MOUNT CARMEL SCHOOL OF MARIA AURORA (MCSMA), INC.

Formerly Mount Carmel High School Maria Aurora 3202, Aurora

Student Learning Plan

Subject:Fundamentals of Accounting, Business,Managements 1
Grade 11 Quarter: 1st

MET 1 Introduction to Accounting,

Lesson 1 Introduction to Accounting: Definition, Nature, Function, and History of Accounting

Prerequisite Content-knowledge: : As you embark on becoming an entrepreneur and business professional, it
is essential to understand the context and situations that caused the development of accounting as a
field of practice. Understanding the history of accounting provides insight into its nature and
functions.

Prerequisite Skill: Suppose that you will be working as an entrepreneur or a business professional years
from now. Regardless of whether you want to become an accountant or not, acquiring basic accounting
skills is indispensable as you perform tasks in business and management. Therefore, it is crucial to
understand the nature and function of accounting and how it relates to your specific goals.
Introduction:
Heads up, future accountants! As you begin your journey towards learning fundamental concepts and skills
in accountancy, business, and management, you need to pay attention to the basic concepts, ideas, and
processes in the field of accounting. You may be thinking,“Why is accounting the focus of this subject?”.
In a nutshell: record-keeping, financial data preparation, and interpretation are the backbone of any
company. Financial data dictates the options and moves of companies that are heavily reliant on their own
financial capabilities. Even when starting a small business, one of the first questions that come to mind
is the owner’s capacity to produce the funds to support
business operations. In this lesson, you will learn the definition, nature, functions, and history of
accounting.
1. You are expected to finish the lesson in 1 week or in 5 hours and may extend depending on the need
that may arise. If you wish to talk to your teacher, do not hesitate to keep in touch with him/her
for further discussion You may contact the teacher via email or Learning Management System (LMS) if
 online, through text messaging or calls, through written feedback indicated in the module or
learning material, or scheduled face-to-face interaction while having consultation.

2. At the end of this lesson, you should be able to do the following;discuss the nature, functions, and
history of accounting,determine the functions and importance of accounting in various personal and
business situations,create personal goals for this course with accounting concepts learned.
3. It is intended to develop students’ appreciation of accounting as a language of business and to
understand basic accounting concepts,principles, and procedures that will help them analyse business
transaction.
4. For the overview of the lesson, Accounting processes deal with regular checks and balances. It
includes manually counting stocks when they arrive, computing the daily sales, then matching it with
expenses to get a simple revenue computation. From these, it will evolve to checking stocks on a
bigger perspective, preparing journal entries that will signify day-to-day operations, making
initial checks and balances through ledgers, then finally preparing financial statements to
reflect the company's
financial position and financial performance in the business scene.
Students Experiential Learning
Chunk 1

Introduction to accounting
As you start with your accounting journey, try answering the questions below to prepare yourself for this
course.
1. What are the activities associated with accounting?

2. What do you think is the role of accountants in business organizations?

3. Why is proper accounting important in almost all businesses and organizations?

Learning competencies:
 Discuss the nature, functions, and history of accounting.
 Determine the functions and importance of accounting in various personal and business situations.
 Create personal goals for this course with accounting concepts learned.
Learn the Basics:
Accounting is the process of identifying, measuring, and communicating financial information to allow
users to make informed judgments and decisions (American Accounting Association,1966). The American
Institute of Certified Public Accountants (1956) also emphasized that accounting is the art of recording,
classifying, and summarizing transactions and events which are financial and are quantifiable in terms of
money. From these two definitions, the purpose of accounting is to provide financial information to help
make decisions.

The Accounting Process

The accounting process starts with identifying and analyzing financial information.
Accounting is concerned with how economic activities are quantified, how they affect the
business, and how they are presented to the users. Therefore, an accountant should
identify which business activities and transactions are relevant to these concerns and
which are not.
Next, the accountant should record or journalize the identified financial information into the
accounting books. This process is also known as bookkeeping, where financial information
is recorded in journals (books of original entry) and ledgers (books of final entry).
Finally, the accountant communicates the results of the first two phases through financial
statements. Identifying and recording financial transactions are pointless if the information
is not communicated to internal and external users. This crucial function in communicating
financial information is why accounting is also considered the universal language of
business.

