Financial Statements for Business Enterprises

Financial statements (or financial reports)

  • are formal records of the financial activities of a business, person, or other entity.
  • are often referred to as accounts
  • provide an overview of a business or person’s financial condition in both short and long term.
  • all relevant financial information of a business enterprise, presented in a structured manner and in a form easy to understand.

Purposes of financial statements

  • to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions
  • owners and managers require financial statements to make important business decisions that affect its continued operation
  • employees also need these reports in making collective bargaining agreements (CBA) with the management, in case of labor unions or for individuals in discussing their compensation, promotion, rankings.
  • prospective investors make use of financial statements to assess the viability of investing in a business.
  • banks and other lending institutions use them to decide whether to grant a company fresh working capital or extend debt securities to finance expansion and other significant expenditures.

Business enterprises are individuals or associations of individuals that control and use resources for a variety of purposes, specially that of yielding return to the enterprise owner (Daughtney 1981).

Basic Types of Financial Statements for a Business Enterprise

  1. Balance sheet, also referred to as statement of financial position or condition, reports on a company’s assets, liabilities, and ownership equity as of given point in time.
  2. Income statement, also referred to as Profit and Loss Statement (or a “P&L”), reports on a company’s income, expenses, and profits over a period of time.
  3. Statement of retained earnings explains the changes in a company’s retained earnings over the reporting time.
  4. Statement of cash flows reports on a company’s cash flow activities, particularly its operating, investing, and financing activities.

Business Transactions

Business transactions are events or exchanges which affect the assets, liabilities or owner’s equity of an organization (Druker 1977)

Each transaction consists of debits and credits and for every transaction they must be equal.

For Every Transaction

Value of debits = Value of Credits

A + E = L + OE + R


A = Assets

E = Expenses

L = Liabilities

OE = Owner’s Equity

R = Revenues

Debit Accounts (A + E) = Credit Accounts (L + OE + R)

Debits are on the left and an increase in a debt account reduces a credit account. Credits are on the right and an increase in a credit account decreases a debit account.


  1. When you pay with cash, you increase rent (expense) by debiting and decrease cash (asset) by crediting.
  2. When you receive cash for a sale, you increase cash (asset) by debiting and increase sales (revenue) by crediting.
  3. When you buy equipment (asset) with cash, you increase equipment (asset) by debiting and decrease cash (asset) by crediting.
  4. When you borrow cash with a loan, you increase cash (asset) by debiting and increase loan (liability) by crediting.

Assets are economic resources acquired through a transaction or event that can provide economic utility in future production or revenues.

Assets are classified (Julian 1974) thus:

  1. Current assets are cash or other types of assets that can readily converted into cash. These assets are expected to consume or sold within one year or within the normal operating cycle.

Classification of current assets:

  • Cash on hand are currency or cash items on hand. Includes checks, bank drafts, money orders, treasury warrants, etc.
  • Cash in bank are deposits in a bank which can be withdrawn or used for current operations without any restrictions
  • Accounts receivable are open accounts without any formal written promise to pay.
  • Notes receivable are open accounts with any formal written promise to pay.
  • Prepaid expenses are short term prepayments of current operating expenditures. Ex: prepaid rent, prepaid insurance, office supplies, and store supplies

2. Property, plant and equipment are long term or long-lived tangible assets with an estimated life of more than one year and re acquired for the purpose of using them in the business to generate revenues.


  • Land
  • Building
  • Equipment – plant equipment, office equipment, store equipment, delivery or transport equipment
  • Furniture & Fixtures 

Liabilities are economic obligations resulting from past transactions or events which can be measured in monetary terms. They are settled through the performance of economic resources.

Classifications of Liabilities

  1. Current liabilities are obligations which must be liquidated by using current assets or the creation of other current liabilities within one year of normal operating cycle.


  • Accounts payable refers to the indebtedness arises from purchase of goods & services, materials, supplies in an open charge business.
  • Account payable non-trade are those that do not arise from purchase of merchandise, materials, supplies in the ordinary course of business
  • Notes payable are short term obligations which are evidenced by promissory notes.
  • Accrued liabilities are accumulated debts arising out of services rendered to the business enterprise before the balance sheet date but payable at later time.
  • Unearned income includes revenues that are collected in advance but have not been earned.

2. Long term Liabilities are obligations which are not expected to require the use of current assets or the creation of current liabilities within one year operating cycle.


