LESSON2 FABM2 STATMENT OF COMPREHENSIVE

STATEMENT OF
COMPREHENSI
VE INCOME

a. Identify and describe the
elements of SCI for a
Service Business and
merchandising
b. Prepare an SCI for a
service business using
single step approach
OBJECTIV
ES

LESSON 1
IDENTIFY AND DESCRIBE THE
ELEMENTS OF SCI FOR A SERVICE
AND MERCHANDISING BUSINESS
AND PREPARATION USING
SINGLE
STEP APPROACH FOR SERVICE
BUSINESS

STATEMENT OF COMPREHENSIVE
INCOME (INCOME STATEMENT)
The Statement of Comprehensive Income informs
the reader about the “performance” and activities
of the company for a certain period (e.g., for the
period ended December 31, 2019). It contains the
revenues and expenses incurred by an entity for a
specific period. It is also compared to a running
video because it presents an entity’s activities form
the start to the end of a period.

STATEMENT OF COMPREHENSIVE
INCOME (INCOME STATEMENT)
Another meaning is it “contains the results
of the company’s operations for a specific
period of time which is called net income if
it is a net positive result while a net loss if it
is a net negative result. This can be
prepared for a month, a quarter or a year”.
(Haddock, Price, & Farina, 2012)

TEMPORARY ACCOUNTS
Temporary accounts are also known as nominal
accounts are the accounts found under the SCI.
They are called such because at the end of the
accounting period balances under these accounts
are transferred to the capital account, thus having
only temporary amounts and resulting to zero
beginning balances at the beginning of the
following year. (Haddock, Price, & Farina, 2012)

TEMPORARY ACCOUNTS
Examples of temporary accounts
include revenues, sales, utilities
expense, supplies, expense, salaries
expense, depreciation expense,
interest expense among others.

ELEMENTS OF THE SCI
1. The Title
The Statement of Comprehensive Income is
a financial report therefore it must be
properly identified and dated. The title or
the heading includes the name of the
entity, the title of the report (i.e.,
Statement of Comprehensive Income and
the period it covers.

ELEMENTS OF THE SCI
2. Revenue
“Revenues arise in the course of the
ordinary activities of an entity and is
referred to by a variety of different
names including sales, fees, interest,
dividend, royalties, rent”. (The Conceptual
Framework for Financial Reporting by the
International Accounting Board 2010)

ELEMENTS OF THE SCI
2. Revenue
Revenues are the first line item in the Statement of
Comprehensive Income. They vary depending to the
nature of the entity. A small retail store has sales as its
main revenue. Revenues may also come from interest
from time deposits and dividends earned from shares
of stocks. Royalties from individuals who would like to
use their established brand and technology. Owners of
fixed properties (e.g. land and building) may charge
third parties with rent.

ELEMENTS OF THE SCI
2. Revenue
Entities engage in service business use service income
as revenue account.
Smaller and less complex entities may have one or two
sources of revenues while larger and more complex
entities have multiple sources of revenues, recorded
when
earned.

ELEMENTS OF THE SCI
3. Expenses
“Expenses arise in the course of the ordinary
activities of the entity include, for example, cost
of sales, wages, and depreciation. They usually
take the form of an outflow or depletion of asset
such as cash and cash equivalent, inventory,
property, plant, and equipment.” (The Conceptual
Framework for Financial Reporting by the
International Accounting Board 2010)

ELEMENTS OF THE SCI
3. Expenses
Revenue earned by business are matched with
expenses. For service entities, expenses are
categorized as cost of service or operating
expense. In a law firm, cost of service includes
the salaries paid to lawyers who render services
to legal clients in behalf of the law firm.
Operating expenses include rent for office space,
salaries for office staff, permits to local
government chapters, depreciation of office

ELEMENTS OF THE SCI
3. Expenses
For a merchandising concern, the expenses are
classified as cost of sales, selling expenses and
administrative (operating) expenses.
The cost of sales is the direct cost of the products
sold or the amount paid or payable
by the business entity to its suppliers for the
merchandise sold to the business then
to then sold to the entity’s customers.

ELEMENTS OF THE SCI
4. Gain and losses
“Gains represent other items that meet the
definition of income and may not, arise in
the course of the ordinary activities of an
entity.” (The Conceptual Framework for
Financial Reporting by the International
Accounting 2010) Gains are
incidental to the operation of the business.

ELEMENTS OF THE SCI
4. Gain and losses
“Losses represent other items that meet the
definition of expenses and may or may
not arise in the course of the ordinary
activities of the entity.”