Chunk 2
Formative question:
What is the nature of information being identified, recorded/journalized, and communicated in accounting?

Nature of Accounting
From the definitions above, you can determine what features accounting has. These features describe the
nature of accounting.
1. Accounting is a process. In accounting, a series of logical and organized steps are involved such as
identifying, recording, measuring, and summarizing financial data. After, the summarized results are
communicated to different parties or “stakeholders”.
2. Accounting is an art. It takes creativity, skill and expertise to perform all the accounting steps
and
activities. Accounting education prepares students for the accounting career.
 3. Accounting deals with financial information. The data that accountants work with is financial in
nature. If accounting information is useful, it must be expressed as a common financial denominator.
Therefore, accountable economic transactions and events have monetary values.

4. Accounting is an information system. It measures business activities, processes

information into reports, and communicates these to decision-makers. Creating
financial statements and documents based on relevant data is vital for this
information system. These reports tell users how well an entity is performing
financially.

Chunk 3
Formative question:
Why is accounting the focus in studying business and management?

Functions of Accounting in Business

Accounting is a multifaceted field. Although it centers primarily on recording and
interpreting financial data, the end goal of accounting is to provide relevant information
necessary to make decisions for the organization's success. Below are the various functions
of accounting as businesses evolved:
1. Keeping systematic records of business transactions
Accounting ensures that the correct and relevant data is organized, detailed, and
understandable to reflect the business's economic standing. It provides users, such
as the management and investors, with relevant information needed to make
informed decisions.

2. Protecting properties of the business

An accountant's responsibility is to ensure that the business's assets are monitored
and performing well. Accounting allows the management to examine whether the
assets on hand coincides with the recorded data. Keeping track of assets, most especially cash, must be
thorough to avoid fraud, corruption, and theft. With proper
stewardship of resources, businesses produce profit and overall economic wealth.
3. Communicating results to various parties
Accounting aims to communicate the financial health and performance of a company
effectively. The accuracy of the information it produces is essential for internal and
external users to make sound decisions.
Accounting is also essential in auditing. Auditing is an independent undertaking
where the information presented from a completed accounting process is evaluated
to determine whether it abides with established accounting standards and does not
favor specific groups or individuals.
4. Meeting legal requirements
It is the accountant's responsibility and duty to ensure that the company meets all
the legal requirements and regulations set forth by the government, including
compliance with trade and business standards, fair employment agreements, and,
most importantly, proper payment of taxes.

Chunk 4
When did accounting begin?

History of Accounting
Historical records show that earlier forms of accounting had been practiced since ancient
civilizations. As economic activities progressed and business operations became more
complex, specific accounting standards and processes were developed.

Mesopotamian Era (3500 B.C.)

The informal recording of money and trade-related information started as early as the
Mesopotamian Era: 5,000 years before the popularization of the bookkeeping system.
Mesopotamians pioneered the use of stone tablets to record commercial transactions such
as sales and loans. These tablets also provided evidence that the Hammurabi Code
enforced the rules and regulations for commercial transactions. It is believed that the
ancient accounting system contributed to the economic and political success of Nineveh
and Babylon, being the centers of trade and commerce in their respective eras.

Luca Pacioli (14th Century)

Luca Pacioli is considered the father of modern accounting. His work, the Summa de
Arithmetica, Geometrica, Proportioni et Proportionalita (Everything About Arithmetic,
Geometry, and Proportion), published in Venice, Italy in 1494 A.D., was recognized as the
precursor for the double-entry system. The double-entry system is what we know today as
the rules of debits and credits. It is the process that paved the way for modern accounting
to arise. Across time, the double-entry system had been one of the most used bases for
various accounting principles and concepts.