  1. Don’t prick pimples.
  2. Drink lots of water.
  3. Keep astringents away from irritated skin.
  4. Go easy on the stress.
  5. Check diet. Fruits and vegetables are important for healthy skin and overall well-being.
  6. Research on products before using them to make sure that they are right for you.
  7. Do facial exercises and get facials.
  8. Use olive oil to keep the skin supple.
  9. Keep hands away from your face. Hands carry germs that are often transferred to our faces.
  10. Don’t smoke.
  11. Cut down on alcoholic beverages. They dehydrate the skin.
  12. Use makeup, in moderation.
  13. Wash your face at least twice a day.
  14. Don’t sleep with make-up on. Your pores need to breathe.
  15. Take a steam bath. It’s great for the skin and reduces stress.
  16. Exercise.
  17. Use homemade body-buffing salt, made from coarse kosher salt, safflower oil, and a favorite essential oil.
  18. Get a shower brush to reach the middle of your back. Those may reduce the appearance of blackheads.
  19. Try vitamin E oil for scars.
  20. Condition the lips. Our lips are often overlooked until they begin to peel.
  21. Take a skin softening milk bath.
  22. Don’t forget suntan lotion and sunscreen.
  23. Lemon juice is excellent for embarrassing skin discolorations.
  24. A full body massage is a great relaxing agent as well as a way to get circulation flowing through your entire body to improve the skin.
  25. Never scrub the skin.
  26. Use soap that is skin-friendly. Some soap can be very harsh on the skin and leave a build up that keeps your skin from looking its best.
  27. Keep all beauty accessories and tools clean to reduce the risk of germs infecting your skin.

Good Grooming for Personal and Professional Development

Cosmetology is the study and application of beauty treatment. Branches of specialty include hairstyling, skin care, cosmetics, manicure/pedicure, and electrology.

In order to help others become beautiful, a cosmetologist should have good health and personal hygiene, and be properly groomed (Reyes 1979).

Good health is required for the successful practice of cosmetology. Without it, a cosmetologists cannot work efficiently nor enjoy the pleasures of life.

Personal hygiene is concerned with intelligent care given by the individual to one’s health by following the rules and healthful living such as: cleanliness, correct posture, exercise, relaxation, adequate sleep, balance diet, and wholesome thoughts.

Grooming is shown in one’s personal appearance. It includes personal hygiene, suitable or appropriate attire and neatness.


Always wash face with soap and water before doing any facial cleaning or treatment. Cleansing creams or lotion may also be used. Mud packs and honey packs are applied to remove blemishes and tone the skin.

Skin whiteners and astringent lotions may be used to peel off the outer layer of the skin.

Pimples and blackheads may be removed with an instrument. Be sure to disinfect your hands and the instruments before and after removing the pimples.

Whether skin is oily or dry, there are always an equivalent lotions or creams that can be used for face.

Various aids used in maintaining the face (Reyes 1986):

  1. Face cleaners. cleansing the face is an important step in making care of your skin. Cleansing helps to remove any excess skin oil or dirt that accumulated throughout the day or night. Face cleansers are effective, yet gentle enough not to disturb the skin’s natural moisture balance. They help to maintain a healthy complexion, and rare a perfect addition to the face care routine.
  2. Face toners. It is important to use a toner after washing the face. It helps to return the skin to its proper pH. This is important because it can take the skin up to six hours to return to its proper pH level without the help of a toner. Face toners get rid of any left behind dirt and oil, and they allow moisturizers to penetrate more effectively and so are a vital step in any face care routine.
  3. Face creams. It is important to moisturize the face as part of face care routine since restoring lost moisture and hydrating the skin helps to slow down the skin’s aging process. A cream is an excellent option for a face moisturizer.
  4. Face lotions. Is another great way to hydrate without being too rich. In many cases an oily skin type may prefer a lotion over cream.
  5. Face serums. Using a face serum is one of the most powerful ways to see fast dramatic results. Serums are generally formulated with a lightweight texture so they can penetrate quickly and effectively into the skin. Serums are excellent for all skin types to boost skin’s function. It is designed for use after cleansing and toning the face, and before moisturizing as part of daily face care routine.
  6. Anti-aging face creams. For those who want to help fight the signs of aging, an anti-aging face cream is an excellent option for a face moisturizer. There are two anti-aging face creams, one for day (perfect by itself or under make-up) and one for night (nourishes the skin throughout the night).
  7. Face exfoliators. Are essential to keep soft and glowing. They help slough off dead skin cells keeping pores clear. This sloughing action also smooths  and clarifies the face’s complexion. An exfoliator is a great pick-me-up for  tired, dull looking skin. It is also a good way to deal with rough of flaky skin.

