from the financial information of Badilles Accounting Services?
a. Cost principle
b. Monetary unit principle
c. Going-concern principle
d. Business entity principle

2
6. This principle states that financial statements are to be divided into specific
time intervals.
a. Cost principle
b. Matching principle
c. Time period principle
d. Accrual Accounting principle

7. This principle emphasized that “In case of assets that are immaterial to make a
difference in the financial statements, the company should instead record it as
an expense.”
a. Conservatism principle
b. Materiality principle
c. Disclosure principle
d. Matching principle

8. This principle is also known as “prudence”.

a. Conservatism principle
b. Materiality principle
c. Disclosure principle
d. Matching principle

9. The common notion of this principle is that revenue should be recognized when
earned regardless of collection and expenses should be recognized when
incurred regardless of payment.
a. Cost principle
b. Matching principle
c. Time period principle
d. Accrual Accounting principle

10. In this principle, accounts should be recorded initially at cost.

a. Cost principle
b. Matching principle
c. Time period principle
d. Accrual Accounting principle

11. It is the reverse of accrual accounting principle.

a. Cost Principle
b. Cash Basis Principle
c. Time Period Principle
d. Going - Concern Principle

12. What principle that states, “revenue is recorded when collected and expenses
should be recorded when paid”?
a. Cost Principle
b. Cash Basis Principle
c. Time Period Principle
d. Going - Concern Principle

3
 13. Cost should be matched with the revenue generated.
a. Conservatism principle
b. Materiality principle
c. Disclosure principle
d. Matching principle

14. All relevant and material information should be reported.

a. Conservatism principle
b. Materiality principle
c. Disclosure principle
d. Matching principle

15. In case of doubt, assets and income should not be overstated while liabilities
and expenses should not be understated.
a. Conservatism principle
b. Materiality principle
c. Disclosure principle
d. Matching principle

What’s In

Directions: Explain the following questions in your own understanding. Write your
answer on a separate sheet of paper.

1. Define external and internal users of financial information

2. Identify users whether they are external or internal
3. Determine what type of information needed by the users
4. Explain how financial information affects user’s business decisions

4
 Rubrics for Scoring
Points
Description Advanced Proficient Approach Developing Beginning
ing
(10) (8) Proficient (4) (2)
(6)
Understanding Demonstrate Demonstrate Provide Did not Needs
of the content an in-depth substantial only support the Improvement
understanding understanding direct answer
of the topic and of the topic, and answers
provide clear provide clear and
justification of justification of unclear
answer answer though justificati
some on of
supporting answer
ideas may be
misunderstood.
Grammar and Correct Correct Some Some Some
organization of grammar, grammar, sentence sentence sentence are
ideas thoughts are thoughts are are are grammaticall
y wrong,
well-organized well-organized grammati grammatic
many
though some cally ally wrong, thoughts are
are misplaced wrong some misplaced
thoughts
are
misplaced

What’s New

Directions: Read and understand the questions carefully. Write your answer on a
separate sheet of paper.

Test I. Petness Shop and Store

Mr. To Bin opened his pet shop business called Petness Shop and Store. He
opened a bank account for his business and depositedPHP500,000. The business
earned PHP50,000 but he had doubts with the recorded expense of PHP60,000. He
is not sure if he should include the following items as expenses:

Salary expense 20,000

Rent expense 10,000
Utilities expense (at home) 15,000
Utilities expense (at the store) 10,000
Insurance expense 5,000
Withdrawals 10,000
TOTAL 60,000

5
 WORD POOL

Salary Expense Rent Expense Utilities Expense (at home)

Insurance Expense Withdrawals Utilities Expense (at the store)

Guide Questions:

1. Among the choices given in the word pool, what is/are the things to consider
as an expense/s? Justify your answer.

2. Among the choices given in the word pool, what is/are the things NOT to
consider as an expense/s? Justify your answer.

Rubrics for Scoring

Points
Advanced Proficient Approaching Developing
Criteria Proficient
(10) (8) (6) (4)
Understanding Demonstrate Demonstrate Provide only Did not
of the content an in-depth
substantial direct support the
understanding
understanding answers and answer
of the topicof the topic, unclear
and provide
and provide justification
clear clear of answer
justification of
justification of
answer answer though
some
supporting
ideas may be
misunderstood.
Completion of Achieved the Accomplished Completed Attempted to
task purpose of the task most of the accomplish
task, including task the task, but
insightful with little or
interpretations no success
and
conjectures

Test II. Identify whether each item shows an example of deductible and non-
deductible expenses. Write YES if it is otherwise NO. Write your answer on a
separate sheet of paper.