Industrial Revolution (17th and 18th Century)

In this period, accounting was emphasized with utmost importance and relevance. The
industrial revolution was characterized by the development of machines for the mass
production of goods. Thus, a system of checks and balances to monitor the process and
expenses in production became necessary.
Queen Victoria (19th Century)
The first recorded accounting standards were attributed to the British Empire’s Queen
Victoria reign. She was known to establish a commission that monitored the reported
transactions of companies, which eventually evolved into the modern process of auditing.
Different countries and international organizations benchmarked this practice and
developed their standards and processes.
Accounting systems continually adapt to the needs of the global market and the business
environment. The existence of multinational and transnational corporations required
uniform accounting standards across different countries and industries. The Generally
Accepted Accounting Principles (GAAP) and the International Financial Accounting
Standards (IFRS) are considered the most credible accounting standards used today by
different countries, corporations, and governments. The Philippines adheres to the
Philippine Financial Accounting Standards (PFRS), which are patterned after the IFRS.

Synthesis:
Activity 1.
Case Study
Controversy Amidst the Pandemic.
The health crisis brought about by the COVID-19 pandemic demanded an urgent distribution of medical
supplies and equipment across the country. The government had to seek the help of private companies to
help supply and distribute these needs. Several months after implementation, a nationwide controversy
erupted from an analysis of the financial statement issued by one of the private contractors. It was
discovered that the company only had ₱599,450.00 worth of funds but won a contract worth ₱7 billion. From
the analysis of the company's financial statement, it appeared that the company was not in a financial
position to implement such a big project; however, the government granted them the project, anyway.
Moreover, accountants found many discrepancies and missing information in the company's financial
statements, further brewing the speculation that the enterprise was a conduit for large-scale corruption.
Financial statements and reports yield crucial information. The role of accountants and the importance of
accounting is once more emphasized in avoiding fraud and corruption in our society.

RUA of Student’s Learning:

The learners can do the following as expected:
● Discuss the nature, functions, and history of accounting.
● Determine the functions and importance of accounting in various personal and business situations.
● Create personal goals for this course with accounting concepts learned.
Post Lesson Remediation Activity:
Challenge Yourself, Do it at home.
Answer the following questions,use your activity notebook.
1. As an aspiring entrepreneur or business professional, why is it important for you to learn and
understand the accounting process? Justify your answer.
2. Should all business owners and professionals learn how accounting works? Why or why not?
3. As a student, how can you use the knowledge and skills on the accounting process?

MET # 2 Branches of Accounting

Lesson # Branches of Accounting

Prerequisite Content-knowledge: Accounting is the process of identifying and analyzing, recording or
journalizing, and communicating economic information to permit informed judgment and decision by users of
the information. This process is necessary for individuals, businesses, governments, and other
organizations dealing with financial transactions.
Prerequisite Skill: Understanding the nature of accounting

Introduction : When people hear the word accounting, one would think that it is only concerned with computing
the expenses and profit of a business. However, the practice of accounting extends beyond that.
Professional accountants perform crucial roles even in the not-for-profit sectors.
Governments, nongovernmental institutions, professional bodies, academe, and other institutions also seek
the services of accountants to perform their mission and achieve their
goals.
1. You are expected to finish the lesson 2 days or in 2 hours and may extend depending on the need that
may arise. You may contact the teacher via email or Learning Management System (LMS) if online, through
text messaging or calls, through written feedback indicated in the module or learning material, or
scheduled face-to-face interaction while having consultation.
2. The student is expected to differentiate the branches of accounting, explain the importance of
services offered by the different branches of accounting.
3. This lesson will discuss the branches of accounting. You will learn that each branch offers a distinct
set of services and uses specific instruments to address the varying needs of businesses and
organizations.
4. Overview of the Lesson, In this lesson, you will learn about the different branches of accounting, their
functions and the services they provide. You will also gain insights into the different opportunities and
job descriptions that are possible under the accounting profession.