Basic Drafting

Drafting is the primary method of communication between designers and clients, architects, and builders, engineers and production personnel and between advertisers and customers. A drawing, when used to show the material, dimensions, and shapes of product, is known as a technical drawing (French 1974).

Fundamental Elements of Drafting

  1. Sketching techniques
  • Horizontal lines are generally drawn from left to right.
  • Vertical lines are generally drawn from top to bottom.
  • Inclined lines are generally drawn in upward or downward direction.
  • Short lines are drawn with finger movements
  • Long lines are drawn with arm movements
  • Very long lines are drawn with segments with very small gaps of about 1/ 32/1 mm.

2. Technical terms used in connection with lines

  • A point indicates the position only; It has no length, breath or thickness.
  • A line has only one dimension and it is called length.
  • A straight line is the shortest distance between two points
  • A curve line is a line no part of which is straight
  • Parallel line are those which are equal distance apart through their entire length.
  • Perpendicular lines are those which intersect with an angle of 90 degrees.
  • when two lines cross each other they are said to intersect and the point at which they meet is the point of intersection.

3. Arcs and Circles.

  • A circle is a plane figure enclosed by curved lines
  • The distance around circle is a circumference.
  • The diameter of the circle is a straight line passing through the center of the circle and terminated at both ends by the circumference.
  • Radius is one-half of the diameter
  • One fourth of the circle is a quadrant.
  • One half of the circle is semi-circle.
  • Tangent is a line that touches only one point of the circle’s circumference.

Ref: TLE reviewer for LET; Mark Raguindin, MAEd


Baking is the process of cooking by dry, indirect heat usually in an oven and is considered the best method of cooking to retain the nutritution value of food. The appropriate mixing method applied for biscuit-making is called the pastry method (Rojo 1986).

Basic Baking Ingredients

  1. Flour – is the main ingredient or framework of baked products.

Kinds of Wheat flour

  • Rice flour – is made into cookies
  • Soybean flour – is made from soy beans using the same procedure in making rice flour used for baking cookies, biscuits, pastries & cakes.
  • Cornmeal – is coarsely ground flour used in making native cookies, quick breads & cakes.
  • Cassava flour (tapioca) – is made from dried slices of cassava roots which are ground finely.
  • Sweet potato flour – are sliced thinly, dried & ground finely to produce the flour.
  • Sago flour – is made from the roots of sago plant

2. Water – the cheapest liquid in baking, is indispensable in transforming the protein of the flour into gluten form.

3. Milk – usually pasteurized, is commonly used in baked products.

4. Sugar – is made from either sugarcane or sugar beets, It may be: Refined – best variety for most light cakes; Brown – added color to baked products, is less refined; Honey – is twice as sweet as sugar; Molasses – is a by-product in the manufacture of sugar from sugercane

5. Shortening – refers to the fat or oil used to tenderized baked products or to fry food. It nay be: Hog fat (lard) – is best for bread, biscuits, dip crust and few types of cake; Butter -is used mainly for cakes and cookies; Coconut oil – is taken from the meat of coconuts.

6. Egg – can provide the cake mixture with structural framework. Egg yolk will serve as an emulsifier in order to make mixing of both liquid possible.

7. Leavening agents – make baked products light and porous

8. Salt – is used to control and regulate the fermentation process in bread making

9. Flavors and spices – are extracts from plants, seeds and aromatic vegetable products which usually available in liquid or finely ground state.

10. Cocoa and chocolate – are widely used in the production of cakes and pastries.

Cookies – are tiny cakes often served as snacks or at festive occasions.

Classifications of cookies (Navaro 1985):

Drop cookies – are made from butter dropped onto the baking sheet from a teaspoon

  • Bar cookies – are made by spreading the dough on a pan, sliced into pieces and then baking
  • Model cookies – are those which are formed into designed shapes with the hands.
  • Refrigerator cookies – are made from the dough which must be chilled in the refrigerator before baking
  • Pinwheel – is a cookie in which two portions of dough of contrasting cookies are rolled cut to the same size
  • Press cookies – are formed with a cookie press
  • Ingot cookies – are made from flour, liquid, baking powder, sugar, shortening and flavoring.

Pastry – Includes a variety of products made from dough containing medium to a large amount of fat. Ingredients include flour, fat, water, salt.

Ref: Reviewer in TLE for LET, M.Raguindin, MAEd.