Father Saturnino Urios University

ACCOUNTANCY PROGRAM
Butuan City

A Technical Paper

In Accounting 414B Internship

A Paper Presented to

The Faculty of the Accountancy Program

Father Saturnino Urios University

Butuan City

In Partial Fulfilment of the Requirement for the

Degree in Bachelor of Science in Accounting Technology

By

Amoguis, Gilbert L.

Dapal, Louie Jay A.

Sanchez, Aian Kit Jasper Y.

March 2018
EXECUTIVE SUMMARY
ACKNOWLEDGEMENT
TABLE OF CONTENTS
 Chapter 1

THE PROBLEM AND REVIEW OF LITERATURE

INTRODUCTION

Accountancy is a profession that plays an important role in

our societies. As the world moves toward global market

economies, and with investments and operations crossing borders

to an ever-greater extent, professional accountants need a broad

global outlook to understand the context in which businesses and

other organizations operate, according to CMO No. 50 Series of

2008.

In accordance with the pertinent provisions of Republic Act

(RA)No. 7722, otherwise known as the “Higher Education Act of

1994”, taking into consideration the demands of local and

international business environments to become more globally

competitive, spanning across all industries, the reason for the

Commission on Higher Education to adopt CHED MEMORANDUM ORDER

(CMO) No. 12 Series of 2013. The CMO provides requirements for

the practicum or internships. The internship begins with a

memorandum between Higher Education Institutions (HEI’s) and

industry partners such as members of Management Association of

the Philippines (MAP), Bankers Association of the Philippines

(BAP), Philippine Marketing Association (PMA), Philippine

Institute of Certified Public Accountants (PICPA), Philippine

Computer Society (PCS), Philippine Software Industry Association

(PSIA), Business Processing Association of the Philippines

(BPAP) and others. The students will then choose a business

function (e.g. marketing, operations, finance, human resources)

and conduct an analysis on the organization’s data with the end

goal of producing a report (descriptive, predictive or

prescriptive) that will be presented to the management for

evaluation. The organization’s evaluation of the report part of

the student’s final grade for the subject.

Way back 2013, a group of kind-hearted CPAs pooled their

resources together and supported financially two of Father

Saturnino Urios University Bachelor of Science in Accountancy

graduates in their review for the Licensure Examination for

CPAs. The first beneficiary was Jurdan Fedelis and the second

was Marc Kevin Chang. Both are now working with the Commission

on Audit in Caraga Region. The Dean of FSUU Accountancy Program,

Dr. Evangeline P. Jamili, after realizing the fulfillment of

giving financial support, initiated to form a Credit

Cooperative.
 Debet Dare Credit Cooperative (Debet Dare means “to give”)

is a credit cooperative located at Teofilo Sanchez St. Butuan

City, organized to generate funds and extend credit to members

for provident and productive purposes. It also provides

employment to its staffs who help themselves finance their

studies and their family at the same time. Debet Dare Credit

Cooperative was founded September 26, 2013 with a vison of

becoming a premier cooperative in CARAGA which provides trading

activities and development solutions in financial services

arena. Together with its mission of generating business

opportunities that will boost economic development and progress

in the community, integrate best corporate practices in their

operation to meet members’ guaranteed satisfaction, value the

importance of cooperative as an integral component of nation-

building and to empower each member to become an advocate for

enabling business environment that promotes generosity in

helping others.

The On-the-Job Training is an effective way of allowing

students to get first-hand experience on the actual situation

that happens in the workplace. It does not just limit on making

students get familiarized on how their field of specialization

works but it also brings a lot of learnings that students can

use as they pursue a professional career.

 The interns have observed that the theories learned in

academic discussions actually applies in the real accounting

world. The interns strictly followed the accounting process of

analyzing, recording, summarizing and communicating.

The interns greatly believe that the On-the-Job Training

formed a big part in the development of a professional career of

an individual as they face the world of professional

accountants.
 Objectives of the Study

This study seeks to elevate the understanding and put more

substance to the following concerns, furthermore, it aims to

evaluate the following concerns:

1. Understand the nature of Debet Dare Credit Cooperative as

a business organization.

2. Determine the complexity of bookkeeping process of Debet

Dare Credit Cooperative.

3. Observe and identify problems encountered in the

preparation of financial statements of Debet Dare Credit

Cooperative.
 4. Analyze the financial statement of Debet Dare Credit

Cooperative.