Students Experiential Learning

Chunk 1
To illustrate the broad set of skills required in the practice of accounting, The accounting profession
has at least eight branches that signify the unique services each one offers. Professional accountants
could pursue a career in these specialized fields.
Formative Question: Can businesses and institutions function efficiently without the services offered by
accounting branches?

Financial Accounting
This branch of accounting is concerned with preparing financial reports at least once a year
to be presented to external users of accounting information, such as potential investors,
creditors, stockholders, government agencies, and the general public. These financial
reports, also called financial statements, follow the generally accepted principles or
standards set by accounting regulatory bodies. The Philippine Financial Reporting
Standards (PFRS), the financial accounting standard followed in the Philippines, adheres to
the International Financial Reporting Standards (IFRSs).
These accounting standards are set to ensure consistency and comparability of financial
statements, regardless of the locality or the type of industry. For instance, a creditor who is
not familiar with a specific industry (e.g. mobile gaming) could still assess the risks associated
with providing debt to a company in that sector (e.g. mobile game development company)
because its financial statements follow the generally accepted accounting standards.
Through the information provided by financial accounting, investors, creditors, stock brokers,
and other concerned parties can also compare the performance of businesses (e,g, small and
big companies, start-up and established firms, etc.) and decide where to invest, buy
stocks, or lend money to.
Management Accounting
This branch of accounting is related to preparing, analyzing, and communicating accounting
information to the internal users or people working within an organization, i.e., the owners,
management, and employees. Management accounting aims to help business stakeholders
make informed decisions concerning their day-to-day operations vis-a-vis the general direction of the
company. It is important to note that since management accounting aims to
meet the needs of internal users, it does not need to follow the PFRS.

How is the business or organization performing financially? What expenses can be cut? What is the
projection of sales for a product or service? Did a particular business decision have a positive or
negative impact on a company’s financial performance? These are some of the questions that
can be answered through the practice of management accounting. The pieces of information
from management accounting is communicated through management reports which could
be released periodically or as required by the management. These reports are more useful
when released frequently (e.g., monthly and quarterly, rather than yearly).direction of the company. It
is important to note that since management accounting aims to
meet the needs of internal users, it does not need to follow the PFRS.

How is the business or organization performing financially? What expenses can be cut? What is the
projection of sales for a product or service? Did a particular business decision have a positive or
negative impact on a company’s financial performance? These are some of the questions that
can be answered through the practice of management accounting. The pieces of information
from management accounting is communicated through management reports which could
be released periodically or as required by the management. These reports are more useful
when released frequently (e.g., monthly and quarterly, rather than yearly).
Cost Accounting
This branch of accounting records and analyzes the information related to the costs in producing goods or
services, such as the object and driver of costs, direct and indirect costs, and fixed and variable
costs. One example of cost accounting in a business is reviewing the cost of manufacturing goods or
providing services to set a fair selling price. Also, this branch of accounting can inform the management
of the difference in total production cost if new machines are purchased, if different materials are
used, or if the company would employ less labor.
Cost accounting provides information for both management and financial accounting that is useful in
making decisions concerning the operations of a business or an organization. It may be considered a
crossroads of financial and management accounting. For instance, cost accounting determines the
production cost. It is used in management accounting to determine price decisions. On the other hand, it
is used in financial accounting to determine the cost of goods sold and the ending inventory presented in
the financial statements.However, cost accounting is more known to be a sub-branch of management
accounting since it contributes more to the said branch than financial accounting.
Short response:
What are the similarities and differences between financial, management,
and cost accounting?

Chunk 2
Formative question: How can tax accounting be useful to businesses and organizations?