_____1. Salary Expense _____5. Private hire car

_____2. Rent Expense _____6. Insurance expense
_____3. Home utilities expense _____7. Bank charges
_____4. Withdrawals _____8. Requirement for the business

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 What is It

“Accounting is the process of IDENTIFYING, RECORDING, and

COMMUNICATING economic events of an organization to interested users.”
(Weygandt, J. et. al)

Explaining the three highlighted words in the graphic:

IDENTIFYING – this involves selecting economic events that are relevant to a

particular business transaction.

The economic events of an organization are referred to as transactions.

Examples of economic events or transactions

- In a bakery business:

•sales of bread and other bakery products

•purchases of flour that will be used for baking
•purchases of trucks needed to deliver the products

RECORDING – this involves keeping a chronological diary of events that are

measured in pesos. The diary referred to in the definition are the
journals and ledgers which will be discussed in future chapters.

COMMUNICATING – occurs through the preparation and distribution of financial

and other accounting reports.

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 Accounting Principle and Concept

1. Business entity principle – a business enterprise is separate and distinct

from its owner or investor.
Examples:
 If the owner has a barber shop, the cash of the barber shop should be
reported separately from personal cash.
 The owner had a business meeting with a prospective client. The
expenses that come with that meeting should be part of the company’s
expenses. If the owner paid for gas for his personal use, it should not
be included as part of the company’s expenses.

2. Going concern principle – business is expected to continue indefinitely.

Example:
 When preparing financial statements, you should assume that the
entity will continue indefinitely.
3. Time period principle – financial statements are to be divided into specific
time intervals.
Examples:

 Philippine companies are required to report financial statements

annually.
 The salary expenses from January to December 2015 should only be
reported in 2015.
4. Monetary unit principle – amounts are stated into a single monetary unit
Examples:
 Jollibee should report financial statements in pesos even if they have a
store in the United States.
 IHOP should report financial statements in dollars even if they have a
branch here in the Philippines
5. Objectivity principle – financial statements must be presented with
supporting evidence.

Examples:

 When the customer paid Jollibee for their order, Jollibee should have a
copy of the receipt to represent as evidence.
 When a company incurred a transportation expense, a voucher should
be prepared as evidence.

8
6. Cost principle – accounts should be recorded initially at cost.

Examples:

 When Jollibee buys a cash register, it should record the cash register
at its price when they bought it.
 When a company purchases a laptop, it should be recorded at the price
it was purchased.
7. Accrual Accounting Principle – revenue should be recognized when earned
regardless of collection and expenses should be recognized when
incurred regardless of payment. On the other hand, the cash basis
principle in which revenue is recorded when collected and expenses
should be recorded when paid. Cash basis is not the generally
accepted principle today.
Example:

 When a barber finishes performing his services, he should record it as

revenue.
 When the barber shop receives an electricity bill, it should record it as
an expense even if it is unpaid.

8. Matching principle – cost should be matched with the revenue generated.

Example:

 When you provide tutorial services to a customer and there is a

transportation cost incurred related to the tutorial services, it should
be recorded as an expense for that period.
9. Disclosure principle – all relevant and material information should be
reported.

Example:

 The company should report all relevant information.

10. Conservatism principle – also known as prudence. In case of doubt, assets

and income should not be overstated while liabilities and expenses
should not be understated.

Example:

 In case of doubt, expenses should be recorded at a higher amount.

Revenue should be recorded at a lower amount.

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 11. Materiality principle – in case of assets that are immaterial to make a
difference in the financial statements, the company should instead
record it as an expense.

Example:

 A school purchased an eraser with an estimated useful life of three

years. Since an eraser is immaterial relative to assets, it should be
recorded as an expense.

What’s More

Directions: With the use of the accounting principles that you have learned. Indicate
which principles are violated in each scenario. Write your answer in a
separate sheet of paper.

1. Mr. Denzel Reyes, the owner-manager, bought a computer for personal use. The
invoice was given to the accountant who recorded it as an asset of the business.

2. The statement of the financial position of a company included equipment

purchased from Japan for 350,000 yen. It was reported at that amount in the
statement of financial position while all the other assets were reported in
Philippine pesos.

3. No financial statements were prepared by Michael Sy for his business. He

explained that he will prepare the statements when he closes the business, which
he predicts to take place after 20 years.

4. Aside from owning a shoe store, Mr. Ken operates a canteen. The assets of the
canteen are reported in the statement of financial position of the shoe store.

5. Purchased a hammer at a cost of 600 pesos. This was recorded as an asset and
expense to decrease its value by 50 pesos per year for 10 years.

6. A food company ordered a machine needed in the assembly line of its production
department. Upon order, the machine was immediately listed as one of its assets.

7. A company borrowed 100,000 pesos in December and will make its only payment
for interest when the note comes due six months later. The total interest for the
six months will be 3,600 pesos. On the December income statement, the
accountant reported interest expense of 600 pesos.

