Week 2

Elements of Statement of
Comprehensive Income(SCI)

I What I need to know?

Last topic, we talked about the different elements of the Statement of
Financial Position: The Assets, Liabilities and Owner’s Equity. In the accounting
equation, Total assets equals total liabilities plus total owner’s equity.
This handout will help the learners demonstrate an understanding of the
service income and operating expenses of a service business that will equip
him/her in the preparation of the SCI for service businesses.
The learners should be able to:
1. identify the elements of the SCI and describe each of these items for a
service business.
2. Prepare an SCI for a service business using the single-step approach.

I What is new?
Let us review some of the concepts that we have learned before.

TASK 1. Directions: Identify the words that are being described in each sentence.
_________ 1. These are items of expenses that have been incurred
but have not been recorded and paid.
_________ 2. These are income items that have been earned but have not been
recorded and paid by the customer.
__________3. It is the money spent or costs incurred by a business in their effort to
generate revenues.
__________4. The income that a business has from the normal business activities
such as sale of goods to customers.
__________5. This type of business offers professional skills, advice, and
consultations.

A. Expense d. Service

b. Accrued Expenses e. Revenue

D What I know?
c. Accrued Income f. Merchandising

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Fill in the blanks with the correct answer by recalling the Income Statement and
the Elements of SCI.
_________ 1. Accounts in the SCI are (Permanent/Temporary)
_________ 2. The two elements of financial statements for SCI
_________ 3. Formerly known as Income Statement
_________ 4. Includes salaries and utilities.
_________ 5. Includes rental revenue, sales, and service income.
_________ 6. Best approach for a single proprietorship business.
_________ 7. Includes gains and losses of a hedging derivatives.
_________ 8. Income is greater than expenses will give you.
_________ 9. If expenses are more than net income, you will have
_________10. Includes company name, income, and expenses

D What is in?
Task 2: My Personal Statement of Comprehensive Income
Directions: In a piece of paper, do the following :
A. Write your monthly allowance (computed by daily allowance x number of
days in a month)
B. Write the amount you spend on food, transportation, phone load, etc. (make
it monthly to match their allowance)
C. Deduct the amount you spend from the amount of your allowance.
Monthly Allowance:____________________________________

Monthly Expenditures:_________________________________

Net Income:____________________________________________

Questions:
1. Let say your net income is negative or you have incurred too many expenses
than your allowance, where will you get an extra money to cover the
expenses?_________________________________________________________________
2. Can you still earn even without a cash? How?
__________________________________________________________________
3. Can you still lose even you have full bank account? How?
__________________________________________________________________

D What is it?
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 A statement of comprehensive income consists of all revenues, gains and
losses that cause the equity account to change at the end of the accounting period.

They are nominal accounts or temporary accounts 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 as the
balances at the beginning of the following year.

SCI is also known as the income statement. Contains the results of the
company’s operations for a specific period 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)
Elements Of Comprehensive Income
1. Heading is composing of company name, the SCI title and the date , starts with
for the period ended (date)
2. Income are increases in economic benefits during the period in the form of
inflows or enhancement of assets or decreases of liabilities that result in increases
in equity, other than those relating to investments by the business owners.
3. Expenses are decreases in economic benefits during the period in the form of
outflows or depletions of assets or increases of liabilities that result in decreases in
equity, other than those relating to distributions to the business owners.
4. Net Income/(Net Loss) is the result of operation. If the income is greater than
the expenses, then the result is net income while if the expenses are greater than
income, then the result is net loss.

Approaches of presenting SCI

Single-step – 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)

Multi-step – Called multi-step because there are several steps needed to arrive at
the company’s net income. (Haddock, Price, & Farina, 2012)

Remember: The two are only formats and will yield the same amount of net
income/loss. The single-step SCI is more commonly used by service companies
while multi-step format is more commonly used by merchandising companies.

A service company provides services to generate revenue and the main

cost associated with their service is the cost of labor which is presented
under the account Salaries Expense. In presenting these items on the
Statement of Comprehensive Income, a service company will separate all
revenues and expenses (as seen in the single-step format)

Under the nature of expense method, expenses are presented

according to their nature (for example, depreciation, purchase of
materials, transport costs, employee benefits and advertising costs) and
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 are not reallocated among their functions within the entity. This method
is easy to apply because no reallocation of expenses is necessary.