Government Accounting
This branch of accounting deals with how the government apportions and spends the
financial resources allocated to them. Government accounting also involves preparing and
analyzing financial reports that show where the government funds come from and how it is
spent. This branch of accounting provides information on the financial position and the
operations of government agencies. The information in government accounting is useful both for
internal users (i.e., government officials, oversight committees, employees) and external
users (i.e., citizens).
In the Philippines, government accounting could provide information on whether or not the
disbursement of funds is aligned with the approved budget by Congress and whether or not
it is utilized according to state priority, standards, and laws. Since government accounting
is related to public governance, the information provided in this branch is useful in the
checks and balances mechanism in the government.
There are three main agencies involved in government accounting. These are the
Department of Budget Management (prepares the budget), the Bureau of Treasury
(disburses cash to the different government agencies), and the Commission on Audit
(monitors the use and allocations of public funds).
Auditing
This branch of accounting deals with verifying the correctness of financial reports prepared
by an organization. It is a process that determines whether or not the information stated in
the financial report is truthful and without errors. Therefore, auditing includes an unbiased
evaluation and opinion by the auditor based on established criteria. Auditing helps businesses and
organizations develop their credibility in their fields. Professionals may perform auditing from
the inside or outside an organization. External auditing is performed by someone outside the
reporting
entity. It ensures that financial reports reflect fairness and compliance with the accounting standards.
On the other hand, internal auditing is performed by someone who works for the reporting entity. It
checks the validity of accounting records, discovers operational inefficiencies, and identifies
weaknesses in the internal control measures.

Tax Accounting
This branch of accounting covers everything related to the payment of taxes: computation of
income tax and tax returns, assessment of repercussions of tax decisions, coming up with
ways to minimize tax legally, and other tax-related matters. Tax accounting in the
Philippines adheres to the National Internal Revenue Code (NIRC). In 2017, the Tax Reform
for Acceleration and Inclusion (TRAIN) Act was signed into law, which amended the NIRC.
Other reforms followed under the Comprehensive Tax Reform Program.
Tax accounting may involve tax avoidance. Tax avoidance, or the process of reducing tax in
compliance with tax laws, is a legitimate practice that organizations and businesses can
perform. However, tax evasion, or the act of omitting sources of income on taxable
transactions and the intentional non-payment of tax, is illegal and is an offense that may be
subject to imprisonment.

Accounting Education
This branch of accounting involves the education sector in coming up with an appropriate
curriculum to help aspiring accountants be equipped with relevant accounting knowledge
and skills. Accounting practitioners can work as teachers or professors who can share their
expertise in the accounting industry, encouraging students to seek a career in accounting.

Accounting Research
Accounting research centers on the pursuit of current and relevant information in the field of
accounting. It can help a particular clientele solve problems concerning its business. It can
benefit regulatory bodies by amending existing accounting principles or developing new
accounting standards to address issues and trends in accounting in business.

Synthesis:

Activity 1
Case Study
BIR vs Social Media Influencers
In August 2021, BIR issued a Revenue Memorandum Circular (RMC) No.
97-2021. The circular mentioned that the bureau received reports that
social media influencers, despite their vast earnings, are not paying their
taxes. There were also reports that though these influencers are
registered with BIR, they register under a different line of business, and
they do not declare their earnings from their social media platforms.
Because of these reports, the memorandum was issued to remind the
social media influencers of their tax obligations and the possible
sanctions for their failure to meet these. In this situation, tax accounting
is involved as this branch of accounting is concerned with the accurate
compliance of individuals with the tax code implemented in the country.
RUA of Student’s Learning:

The learners understand that each branch of accounting differs in terms of purpose and intended user of
its services.
Post Lesson Remediation Activity:

Ask the learners to answer the given question as their activity at home.

 Upon learning the different branches of accounting, what other skills should accountants have aside
from performing mathematical equations?

MET #3 Users of Accounting Information

Lesson 3 External and internal users of Accounting

Prerequisite Content-knowledge:. Accounting definition, nature and history are three of the most important topics to
learn in this subject. With them, you find there’s a point moving forward with accounting.

