1.

The learners should compare and

contrast the types of business
according to activities

2. identify the advantages and business

requirements of each type
•Sole / Single proprietorship – owned by one
person
•Partnership – owned by partners (two or
more persons)
•Corporation – owned by shareholders
•The types of business organizations differ
on the presentation of the equity side but the
accounting for assets and liabilities are
essentially the same
•This topic, types of business operations,
differs in terms of the presentation of the
statement of comprehensive income
(income statement) and the content
statement of financial position (balance
sheet)
 1. Give Local Example and Application
•How the following earn profits:

•Bruno’s Barber Shop •Wash Your Problem

Laundry Shop
•Clean Ko Place Mo
Cleaning Services •Bread Pit Bakery

•Tutorial Services •Cut and Face Parlor

•Cynthia’s Food Vendor •Fish Be With You Fish

Shop
2. Because of the nature of their
operations, the presentation of their
statement of comprehensive income
and the content of the statement of
financial position may differ from each
other possible Answers.

•by providing services

•by selling goods
3 TYPES OF BUSINESS ORGANIZATIONS:

•Service Business
This type of business offers professional
skills, advice and consultations.

Examples: barber shops and beauty

parlors, repair shops, banks, accounting
and law firms
•Merchandising Business
This type of business buys at wholesale
and later sells the products at retail. They
make a profit by selling the merchandise
or products at prices that are higher than
their purchase costs. This type of
business is also known as "buy and sell".

Examples are: book stores, sari-sari

stores, hardware stores
•Manufacturing Business
This type of business buys raw materials
and uses them in making a new product,
therefore combining raw materials, labour
and expenses into a product for sale later
on.

Examples are: shoe manufacturing

businesses, car manufacturing plants
Additional information:

There are businesses that may be

classified under more than one type of
business. A bakery, for example, combines
raw materials in making loaves of bread
(manufacturing), sells hot pan de sal
(merchandising), and caters customers’
orders in small coffee table servings of
ensaymada and hot coffee (service).
ENRICHMENT (5 MINUTES)

Provide local examples.

1.Ask the learners to think of five companies/

stores who do service, merchandising and
manufacturing

2. Call on a learner and ask why those businesses

were categorized as service, merchandising or
manufacturing .
Homework activity:

1. Look for a business that is either a

service, merchandising or manufacturing
business. Interview the owner by asking
the following questions.
.
“Suppose you want to open your own sari-sari
store that will need PHP10,000 to start and
you used your PHP10,000 savings to start
the said business.

You are the sole owner of the said sari-sari

store. This type of business is called
sole/single proprietorship.”
 Sole/Single proprietorship.”
• A form of business is owned by one person;
the simplest, and the most common form of
business organization.
•It is not separate from the owner. The
business and the owner are inseparable.
Advantages of sole/single proprietorship.

•The owner keeps all the profits.

•The owner makes all the decisions.
•It is easy to form and operate.
 Disadvantages of sole/single
proprietorship.
•The life of the business is limited to the life
of the owner. Once the owner dies, the
business will cease to operate under the
name of the proprietor.
Department of Trade and Industry is the government
agency that regulates the trade names of sole/single
proprietorship businesses.
 Disadvantages of sole/single
proprietorship.

•The amount of capital is limited only by the

wealth of the proprietor.
“What if the needed amount to start your dream sari-
sari store is PHP50,000 and you only have
PHP25,000 cash savings. You ask Juan, your friend
if he is willing to invest his PHP25,000 and become
part owner of the sari-sari store. Assuming he
agrees, what form of business organization was
created?”
“This type of business is
called partnership.”
 Partnership
•A form of business owned by two or more
persons. The details of the arrangement
between the partners are outlined in a
written document called articles of
partnership.
•Profits are divided among partners based on
their agreed sharing.
•The owner is called a partner.
 Advantages of Partnership

•Higher capital because two or more

persons will contribute to the common fund.