8. A retailer wishes to report its merchandise inventory on its balance sheet at its
retail value.

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9. An asset with a cost of 240,000 pesos is depreciated over its useful life of 10 years
rather than expensing the entire amount when it is purchased.

10. A company purchases a 12,500 pesos digital camera and expenses it immediately
instead of recording it as an asset and depreciating it over its useful life.

What I Have Learned

Directions: Read the paragraph carefully and identify the correct words that fit in
the given sentences in the box below. Write your answer in a separate
sheet of paper.

Concepts Generally Accepted Accounting

Going concern Time period Principles
Objectivity Cost Materiality
Disclosure Matching

There are general rules and concepts that govern the field of accounting. These
general rules are referred to as basic accounting (1) __________ and (2) __________ in
which these are helpful on the preparation of financial statements. Moreover, these
are governed by the (3) ____________ which are uniform set of accounting rules,
procedures, practices and standards. Because of (4) ____________ we can assume that
there is consistency from year to year in the methods used to prepare a company's
financial statements.

As a result, these are the following principles in accounting which helps to

prepare the financial statements easy. The (5) _______________ principle requires that
assets should be recorded at original or acquisition cost. The (6) _____________
principle requires that accounting records should be based on reliable and verifiable
data as evidence of transactions. In addition, the (7) _____________ principle dictates
practicability to rule over theory in determining the valuation of an item. As to the
(8) ________________ principle, it exemplifies that revenues and expenses are
recognized only when they are earned and incurred in the same year. In short, you
could not deduct the expenses incurred in 2018 from the revenues earned in 2019.
Lastly, this (9) _______________ principle requires that financial statements should be
free from any material misstatement.

11
 What I Can Do

Directions: Analyze the following situations and determine which underlying

principle is violated in each situation. Discuss your answer in each item
on a separate sheet of paper.

1. MaxDor is a local ala carte resto-bar in Banisilan, Cotabato. Due to the

mishandling of chicken during delivery, some customers become ill, and the
resto-bar receives bad publicity. Revenues are way down, some bills are past
due, and the plan to close the resto-bar at the end of the month is underway.
The entity continues to report its assets in the statement of financial position
at historical cost.

2. Kawaii Yan Lights Furnishings specializes in the installation of bamboo

furnishings adorned with lights of different colors and gleams. The company
has the usual expenses: salaries, supplies, utilities, advertising, etc. Its owner,
Mr. Kawaii, took his wife and three sons to Japan for a vacation trip and
reported airfare and hotel expenses in the income statement of Kawaii Yan
Lights Furnishings.

3. Drums and Bells Enterprises sells special music equipment. The fluctuations
in sales are very erratic, hence management decided to publish financial
statements only when a substantial amount of activity has taken place. Its
last financial statements covered 16 months and the set of financial
statements before that covered 19 months.

4. Universal Robina, the manufacturer of C2 bottled green tea operates in the

Philippines and Vietnam. For the current year, the company purchased two
delivery trucks in the Philippines worth 2 million pesos and three trucks in
Vietnam for 437,000 dongs (437,000 Vietnamese Dong). The company
reported the five trucks with no corresponding amount in the statement of
financial position because of the differences in currencies.

12
 Rubrics for Scoring
Points
Description Advanced Proficient Approachin Developing Beginning
g Proficient
(10) (8) (6) (4) (2)
Understandi Demonstra Demonstrate Provide Did not Needs
ng of the te an in- substantial only direct support the Improveme
content depth understandin answers answer nt
understan g of the topic, and
ding of the and provide unclear
topic and clear justificatio
provide justification n of
clear of answer answer
justificatio though some
n of answer supporting
ideas may be
misunderstoo
d.
Grammar Correct Correct Some Some Some
and grammar, grammar, sentence sentence are sentence are
organization thoughts are thoughts are are grammaticall grammatical
of ideas ly wrong,
well- well-organized grammatica y wrong,
many
organized though some lly wrong some thoughts
are misplaced thoughts are are
misplaced misplaced

Assessment

Directions: Read and understand the questions carefully. Write your answers on a
separate sheet of paper.

Test I. Choose the letter of the correct answer.

1. The objectivity principle ______________________________.
a. means that information is supported by independent, unbiased
evidence
b. means that information can be based on what the preparer thinks is
true
c. means that financial statements should contain information that is
optimistic
d. means that a business may not re-organize revenue until cash is
received.