Review of Related Literature

This section presents the related literature that would

help enhance the understanding of this study.

A cooperative is an organization established for the

purpose of purchasing and marketing the products of its members,

i.e., shareholders, and/or procuring supplies for resale to the

members, whose profits are distributed to the members (in the

form of patronage dividends), not on the basis of the members’

equity investment in the cooperative, but in proportion to their

patronage of it, i.e., the amount of business that each member

transacts with it. In a workers’ cooperative, the members

jointly manufacture a product and share in the profits of the

enterprise based on the amount of labor they contribute

(Freitag, 2008).

Republic Act No. 9520 known as the "Philippine Cooperative

Code of 2008 which states that it is the declared policy of the

State to foster the creation and growth of cooperatives as a

practical vehicle for promoting self-reliance and harnessing

people power towards the attainment of economic development and

social justice. The State shall encourage the private sector to

undertake the actual formation and organization of cooperatives

and shall create an atmosphere that is conducive to the growth

and development of these cooperatives.

In accordance with R.A. 9520, every cooperative shall

conduct its affairs in accordance with Filipino culture, good

values and experience and the universally accepted principles of

cooperation which include, but are not limited to, the

following:

"(1) Voluntary and Open Membership - Cooperatives are

voluntary organizations, open to all persons able to use

their services and willing to accept the responsibilities

of membership, without gender, social, racial, cultural,

political or religious discrimination.

"(2) Democrative Member Control - Cooperatives are

democratic organizations that are controlled by their

members who actively participate in setting their policies

and making decisions. Men and women serving as elected

representatives, directors or officers are accountable to

the membership. In primary cooperatives, members have equal

voting rights of one-member, one-vote. Cooperatives at

other levels are organized in the same democratic manner.

"(3) Member Economic Participation - Members contribute

equitably to, and democratically control, the capital of

their cooperatives. At least part of that capital is the

common property of the cooperative. They shall receive

limited compensation or limited interest, if any, on

capital subscribed and paid as a condition of membership.

Members allocate surpluses for any or all of the following

purposes: developing the cooperative by setting up

reserves, part of which should at least be indivisible;

benefitting members in proportion to their partonage of the

cooperative's bubsiness; and, supporting other activities

approved by the membership.

"(4) Autonomy and Independence - Cooperatives are

autonomous, self-help organizations controlled by their

members. If they enter into aggreements with other

organizations, including government, or raise capital from

external sources, they shall do so on terms that ensure

democratic control of their members and maintain their

cooperative autonomy.
 "(5) Education, Training and Information - Cooperatives

shall provide education and training for their members,

elected and appointed representatives, managers, and

employees, so that they can contribute effectively and

efficiently to the development of their cooperatives.

"(6) Cooperation among Cooperatives - Cooperatives serve

their members most effectively and strengthen the

cooperative movement by working together through local,

national, regional and international structures.

(7) Concern for Community - Cooperatives work for the

sustainable development of their communities through

policies approved by their members.

Bookkeeping refers mainly to the record-keeping aspects of

accounting; it is essentially the process of recording all the

information regarding the transactions and financial activities

of a business. Bookkeeping is an indispensable subset of

accounting. The term accounting is much broader, going into the

realm of designing the bookkeeping system, establishing controls

to make sure the system is working well, and analyzing and

verifying the recorded information. Accountants give orders,

bookkeepers follow them. (Tracy, 2011)

 Bookkeeping is the foundation of the entire accounting and

financial reporting process. The bookkeeper must analyze and

record every financial transaction in an organization. The sum

of all of those transaction forms the basis for everything that

follows: financial reporting, tax returns, budgets, cash

forecast, grant proposals, and so on. (Halpin, 2012)

Bookkeeping, when done properly, gives you an excellent

measure of how well you’re doing and also provides lots of

information throughout the year. This information allows you to

test the financial success of your business strategies and make

any necessary course corrections early in the year to ensure

that you reach your year-end profit goals. (Kelly, 2016)

Bookkeeping can be made simpler if you follow a logical set

of steps. Here are the fundamental concepts that can help keep

things in order when handling the books for a business.

1. Prepare source documents for all transactions, operations,

and other business events; source documents are the

starting point in the bookkeeping process.

When buying products, a business gets a purchase invoice from

the supplier. When borrowing money from the bank, a business

signs a promissory note payable, a copy of which the business

keeps. When a customer uses a credit card to buy the business’s

product, the business gets the credit card slip as evidence of

the transaction. When preparing payroll cheques, a business

depends on salary rosters and time cards.