Prerequisite Skill: You’ve just learned that communicating is one of the steps involved in the accounting
process.
Introduction: Accounting provides qualitative and quantitative financial data or information to help users
make sound decisions. It is also known as the language of business. As businesses evolve, accounting
adapts to the changes and continues to progress to accommodate the needs of different companies; thus, a
wider range of audience or users is being catered. They have different needs and objectives to generate
financial information that would be relevant to them. As you go through the lesson, you will understand
the different types of users of financial information and how they utilize financial information in
decision-making.
5. You are expected to finish lesson 1 week in 5 hours and may extend depending on the need that may
arise. You may contact the teacher via email or Learning Management System (LMS) if online, through
text messaging or calls, through written feedback indicated in the module or learning material, or
scheduled face-to-face interaction while having consultation.
6. At the end of this lesson, you should be able to do the following: Identify the external and
internal users of accounting information. Illustrate scenarios when accounting information is
crucial to the decision-making of users. Analyze situations where different users utilize
accounting information.
7. As you go through the lesson, you will understand the different types of users of financial
information and how they utilize financial information in decision-making.
8. For the overview of the lesson, the objective of accounting is to generate timely and relevant
financial information for a broader range of users based on their needs. Thus we must identify who
these users are and understand what relevant information they would appreciate.
Students Experiential Learning

Chunk 1
Questions to Ponder:
1. Why is it important for accountants to know who the users of accounting information are?

2. How can the decisions of these users significantly affect the organization?

3. What happens if these users are not provided with accurate and complete accounting information?

Learning competencies:
1. Define external users and give examples
2. Define internal users and give examples
Learn the Basics:
The American Institute of Certified Public Accountants (AICPA) defines accounting as “the art of
recording, classifying, and summarizing in a significant manner and terms of money,
transactions and events, which are in part at least of a financial character, and interpreting
the results thereof.”

Accountants interpret financial information based on the needs of specific users. They can
be classified into two categories: internal users and external users. Internal users are
the individuals within the company or organization, while external users are those groups
or individuals outside the organization.
Chunk 2
Essential Question

Why is it crucial for the users of accounting information to be informed about the company’s financial activities
and overall financial well-being?
.

Internal Users
Internal users are considered as the primary users of financial information. They are part of
the reporting entity and are directly involved in managing its operations. They are the decision-makers
who make strategic, operational, and financial decisions that directly impact the company. Examples of
internal users of accounting information are the owners, investors, stockholders, management, and
employees.

Owners and Stockholders

Owners and stockholders are the parties who provide financial assets and resources to keep the company
afloat. Owners of sole proprietorship businesses, partners in partnership businesses, and shareholders in
a corporation belong to this group of users. By examining financial information, this group of users
decides whether they would continue investing in a company or not. They are interested in keeping track
of the economic position,financial performance, and changes in the organization’s financial position.
Their goal is to determine whether the company is maximizing its profit and wealth and increasing the
value of their investment. Those who belong to this group also need accounting information to assess if
the operations of the company are effective and efficient.

Management
The management is composed of people who administer the tasks within an organization.
Their role is to efficiently manage the resources towards achieving the business’s goals
and objectives. Depending on the form and size of a company, the management may be
composed of senior managers (president and board of directors), mid-level managers (heads
of departments, sections, regional operations, etc.), and low-level managers (supervisors and
frontline managers). Whichever level they work in, the management needs financial information to set
goals, plan, monitor, and make organizational and operational decisions. Financial information helps
them evaluate the business’s progress and the areas of concern. It is also a basis for measuring future
management decisions and actions.
Employees
Employees are people who work for an organization under a contract of employment. In exchange for payment
and benefits, they perform specific tasks and roles to help the organization achieve its goals. Both
management and rank-and-file employees belong to this group.
Employees are interested in knowing the company's financial performance. They want to know if the company
they are employed in can provide them long-term job security and income. In collective bargaining,
employees also examine the financial statement of the company to determine the amount of increase in
salary, wage, and benefits that they could negotiate.

Chunk 3
Formative question:
Why are internal users considered as primary users of accounting
information?

External Users
External users are the secondary users of financial information. They are the individuals or
groups outside the reporting entity who are interested in examining the financial information of the
organization. Although they take no part in the company’s internal decisions and operations, their
decisions may still significantly affect the organization. Examples of external users of accounting
information are creditors, government, and potential investors.