The examples of comprehensive income are gains or losses in

hedging derivatives, translation of foreign currency exchange rate
adjustments and unrealized gains and losses on postretirement benefits

Remember the Formula

Income minus Expenses plus Comprehensive Income is equal to Net

Income or Net Loss or Total Comprehensive income.

E What is more?
Task 3. Label up!
Directions: Identify and label the parts or elements of SCI in a single-step
approach used by a service company.

Ingram Online Consulting

Statement of Comprehensive Income 1
For the year ended December 31, 2019

Revenue P 100,000
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Less: Operating Expenses 3
Wage Expense P 45,000
Rent Expense 12,000
Advertising Expense 10,500
Depreciation Expense 7,500
Supplies Expense 3,000
Internet Expense 2,200
Total Operating Expense P 80,200

Operating Income P 19,800

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E What I can do?

do?
Task 5 Let’s Practice.

4
Directions: Solve for the unknown

E What else I can do?

Task 6. Let’s Create

Direction: Prepare a Statement of Comprehensive Statement (Single-step

Approach) for each of the following items.

1. At the end of the first month of operations for Juan’s Service

Company, the business had the following accounts: Cash, Php19,000;

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 Prepaid Rent, Php500; Equipment, Php5,000 and Accounts Payable
Php2,000. By the end of the month, Jackson's had earned Php20,000
of Revenues, Php1,000 of Utilities Expenses and Php1,500 of Salaries
Expenses. Calculate the net income to be reported by the company for
this first month.

2. BTS Services had the following accounts at the end of the year. For
taxes purposes they need to submit a SCI to the BIR.

Revenues – 20,000

Rent expense – 3,000

Salaries expense – 4,000

Utilities expense – 2,000

3. Black Pink Salon had the following accounts: Service Revenue

Php95,000.00; Salaries Expense Php5,000.00; Transportation
Expense Php15,000.00; Rent Expense Php20,000.00; Utilities
Expense Pph3,000.00; Other Comprehensive Income is Php8,000.00.

4. The Legends Online Services had the following accounts: Salaries

Expense Php25,000.00; Transportation Expense Php1,000.00; Rent
Expense Php10,000.00; Utilities Expense Php5,000.00; and Services
Revenue is Php40,000.00.

What I have learned?

A
Task 9. Complete me!
Directions: Complete the sentence with the learnings you had from our
lesson.

1. The Statement of Comprehensive Income consists of

__________________________________________________________________
2. SCI is used
_____________________________________________________________________
____________________________________________________________________.
3. The approaches to be used in preparing for SCI are
_____________________________________________________________________
_____________________________________________________________________

What I can achieve?

A
Fill in the blanks with the correct answer by recalling the Income Statement
and the Elements of SCI.
_________ 1. Accounts in the SCI are (Permanent/Temporary)

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_________ 2. The two elements of financial statements for SCI
_________ 3. Formerly known as Income Statement
_________ 4. Includes salaries and utilities.
_________ 5. Includes rental revenue, sales, and service income.
_________ 6. Best approach for a single proprietorship business.
_________ 7. Includes gains and losses of a hedging derivatives.
_________ 8. Income is greater than expenses will give you.
_________ 9. If expenses are more than net income, you will have
_________10. Includes company name, income, and expenses

REFLECTION:

Pedestrians in protective face mask walk past a closed business on March 20 in Philadelphia.AP
PHOTO/MATT ROURKE

Most of the businesses all over the world were affected by this pandemic. In the
Philippines, both large and small businesses had been closed for some time, which caused
displacement from work of a lot of employees. Filipino families, however, show their
resiliency amidst of this crisis. Finding ways to earn income to support the needs of their
family members is one of the main concerns of every household.
Assess and evaluate the income and expenses of your family for the past two
months. Enumerate the ways on how your parents/guardians support the expenses that
you had incurred. Prepare your Family SCI for this month.
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
_______________________________________________________________________________________.