ELEMENTS OF THE SCI
5. Other Items
Other items included in the computation of
the total comprehensive income are income
taxes and items of other comprehensive
income.
Income tax is the sum of money payable to
the government. Items of other
comprehensive income are increases or
decreases in economic benefit for a period.

THE TWO TYPES OF
STATEMENT OF
COMPREHENSIVE
INCOME:
1. The Single-step Format of the SCI
It is called single-step because all revenues
are listed down in one section while all
expenses are listed in another. Net income is
computed using a “single-step” which is Total
Revenues minus Total Expenses. (Haddock,
Price, & Farina, 2012). This
format of SCI is more commonly used by
service companies.

THE SINGLE-STEP
FORMAT OF THE SCI

THE TWO TYPES OF
STATEMENT OF
COMPREHENSIVE
INCOME:
2. Multi-step format of the SCI
It is called multi-step because there are
several steps needed in order to arrive at the
company’s net income. (Haddock, Price, &
Farina, 2012) This format is more
commonly used by merchandising
companies

DIFFERENCE BETWEEN THE SCI OF
A SERVICE BUSINESS AND THE SCI
OF A
MERCHANDISING BUSINESS

1.A service company provides
services in order to generate
revenue and the main cost
associated with their service is the
cost of labor which is presented
under the account Salaries
Expense.

2. A merchandising company sells
goods to customers and the main cost
associated with the activity is the cost
of
the merchandise which is presented
under the line item Cost of Goods
Sold.

PREPARATION OF THE STATEMENT
OF COMPREHENSIVE INCOME
USING THE
SIGNLE-STEP APPROACH

ABC COMPANY STATEMENT OF COMPREHENSIVE
INCOME FOR THE MONTH OF JUNE 2023
Cost of Goods Sold: ₱300,000
Sales: ₱500,000
Salaries: ₱50,000
Rent Expense: ₱20,000
Interest Income: ₱10,000
Utilities: ₱10,000

ABC COMPANY
Statement of Comprehensive Income
For the Month Ended June 30, 2023
Revenue:
Sales ............................................. ₱500,000
Add: Interest Income .................. ₱10,000
Total Revenue ................................ ₱510,000
Less: Cost of Goods Sold ........... ₱300,000
Gross Profit ..................................... ₱210,000
Operating Expenses:
Salaries .......................................... ₱50,000
Rent Expense ................................. ₱20,000
Utilities ........................................... ₱10,000
Total Operating Expenses .......... ₱80,000
Net Income ........................................ ₱130,000

DEF COMPANY STATEMENT OF
COMPREHENSIVE INCOME FOR THE
MONTH OF JUNE 2023
Sales: ₱1,000,000
OPERATING expenses: 200,000

DEF COMPANY
Revenue:
Sales .................................................
₱1,000,000
Less: Cost of Goods Sold ............ ₱600,000
Gross Profit ......................................... ₱400,000
Less: Operating Expenses ............. ₱200,000
Net Income ............................................
₱200,000

HIJ COMPANY STATEMENT OF COMPREHENSIVE INCOME FOR
THE MONTH OF JUNE 2023
Sales: ₱3,000,000 Salaries and Wages: ₱500,000
Sales Interest: ₱10,000 Gain on Sale of Equipment: ₱50,000
Cost of Goods Sold: ₱1,800,000 Other Income: ₱100,000
Maintenance: ₱15,000 Depreciation: ₱20,000
Advertising: ₱30,000 Travel Expenses: ₱50,000

KLM COMPANY STATEMENT OF COMPREHENSIVE INCOME
FOR THE MONTH OF JUNE 2023
Sales: ₱800,000 Salaries and Wages: ₱100,000
Sales Interest: ₱10,000
Cost of Goods Sold: ₱500,000 Other Income: ₱10,000
Depreciation: ₱10,000
Advertising: ₱20,000 Intereset Income: ₱5,000

QRS COMPANY
Sales Revenue: ₱1,200,000
Supplies : ₱25,000

ABM COMPANY
Sales Revenue: ₱900,000
Salaries: : ₱ 150,000
Transportation : ₱10,000

WXY COMPANY
Salaries: : ₱ 300,000
Maintenance: ₱40,000
Supplies: ₱15,000
Advertising: ₱40,000

ZAB COMPANY
Salaries: : ₱ 350,000
Cost of Goods Sold: ₱1,300,000
Travel: ₱25,000
Supplies: ₱15,000

LESSON2 FABM2 STATMENT OF COMPREHENSIVE

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