All of these key business forms serve as sources of information

into the bookkeeping system — in other words, information the

bookkeeper uses in recording the financial effects of the

business’s activities.

2. Determine and enter in source documents the financial

effects of the transactions and other business events.

Transactions have financial effects that must be recorded — the

business is better off, worse off, or at least “different off”

as the result of its transactions. Examples of typical business

transactions include paying employees, making sales to

customers, borrowing money from the bank, and buying products to

sell to customers.

The bookkeeping process begins by determining the relevant

information about each transaction. The business’s chief

accountant establishes the rules and methods for measuring the

financial effects of transactions. Of course, the bookkeeper

should comply with these rules and methods.

 3. Make original entries of financial effects into journals

and accounts, with appropriate references to source

documents.

Using the source document(s) for every transaction, the

bookkeeper makes the first, or original, entry into a journal

and then into the business’s accounts. Only the official,

established chart of accounts should be used in recording

transactions.

A journal is a chronological record of transactions in the order

in which they occur — like a very detailed personal diary. In

contrast, an account is a separate record, or page as it were,

for each asset, each liability, and so on. One transaction

affects two or more accounts. The journal entry records the

whole transaction in one place; then each piece is recorded in

the two or more accounts that are affected by the transaction.

Entering transaction data correctly and in a timely manner is

critically important. The prevalence of data entry errors was

one important reason why most retailers started to use cash

registers that read barcode information on products, which more

accurately captures the necessary information and speeds up the

data entry.

4. Perform end-of-period procedures — the critical steps for

getting the accounting records up-to-date and ready for the

 preparation of management accounting reports, tax returns,

and financial statements.

A period is a stretch of time — from one day to one month to one

quarter (three months) to one year — that is determined by the

business’s needs. A year is the longest period of time that a

business would wait to prepare its financial statements. Most

businesses need accounting reports and financial statements at

the end of each quarter, and many need monthly financial

statements.

5. Compile the adjusted trial balance for the accountant,

which is the basis for preparing reports, tax returns, and

financial statements.

After all the end-of-period procedures have been completed, the

bookkeeper compiles a complete listing of all accounts, which is

called the adjusted trial balance. Modest-sized businesses

maintain hundreds of accounts for their various assets,

liabilities, owners’ equity, revenue, and expenses.

Larger businesses keep thousands of accounts, and very large

businesses may keep more than 10,000 accounts. In contrast,

external financial statements, tax returns, and internal

accounting reports to managers contain a relatively small number

of accounts. For example, a typical external balance sheet

reports only 25 to 30 accounts (maybe even fewer), and a typical

income tax return contains a relatively small number of

accounts.

The accountant takes the adjusted trial balance and groups

similar accounts into one summary amount that is reported in a

financial report or tax return. For example, a business may keep

hundreds of separate inventory accounts, every one of which is

listed in the adjusted trial balance. The accountant collapses

all these accounts into one summary inventory account that is

presented in the business’s external balance sheet. In grouping

the accounts, the accountant should comply with established

financial reporting standards and income tax requirements.

6. Close the books — bring the bookkeeping for the fiscal year

just ended to a close and get things ready to begin the

bookkeeping process for the coming fiscal year.

Books is the common term for a business’s complete set of

accounts. A business’s transactions are a constant stream of

activities that don’t end tidily on the last day of the year,

which can make preparing financial statements and tax returns

challenging. The business has to draw a clear line of

demarcation between activities for the year (the 12-month

accounting period) ended and the year yet to come by closing the

books for one year and starting with fresh books for the next

year.
 Understanding financial statements is key to fundamental

stock analysis and overall investment research. Financial

statements provide an account of a company’s past performance, a

picture of its current financial strength and a glimpse into the

future potential of a firm. The role of financial reporting for

companies is to provide information about their fiscal health

and financial performance. As investors, we use financial

reports to evaluate the past, current and prospective

performance and financial position of a company. These

statements allow us to compare one firm to another and form the

basis of valuing the worth of a stock. Several financial

statements are reported by companies. The most important three,

and the three used most often by investors, are the income

statement, the balance sheet and the cash flow statement

(Lan,2018).

