HANDOUT FOR ENTREPRENEURSHIP

Business Plan - it is a document that describes the various external and internal elements involved in starting a business
or in expanding an existing venture, amidst a dynamic business environment. There are 12 major sections of the
business plan.
Marketing Plan - it is a document containing the marketing objectives, marketing strategies, and the activities that will be
undertaken to execute these strategies.
Organizational Plan - it is the section of the business plan that identifies the form of ownership the business will take.
Sole Proprietorship - this is the simplest form of business as it is owned solely by an individual or one person.
Partnership - it is a business organization owned jointly by two or more persons who share the assets, liabilities and
profits.
Corporation - it is a kind of business organization wherein five or more persons register a business entity. A business that
is chartered by a state and legally operates apart from its owners; owned by stockholders who have purchased
units or shares of the company.
Assets - it is a resources controlled by the enterprise as a result of past transactions or events and from which future
economic benefits are expected to flow to the enterprise.
Liabilities - it is the present obligations of the enterprise arising from past transactions or events.
Capital - it is the residual interest in the assets of the enterprise after deducting all its liabilities and can be so called as
net worth or equity.
Income - it is the inflow of the future economic benefits that increase equity, other than the contributions or investments
from owners.
Drawings - it refers to the withdrawals made by an owner from the enterprise.
Expenses - it refers to the outflows or consumption of future economic benefits that decrease equity other than
distributions or dividends paid to owners.
Income Statement - it is the means by which the information accumulated and processed in financial accounting is
periodically communicated to the users.
Balance Sheet - it is a formal statement showing the financial position of the enterprise as of a particular date.

Major Sections of the Business Plan Accounting Equations

1. Introductory Page
2. Executive Summary
ASSETS = LIABILITIES + PROPRIETORSHIP
3. Environmental and Industry Analysis
4. Description of the business Can also be derived as:
5. Production Plan
6. Operations Plan LIABILITIES = ASSETS - PROPRIETORSHIP
7. Marketing Plan
8. Organizational Plan PROPRIETORSHIP = ASSETS - LIABILITIES
9. Financial Plan
10. Assessment of risk
11. Timetable / Milestones
12. Appendices

Three common forms of business ownership Users of Financial Statements

1. Sole Proprietorship 1. Investors
2. Partnership 2. Employees
3. Corporation 3. Lenders
4. Suppliers and other trade creditors
Elements of Financial Statement 5. Customers
1. Assets 6. Government and their agencies
2. Liabilities 7. Public
3. Capital or Equity
4. Drawings Five Columns of Journal Entry
5. Income 1. Date
6. Expenses 2. Particulars
3. Folio
4. Debit
5. Credit

Sample Problem:

1. Mr. Paul Alarcon started business by investing P7,500 cash. In addition, the business assume a
payable of Mr. Alarcon accounting to P1,500.
Solution:
Accounting equation: ASSETS = LIABILITIES + PROPRIETORSHIP
A = P1,500 + 7,500
A = P9,000
2. Mr. Samson invested assets worth P20,000. Capital of Mr. Andres is computed as P15,000.
Solution:
Accounting equation: LIABILITIES = ASSETS – PRORIETORSHIP
L = P20,000 – 15,000
L = P5,000
3. Mr. Singson gave cash amounting P75,000. However, a P25,000 payable by him to PNB assumed
by the business.
Solution:
Accounting equation: PROPRIETORSHIP = ASSETS – LIABILITIES
P = P75,000 – 25,000
P = P50,000

SAMPLE INCOME STATEMENT

Situation: Mr. Chit Manlunas established an advertising business on December 1, 2008 for the whole
month of December. Below are the pertinent data:
1. Total Service Revenues for the month is P10,110
2. The following are the expenses:
a. Advertising expense P5,225
b. Rent expense 400
c. Salaries expense 800
d. Other expenses 500
CHIT MANLUNAS
Income Statement
For the Period of December 31, 2008

Service Revenues P10,110

Less: Expenses:
Advertising Expenses P5,225
Rent Expense 400
Salaries Expense 800
Other Expenses 500 6,925
Net Income P 3,185

SAMPLE BALANCE SHEET

Situation: Mr. Chit Manlunas has the following information in his journal as of December 31, 2008.
1. Total Cash P5,235
2. Receivable from Customer 750
3. Delivery equipment for business 16,500
4. Tables, Chairs and other fixtures 1,950
5. Payable to Cyrex Commercial 250
6. Initial Capital of P22,000 decrease by
Personal withdrawal of 1,000
7. Profit for the month 3,185

CHIT MANLUNAS
Balance Sheet
As of December 31, 2008

Assets

Cash P5,325
Accounts Receivable 750
Delivery Equipment 16,500
Furniture and Fixture 1,950
Total Assets P24,435

Liabilities and Proprietorship

Liabilities
Accounts Payable – Cyrex P250
Proprietorship
Manlunas Capital P22,000
Less: Withdrawal 1,000
P21,000
Add: Net Profit 3,185 24,185
Total Liabilities and Proprietorship P24,435