Accounting

ACTIVITY No. 1

Think your Dream Business….

Each student will assume that they have P20,000 savings that can be use in establishing their own businesses. Applying the steps in starting the business, they can choose whether their business activity/(ies) will be service, merchandising , manufacturing or a combination of two or more business activities. They can also choose whether to form a single/sole proprietorship, partnership or corporation.

Example:

1. The proponent has a savings of P20,000 and can use the 50 sq. m. vacant lot in front of her house.

2. The proponent wants to establish a water station, which is merchandising types of business activity.

3. Since the initial investment is not enough, additional 3 partners are invited to contribute to make this business possible. (P60,000)

4. The partnership will register in __________________________________. (Think & Drink Water Station). In registering the following expenses are expected to incur for a total of Php5,000.00. Details are follows.

AGENCY | REG. FEES/PERMIT/TAXES/LICENCES | OTHER ORGANIZATION COSTS |

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5. After obtaining the necessary certificate of registration, payment of taxes, permit and licenses, the following will be acquired.

ASSETS ACQUIRED | AMOUNT | MANNER OF ACQUISITION |

Cost of Machines | P60,000.00 | Cash purchases |

Gallons & Bottles | 30,000.00 | Loan to suppliers (credit terms – 30 days) |

Office supplies | 3,000.00 | Cash purchases |

Miscellaneous expenses | 1,500.00 | Cash purchases |

TOTAL | 94,500.00 | |

6. Using the accounting equation: Assets=Liabilities + Equity, the above transactions are accounted as follows:

| ASSETS | = | LIABILITIES | + EQUITY |

INITIAL INVESTMENTS | 20,000 | = | | 20,000 |

COST OF LAND (50 sq. m. x P4,000) | 200,000 | = | | 200,000 |

ADDITIONAL INVESTMENTS (3 partners x P20,000) | 60,000 | = | | 60,000 |

REGISTRATION, TAXES, PERMITS &...