Analysis of Financial Statements is a systematic process of

the critical examination the financial information contained in

the financial statements in order to understand and make

decisions regarding the operations in the firm. The Analysis of

Financial Statements is a study of relationships among various

financial facts and figures as set out in the financial

statements i.e., Balance sheet and Profit and Loss Account. The

complex data given in these financial statements is

divided/broken into simple and valuable elements and

relationships are established between the elements of the same

statement or different financial statements (Agrawal, 2011).

Horizontal analysis is a financial statement analyst uses

horizontal analysis to compare two years' financial data and

shows changes in percentage or in dollars. This specialist also

could compare several years in order to detect trends or

operating indicators. For example, a finance specialist might

review a company's statement of profit and loss and compute

dollar and percentage variations in sales over a ten-year period

to assess business performance. Vertical analysis helps a firm

understand business performance and segment productivity by

evaluating common size statements. Such statements indicate

operating items in percentage and dollar forms. Vertical

analysis specialists compute each item as a percentage of a base

amount. For example, ABC Finance's common size balance sheet--

showing assets, liabilities and owners' equity--could show asset

items as percentages of total assets. If ABC Finance's total

assets amount to $100 million, and cash available is $12

million, a common size balance sheet will show total assets at

100% and cash available at 12%.

Horizontal analysis, sometimes called trend analysis, is

the process of comparing line items in comparative financial

statements or financial ratios across a number of years in an

effort to track the history and progress of a company’s

performance. In other words, it’s a way for analysts to compare

accounts or performance metrics over time to see if the company

is improving or declining (My Accounting Course, 2017).

Financial ratios are useful tools that help companies and

investors analyze and compare relationships between different

pieces of financial information across an individual company's

history, an industry, or an entire business sector. Numbers

taken from a company's income statement, balance sheet, and cash

flow statement allow analysts to calculate several types of

financial ratios for different kinds of business intelligence

and information (Peavler, 2018).

Financial ratio analysis can provide meaningful information

on company performance to a firm's management as well as outside

investors. Calculating the ratios is relatively easy;

understanding and interpreting what they say about a company's

financial status takes a bit more work. Ratios serve as a

comparative tool of analysis for liquidity, profitability, debt,

and asset management, among other categories—all useful areas of

financial statement analysis. Companies typically start with

industry ratios and data from their own historical financial

statements to establish a basis for ratio comparison. Analysts

compare the ratios for a given firm to the ratios of other firms

in the same industry and against previous quarters or years of

historical data for the firm itself. Performing an accurate

financial ratio analysis and comparison helps companies gain

insight into their financial position so that they can make

necessary financial adjustments to enhance their financial

performance (Peavler, 2018).

Theoretical Framework

According to Republic Act No. 9520, Article 3, a

cooperative is an autonomous and duly registered association of

persons, with a common bond of interest, who have voluntarily

joined together to achieve their social, economic, and cultural

needs and aspirations by making equitable contributions to the

capital required, patronizing their products and services and

accepting a fair share of the risks and benefits of the

undertaking in accordance with universally accepted cooperative

principles.
 “The main function of the CDA is ‘development’.” Dr.

Castillo explains, “Why development? Because cooperatives

basically focus on the less-privileged members of the society.

So the target of cooperatives is to uplift the livelihood,

welfare, economic, and social status of the less-privileged

members of our society that’s why we have to develop them. We

are pro poor. We are tasked to put them in the socio economic

mainstream so that instead of becoming a burden to society, they

will become an active player in nation building. In order to do

that, we have our technical assistance program, which is

primarily composed of capacitating the human resources in the

development world, particularly those who are belonging in the

micro and small cooperatives, the capacity building is in terms

of training. We have to train them on what cooperatives is all

about, it is very awkward to put them in the cooperatives world

if they do not understand it. They have to at least understand

what the cooperative principles is all about and the

cooperatives laws because if they do not understand these, they

will not be able to comply with the legal requirements that all

cooperatives satisfy.”
 Bookkeeping involves the recording of financial

transactions and other information related to the business on a

day-to-day basis. The most important aspect of bookkeeping is to

keep an accurate account of all records and keep them up to

date. Accuracy is the most vital part of the bookkeeping

process.

Bookkeeping is constructed to provide the preliminary

information needed to create accounting statements. Each

transaction must be recorded in the books, and any and all

changes must be updated on a continuous basis (Reviso, 2017).