Creditors
Creditors provide funds to enterprises in exchange for interest earnings. They provide the
company additional capital for business expansion and operations like investors. However,
unlike investors, they do not gain ownership of the enterprise; thus, they remain outside the
business organization. Some examples of creditors include banks and other financial institutions.
Creditors use financial information to assess a company’s capacity to pay its obligations. By examining a
company’s assets, liabilities, and obligations, creditors can determine how much money they are willing
to lend the debtor. If creditors think that the enterprise is
financially stable and healthy, there is a chance that they would approve the entity’s
request for a loan.

Government
The government is the entity that legislates and enforces tax policies and other laws concerning the
operations of business organizations in a given territory. Agencies in different branches of the
government—the executive, legislative, and judiciary—use accounting information to perform their
respective functions. For instance, government agencies such as the Bureau of Internal Revenue and the
Securities and Exchange Commission examine the financial information of a company for compliance and tax
purposes. They are interested if the organization declared and filed the correct amount of taxes, and
they cross-reference the financial information of suppliers and consumers to identify potential tax
evaders. During legislative oversight hearings, financial information may also be examined by the
Congress to determine if there are irregularities in government dealings with private entities. Judicial
courts may also look into the financial statements if there are legally enforceable claims that need
their decision.

Potential Investors
Potential investors are individuals or organizations who are interested in buying stocks and other
securities. This group of users includes individuals, institutions, and investment banks who have not yet
invested their assets and therefore remain outside of the business
organization. Potential investors examine the company’s performance through their financial information.
This information helps them determine if their investment would yield a reasonable rate of return. They
also use the information to assess if their investment would be secured.

Chunk 4
Check Your Progress

Differentiate the two classifications for users of accounting information.

Synthesis:

Case Study
Activity 1

Oplan Kandado
The Bureau of Internal Revenue is the main revenue-collecting agency of the Philippine government, with
trillions of pesos in tax collections every year. Recently, the agency has been commended with increased
tax collections, which may be mainly contributed by the implementation of TRAIN (Tax Reform for
Acceleration and Inclusion) Law, but some analysts say that the enhanced tax collection programs of the
BIR have a huge part to play in its increased collections. One of the notable programs is
called “Oplan Kandado,” which imposes heavy penalties to tax violators such as temporary suspension or
closure of the business. Recently, many businesses ranging from transport operations to restaurants have
been closed due to some irregularities in tax compliance. This program of the BIR is completely aligned
to its lawful mandate - to suspend business operations by establishments who (1) fail to register for
Value Added Tax (VAT) as required; (2) fail to issue receipts or invoices; (3) fails to file a VAT return
and pay the tax due; and (4) understates of taxable sales or receipts by 30% or more. But are all of
these detected and investigated, given the thousands of business establishments around the country? In
most cases, after the BIR receives information from its agents about a possible tax violation by a
certain establishment, it sends a notice to conduct surveillance on the taxpayer’s operations within a
period of 10 to 30 days. Even more so, the agency may check the financial statements and the actual
transactions of the business to verify if it is properly paying taxes. This procedure is important
because income taxes are paid based on profit (after expenses and other allowable deductions are deducted
from revenues). On the other hand, business taxes are charged through revenues and sales. All of these
can be confirmed if an establishment practices proper accounting and prepares truthful financial
statements. With all of these in mind, accounting not only provides useful information to the business
owners or potential investors, but aids in nation-building and economic prosperity of a country.
RUA of Student’s Learning:
The learners can define and give examples of external users and internal users.

Post Lesson Remediation Activity:

Provide a scenario that demonstrates how the following users of accounting information
utilize financial information in their decision-making. You may refer to the example below to
guide you in performing this task.
Example: Government – Accounting information is useful for the government to
determine if a private company bidding for a government project has the capacity to
 deliver the needed services. For instance, the government may eliminate bidders who can
not prove enough assets .
1. Internal users
2. External users
3. Creditors
4. Potential investors
5. Management

Prepared by: Christopher S. Sura LPT

Approved by: John Ian C. Barrientos LPT MAED