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 2. Which of the following accounting principles would require that all goods and
services purchased be recorded at cost?
a. Cost Principle
b. Business entity principle
c. Going – concern principle
d. Continuing – Concern Principle

3. This principle is a benefit to accountant and other related stakeholders who

use the financial statements since the financial transactions are records at
the identify costs and verifiable evidence.
a. Cost Principle
b. Monetary Unit
c. Time period Principle
d. Business Entity Principle

4. What principle requires the entity to disclose all necessary information in its
financial statements?
a. Matching principle
b. Disclosure principle
c. Materiality principle
d. Conservatism principle

5. What principle is being portrayed in this case, “the entity’s main services or
products are no longer need in the markets and sales dramatically drop also
most to zero. This situation indicates that an entity probably liquidates its
assets to support its operation in the period of less than twelve months.”?
a. Going-concern principle
b. Cost - Benefits Principle
c. Business entity principle
d. Continuing-concern principle

Test II. Match the following accounting principle in Column B with their definition in
column A, Write the correct letter.

COLUMN A COLUMN B
1. All relevant information should be included A. Going concern principle
in the financial reports
2. In case of doubt, assets and income should B. Objectivity principle
not be overstated.
3. Assume that the company will continue C. Matching principle
indefinitely.
4. All transactions should be supported by D. Materiality principle
unbiased evidence.
5. Expenses should be recorded in the period E. Time period principle
when the revenue is generated.
6. Minimal costs incurred should be recorded F. Cost principle
as an expense.
7. A Philippine company should report financial G. Disclosure principle
statements in pesos.

14
 8. A barber who performs services for a client H. Monetary unit principle
should record revenue.
9. Statement of Financial position should be I. Accrual accounting
recorded as of December 31, 2015. principle
10. A company that purchases furniture should J. Conservatism principle
record it at its acquisition price.
K. Accrued Principle

Additional Activities

Directions: You are asked to interview a business owner and ask them about their
accounting practices. You should identify if there has been any violation
of the accounting principles. You will be rated based on the rubric given
below.

CRITERIA
Points
Criteria Advanced Proficient Approaching Develop Beginning
(5) (4) Proficiency ing(2) (1)
(3)
Understanding Understa Understan Applied two Applied Needs
and application of nd and d and concepts one improveme
the accounting nt
applied applied concept
principles
all several
concepts concepts
Knowledge and Correct Correct Some sentence Some Needs
content on the grammar, grammar, are sentence improveme
topic thoughts thoughts grammatically are nt
are well- are well- wrong, some grammat
organized organized thoughts are ically
though misplaced wrong,
some are many
misunderst thoughts
ood are
misplace
d
Effort and skills Completed Completed Completed work Incomple Needs
work and work with but with te work improveme
show good effort minimal effort with nt
much minimal
effort effort

15
 16
Assessment
A. Multiple Choice
1. A
2. C
3. C
4. B
5. A What’s More
1. Business Entity
B. Matching Type
1. G 2. Monetary Unit
2. J 3. Time period
3. A 4. Business entity
4. B 5. Materiality
5. C 6. Objectivity
6. D 7. Matching
7. H
8. Cost
8. I
9. E 9. Matching
What I Have Learned 10. F 10. Materiality
1. Principles/ Concepts
2. Principles/ Concepts
3. Generally Accepted
Accounting Principles
4. Generally Accepted What I Can Do Activity 1
Accounting Principles 1. Going concern 1. YES
5. Cost 2. Business Entity 2. YES
6. Objectivity 3. Time Period 3. NO
7. Materiality 4. Monetary Unit 4. NO
8. Matching 5. NO
9. Disclosure 6. YES
7. YES
8. NO
What’s New What I know
Possible Responses: 1. B 9. D
A. 2. B 10. A
1.Salary Expense- it should be included since it is related 3. A 11. C
to the operations of the business. 4. C 12. B
2. Rent expense – it should be included since the rent is 5. D 13. D
for the business. 6. C 14. C
3. Utilities expense( store) – should be included ; it is an 7. B 15. A
expense of the business. 8. A
4. Insurance expense – should be included since the
insurance is for the business.
B.
5. Utilities expense (home)- should not be included: it is a
personal expense.
6. Withdrawals- should not be included since the
withdrawal is for personal use.
Answer Key
References

Claudel E. J., et al. 2018. Accounting Essentials. Bukidnon: CMU Press.

Haddocl, M., J. Proce, and M. Farina. 2012. College Accounting: A Contemporary

Approach. New York.
Lopez, R. Jr. 2016. Fundamentals of Accountancy 1st Edition. Davao City: MS Lopez
Printing & Publishing.

Valencia, E. G., and G. F. Roxas. 2010. Basic Accounting. Mandaluyong: Valencia

Educational Supply.
Wild, J. 2009. Principles of Accounting. McGraw Hill Publishing.

Website:

https://lrmds.deped.gov.phaccessed June 5, 2020

17
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