Others see bookkeeping as limited to recording transactions

in journals or daybooks and then posting the amounts into

accounts in ledgers. After the amounts are posted, the

bookkeeping has ended and an accountant with a college degree

takes over. The accountant will make adjusting entries and then

prepare the financial statements and other reports. The past

distinctions between bookkeeping and accounting have become

blurred with the use of computers and accounting software. For

example, a person with little bookkeeping training can use the

accounting software to record vendor invoices, prepare sales

invoices, etc. and the software will update the accounts in the

general ledger automatically. Once the format of the financial

statements has been established, the software will be able to

generate the financial statements with the click of a button

(Averkamp, 2018).

Three financial reports commonly used in business are the

balance sheet, income statement, and the statement of cash

flows. They report the financial position of the cooperative,

its performance over a given time period, and its ability to

meet cash obligations. They are the basis for planning future

operations. Each report contains different, but interrelated

information that together give a complete picture of the

financial operations of the cooperative. Managers, bookkeepers

and board members should be able to understand and interpret

these reports so they can make informed business decisions about

the future of the cooperative (Binion, 1998).

Members and patrons also have an interest in understanding

cooperative financial statements. Financial strength determines

a cooperative’s ability to control its future and provide

services for its members and patrons. Services provided by a

local cooperative can be an important part of members’

operations. Members depend on financially strong organizations

to serve their current and future needs (Wissman, 1991).

Significance of the Study

The results of this study would be of great benefit to the

following people:
 Accountancy Interns. As a way of exposing the interns into

the real world of business. It enables them to apply their

accounting and financial learnings and thoroughly understand the

topics being discussed in their accounting courses. In addition,

this internship adds knowledge about Cooperatives considering as

one of the additional subtopics in CPA Licensure Exam.

Accountancy Program. As the guide to the program to

determine the effectiveness of sending Accountancy Interns to

cooperatives as their training ground. The evaluation of the

program can be the basis to help future interns whether to work

with cooperatives.

The Cooperative. As to help the bookkeeper in her work

since the interns are tasked to keep records. It helps the

entity assess its position and performance. In addition, it

serves as a basis for the improvement of the operation since the

interns are tasked to understand the complexity of keeping

records and to prepare financial statements and provide

corresponding analysis.
 Future Accountancy/Accounting Technology Students. To

encourage the students to work as interns and choose entity that

will help them apply and further understand the learnings they

have learned in their accounting courses.

Definition of Terms
 To attain understanding of the study concerning the

ambiguous terms, the following are functionally defined:

Chapter 2
 METHODOLOGY

This chapter presents the methodology and procedures of

research employed in the study. It comprises the research

environment, ethical consideration, and data analysis.

Research Environment

This study was conducted at Debet Dare Credit Cooperative

(DDCC) located at Teofilo Sanchez St. Butuan City.

Debet Dare Credit Cooperative was founded September 26,

2013 with a vison of becoming a premier cooperative in CARAGA

which provides trading activities and development solutions in

financial services arena. Together with its mission of

generating business opportunities that will boost economic

development and progress in the community, integrate best

corporate practices in their operation to meet members’

guaranteed satisfaction, value the importance of cooperative as

an integral component of nation-building and to empower each

member to become an advocate for enabling business environment

that promotes generosity in helping others.

As an accountancy students, the interns chose to work with

accounting related jobs and used these jobs as their basis in

formulating the study. The interns were tasked to assist the

bookkeeper in keeping records in every financial transaction in

a day-to-day basis. The interns were also tasked to prepare

financial statements and provide corresponding analysis.

Ethical Consideration

The interns asked permission to conduct their On-The-Job

Training in Debet Dare Cooperative, provided with an endorsement

letter from the Dean of Accountancy Program, Dr. Evangeline P.

Jamili, CPA, and the Vice President for Academic Affairs, Rev.

Fr. Randy Jasper C. Odchigue and a notarized Memorandum of

Agreement signed again by the Dean of Accountancy Program.

In conducting the research, interns always observed

fundamental principles of professional accountants as if they

were already professionals. The trainees were obligated that

confidential information are always protected during the work

and study conducted. As interns, they were directed not to

disclose any such information to third parties without proper

and specific authority. They ensure integrity and objectivity

during research by being straightforward and by not being bias

in their judgments.

Data Analysis

The accounting cycle was observed to gather information to

come up with a financial reports. All economic transactions were

being recorded and classified. These transactions were accounted

and summarized through a financial statements. All corresponding

values, amounts and explanations of these economic transactions

can be traced through financial statements. These financial

statements serve as the basis for analysis. Horizontal and ratio

analysis were used as tool for the critical examination of

financial information contained in the financial statements.