•It is easy to operate like a sole/single

proprietorship
 Disadvantages of Partnership
•The profits are divided among the partners.
•A partner can be held liable for the acts of
the other partners.
•In a lawsuit, the personal properties of the
partners can be held beyond their
contributions and may be used to answer
for any liability of the partnership.
 “Assuming your dream is to open a grocery store
and not just a sari-sari store but you will need
PHP1,000,000 to start the said business. You
have only PHP25,000, your friend Juan has
PHP25,000, and your mother is willing to invest her
PHP50,000, but still these are not enough to start
your dream grocery store. Where will you get the
money to raise the PHP1 million? What type of
business will you considered?
You may
consider setting up a corporation?”
 Corporation
•A corporation is a business organized as a separate
legal entity (artificial person) under the corporation law
with ownership divided into transferable shares of
stocks
•Emphasize that it is the law (Corporation Code of the
Philippines) that creates a corporation.
•The corporation begins its existence from the date
the Articles of Incorporation is approved by the
Securities and Exchange Commission (SEC).
 Corporation
•The SEC (Securities and Exchange Commission) is
the government agency primarily tasked to regulate
private corporations in the Philippines.
•The owners are called stockholders or shareholders.
•The word ‘Corporation/Incorporation/Corp./Inc.’
appears in the name of the entity.
•The voting rights of a shareholder is generally based
on the percentage of ownership.
 Corporation
•The management of the business is delegated by the
shareholders to the Board of Directors
•The ownership is divided into shares and the value of
one share may be denominated at a smaller amount,
for example at
PHP10 per share.
•The proof of ownership is evidenced by a stock
certificate.
 Advantage of Corporation
•Can easily raise additional funds by selling shares of
stocks to the public.

•Shareholders are not personally liable for the debts

of the corporation. The extent of their liability is limited
to their equity
(ownership) in the corporation.
 Disadvantage of Corporation

•It is relatively complicated to set up.

•Subject to several legal restrictions as listed

in the Corporation Code of the Philippines
“Assuming all the mothers in your barangay decided to open a sari-
sari store where all the members can buy in cash or in credit.
Some mothers were also taught how to sew dresses and bags as
part of the project of the group. These bags are then sold to a
certain company. Aside from that, the organization provides
seminars to the members on various topics involving mothers and
their roles. At the end of the year, the profits are distributed among
the members based on their capital contribution. The amount of
their purchases in the sari-sari store during the year is also
computed and they receive something out of the profit/surplus
based on their purchases.
This form of business organization is
called a COOPERATIVE
 COOPERATIVE
•A cooperative is a duly registered association of
persons with a common bond of interest, voluntarily
joining together to achieve their social, economic and
cultural needs.
•The owners are called members who contribute
equitably to the capital of the cooperative.
•The members are expected to patronize their
products and services.
 COOPERATIVE
•The word ‘cooperative’ appears in the name
of the entity.

•This form of business organization is

regulated by the Cooperative Development
Authority (CDA).
 Advantage of a Cooperative

•Enjoys certain tax exemption privilege

•Promotes the concept of sharing
resources
 Disadvantage of a Cooperative
•Limited distribution of surplus
•Requires continuous education programs
for members.
•The members have active and direct
participation in the business of the
cooperative.
 Summarize all the form of accounting

1. Sole / Single Proprietorship

2. Partnership
3. Corporation
4. Cooperatives

give a brief description of each form and the

advantage of creating such forms.
“Your PHP10 daily allowance may be used to
buy shares of stocks, thus making you an
owner of a Corporation.”
Group Activity:
1. Assign each group a form of business organization.
2. Assign a group leader/reporter for every group.
3. List down at least three businesses in their locality
or in the country
4. For every business, identify the business activities,
products or services offered by each business.
5. You may Identify the owners of every businesses
listed.
6. Leader or reporter to present the output of each
group.