These tools were used to determine the different relationship of

financial facts and figures for the last year and for the

current year.
 Chapter 3

TECHNICAL ANALYSIS AND DISCUSSIONS

This chapter presents the data gathered by the interns in

the conduct of their On-the-Job Training (OJT) in Debet Dare

Credit Cooperative (DDCC). The interpretations, analysis and

discussions presented is based on the objectives formulated.

Observations and computations are done as it appears necessary

to provide a comprehensive study.

1. Debet Dare Credit Cooperative as a business organization.

Debet Dare Credit Cooperative as a business organization is

almost the same with the other types of business organizations.

Before the entity can actually operate it has to follow and

comply all the necessary documentary requirements. What makes a

cooperative different from the rest of the business organization

are its characteristics as being autonomous and members join

voluntarily to achieve a defined purpose.

The founding members of Debet Dare chose to establish it as a

cooperative instead of a being a non-government organization

because of the difficulty in complying all necessary

requirements due to the prevailing issues, specifically the

Priority Development Assistance Fund (PDAF) scam or the Pork

Barrel scam. Since the very purpose why the founding members

want to establish an organization, is to help, and they wanted

to put that into action right away, so they opted to form Debet

Dare Credit Cooperative.

2. Complexity of Bookkeeping of Debet Dare Credit Cooperative

The process of bookkeeping applied in Debet Dare Credit

Cooperative is the usual bookkeeping used by other business

organizations. The type of bookkeeping the entity employs is the

bookkeeping that the interns encounter in their accounting

subjects. The interns strictly followed the Generally Accepted

Accounting Standards as a requirement.

Debet Dare used a computerized recording of transactions.

Though it does not really using an automated accounting system

or a software for that matter, the recording of financial

transactions by the interns was properly formulated. There was

an automatic updating of accounts in the general ledger and in

the trial balance. After all adjustments and once the format of

the financial statements has been done, the formulated excel

will generate the financial statements automatically.

 The recording of financial transactions by the interns was

easy because the journal was already in format. The first job of

the intern is to record financial transactions and to update the

subsidiary ledger. The interns were also tasked to amortize the

unearned interest income to determine the level of income over

the life of the loan and to update the balances of unpaid

subscribed share capital to determine the remaining capital to

be paid by the members of the cooperative. Savings, donations,

receivables, salaries, and common expenses were also updated.

All the updates of these accounts with corresponding values were

summarized for easy reporting and evaluation of the management

or members.

In order to further understand the bookkeeping process of

Debet Dare Credit Cooperative, interns were also tasked to do

administrative works. The interns updated the registration of

the entity with the SSS and the city office. They also engaged

with processing clearances at Philhealth and Pag-Ibig and paying

withholding tax. These tasks were supplemental to the intern’s

knowledge while recording remaining transactions with the

salaries as a deductions. These tasks also introduced unfamiliar

supporting documents to the interns which is an advantage for

them for future professional works.

 The process of bookkeeping applied in Debet Dare Credit

Cooperative is the usual bookkeeping used by other business

organizations. The type of bookkeeping the entity employs is the

bookkeeping that the interns encounter in their accounting

subjects. In addition, the interns strictly followed the

Generally Accepted Accounting Standards as a requirement.

3. Preparation of the financial statements of Debet Dare

Credit Cooperative.

The process of making an accurate and reliable financial

statements for the cooperative requires a proper accounting in

accordance with the Generally Accepted Accounting Principles

(GAAP) and other standards of accounting. The interns have

observed and identified some problems in the process

particularly on the preparation of the appropriate journal

entries for the payroll of the cooperative’s employees since the

expenses are allocated between three entities. For the year

2017, there were difficulties in allocating the salaries and

wages of the employees because there were advances done by them

which were not fully paid upon their next payroll. At year-end,

there were even employees who happen to have negative net pay

which makes the process a bit complicated. The interns also

encountered the unbalancing of the debit and credit balances of

the cooperative’s trial balance which results to the need for

review of the entries and check if the amounts correspond to the

receipts and disbursements and make sure that the debit and

credit of the entries are balanced.

4. Analysis of the financial statement of Debet Dare Credit

Cooperative.

The interns decided to use ratio analysis in analyzing the

financial statement of Debet Dare Credit Cooperative. Ratios

serve as a comparative tool of analysis for liquidity,

profitability, debt, and asset management, among other

categories—all useful areas of financial statement analysis. The

interns use profitability ratio, liquidity ratio and solvency

ratio in analyzing the financial statement of Debet Dare Credit

Cooperative. Such analysis can help businesses improve their

profitability, cash flow, and value as well as to assist the

management in the decision making process.

First ratio analysis that the interns had used is the

profitability analysis which measures the ability of a business

to make profit. The first measure of the profitability analysis

is the net profit margin. Profit margin is a profitability ratios

calculated as net income divided by revenue, or net profits

divided by sales. The interns computation of the net profit

margin of the year 2017 resulted to (153%) which is higher

compare to profit margin of the year 2016 which is (74%) which

is not a good indication for the year’s performance of the

cooperative. A negative profit margin means that the

cooperative’s net loss is greater that it’s revenue and also

indicates that the entity is losing more money in the operation

compared to generating revenues from the operation so they have

to rely on their cash reserves and funds coming from the

investors .

The second measure of the profitability analysis is the

asset turnover. Asset turnover is a financial ratio that

measures the efficiency of a company's use of its assets in

generating sales revenue or sales income to the company and can

simply be computed by dividing the year end revenue to the total

assets. The higher the turnover ratios mean the company is using

its assets more efficiently. The interns computation of the

asset turnover for the year 2017 resulted to 10.43% which means

that the cooperative is generating P 0.1043 for every peso

invested in the assets.

Next measure of the profitability analysis is the fixed

asset turnover which measures how a company is able to generate

net sales from fixed-asset investments, namely property, plant

and equipment (PP&E), net of depreciation and can simply be

computed by diving the year end revenue over the fixed assets.

The interns computation of the fixed asset turnover for the year

2017 resulted to 130.64% which means that for every peso

invested in the fixed assets , the cooperative is able to

generate P 1.30.

The last profitably ratio that the interns used is the

return on equity measures how many dollars of profit a company

generates with each dollar of shareholders' equity. The formula

for ROE is: ROE = Net Income/Shareholders' Equity and the higher

the ROE the better. The interns computation of the ROE resulted

to a negative(34.49%) which means that the cooperative in unable

to profit from each peso of the shareholders’ equity.

Another ratio analysis tool that the entity can use is the

liquidity ratio which measures the ability of the entity to pay

their debts. The first measure of liquidity analysis that the

interns used is the receivable turnover which simply measures

how many times the receivables are collected during a particular

period. It is a helpful tool to evaluate the liquidity of

receivables. It is computed by simply dividing net sales over

average receivable. The interns’ computation of the receivable

turnover resulted to 0.18 which means that the cooperative is

roughly able to collect its receivable 0.18 times per year, but

compare to last year’s receivable turnover of 0.17, there is an

increase which is means that the cooperative collection of

receivable has slightly improved.

The second measure of liquidity is the current ratio whick

measures a company's ability to pay short-term and long-term

obligations. The current ratio considers the current total

assets of a company relative to that company’s current total

liabilities and can simply be computed by dividing total current

assets over total current liabilities. The interns computation

of current ratio for the year 2017 is 1.76 which means that for

every P1.00 of current debt, Debet Dare has P1.76 available to

pay for the debt which is more than enough to cover its current

liabilities if they come due. Compare to 2016 current ratio of

1.83, the current ratio of Debet Dare had slightly decrease,

however, the current ratio of the year 2017 still indicates

that the current assets of the cooperative is more than enough

to cover its current liabilities if they come due.

The last measure of liquidity is the quick ratio which is a

measure of how well a company can meet its short-term financial

liabilities. Compare to current ratio, quick ratio does not

include inventory and other less liquid current assets in the

computation. The formula for computing quick ratio is ( Cash +

Marketable Securities + Accounts Receivable) / Current

Liabilities. The interns’ computation of quick ratio resulted to

1.76 which is same to the entity’s current ratio. This is

because Debet Dare Credit Cooperative only offers credit

services and does not keep an inventory. Compare to 2016 current

ratio of 1.83, the quick ratio of Debet Dare Cooperative had

slightly decrease, however , the quick ratio of the year 2017

still indicates that the current assets exluding inventory and

other less liquid current asset of the cooperative is more than

enough to cover its current liabilities if they come due.

The last ratio analysis that the interns’ had used is the

solvency ratio. The solvency ratio is used to examine the ability

of a business to meet its long-term obligations.