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    Lesson 2 Statement of Comprehensive Income

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    Mylene Santiago
    The document contains information about preparing and presenting a Statement of Comprehensive Income (SCI). 1. The SCI contains revenues, expenses, and net income or loss for a specific period of time. It is prepared using either a single-step or multi-step format. 2. A single-step SCI lists all revenues in one section and all expenses in another section, with net income computed as total revenues minus total expenses. 3. A multi-step SCI for a merchandising business emphasizes the steps to arrive at net income, commonly listing revenues, cost of goods sold, gross profit, expenses, and net income.

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    Lesson 2 Statement of Comprehensive Income

    Uploaded by

    Mylene Santiago
    2K views24 pages
    The document contains information about preparing and presenting a Statement of Comprehensive Income (SCI). 1. The SCI contains revenues, expenses, and net income or loss for a specific period of time. It is prepared using either a single-step or multi-step format. 2. A single-step SCI lists all revenues in one section and all expenses in another section, with net income computed as total revenues minus total expenses. 3. A multi-step SCI for a merchandising business emphasizes the steps to arrive at net income, commonly listing revenues, cost of goods sold, gross profit, expenses, and net income.

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    The document contains information about preparing and presenting a Statement of Comprehensive Income (SCI). 1. The SCI contains revenues, expenses, and net income or loss for a specific period of time. It is prepared using either a single-step or multi-step format. 2. A single-step SCI lists all revenues in one section and all expenses in another section, with net income computed as total revenues minus total expenses. 3. A multi-step SCI for a merchandising business emphasizes the steps to arrive at net income, commonly listing revenues, cost of goods sold, gross profit, expenses, and net income.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    2K views24 pages

    Lesson 2 Statement of Comprehensive Income

    Uploaded by

    Mylene Santiago
    The document contains information about preparing and presenting a Statement of Comprehensive Income (SCI). 1. The SCI contains revenues, expenses, and net income or loss for a specific period of time. It is prepared using either a single-step or multi-step format. 2. A single-step SCI lists all revenues in one section and all expenses in another section, with net income computed as total revenues minus total expenses. 3. A multi-step SCI for a merchandising business emphasizes the steps to arrive at net income, commonly listing revenues, cost of goods sold, gross profit, expenses, and net income.

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    © All Rights Reserved
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    Download as pptx, pdf, or txt
    of 24

    STATEMENT

    OF
    COMPREHENSIVE INCOME
    Individual Activity
    Prepare a Personal SCI:
    a. Prepare a ¼ piece of paper.
    b. Write your monthly allowance (computed by daily
    allowance x number of days in a month).
    c. Write the amount you spend on food, transportation,
    phone load, etc. (make it monthly to match their
    allowance).
    d. Deduct the amount they spend from the amount their
    allowance.
    e. Associate allowance with revenue and spending
    expense with the net amount as net income.
    Objectives:

    1. identify the elements of the SCI and


    describe each of these items for a service
    business and a merchandising business.

    2. Prepare an SCI for a service business using the


    single step approach.

    3. Prepare an SCI for a merchandising business


    using the multi-step approach.
    STATEMENT OF COMPREHENSIVE INCOME - Also known as
    the income statement. Contains the results of the company’s operations
    for the 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.

    a. Revenue generated by operating activities.


    b. Cost spent to generate the revenue
    c. Income, which is the excess of revenue over
    costs.
    TEMPORARY ACCOUNTS – 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 account are transferred to the
    capital account, thus having temporary amounts and resulting to zero
    beginning balances at the beginning of the following year.

    Examples: revenues, sales, utilities expense, salaries expense, depreciation


    expense, interest expense among others.

    “For the Period”


    The SCI is described as “for the period” report. This means that the amounts
    presented on the report include only those the occurred within the given period.
    This can be prepared for a month, a quarter or a year. This statement contains the
    following information:
    Elements of Statement of Comprehensive Income

    1. Income/Revenue – refers to the increase in the economic benefits of


    the entity that may be a result of enhancement or inflow of asset or
    such decrease in the liability that causes the equity to increase.
    However, this does not include additional investments made by the
    owners or shareholders.
    2. Expense – is decrease in the economic benefits of the entity that
    maybe results of deterioration or outflow of asset or such increase in
    liability that causes equity to decrease. However, this does not include
    distributions to owners or shareholders.
    ABC COMPANY
    STATEMENT OF COMPREHENSIVE INCOME
    FOR THE MONTH OF DECEMBER 31, 2019

    Revenues Php 1,290,000.00


    Less: Expenses 890,000.00
    Net Income Php 400,000.00
    CLASSIFICATION OF INCOME
    as to revenue and gains is dependent
    on the nature of the business.
    Difference of the Statement of Comprehensive Income of a Service Company
    and of a Merchandising Company

    Service Company : is a business that generates income by providing services


    instead of selling products. A good example of a service company is a public
    accounting firm. They earn revenues by preparing income tax returns, performing
    audit and asset services, and even doing bookkeeping.
    Merchandising company: is a company that buys goods and then resells them,
    generally for the higher price than they were purchased.
    There are two types of merchandising companies – retail and wholesale. A retail
    company is a company that sells products directly to customers, whereas a
    wholesale company is a company that buys items in bulk from manufacturers and
    resells them to retailer or other wholesalers.
    Revenues
    1. Sales - An account used to summarize sale of goods of a
    trade or merchandising business. This includes cash sales and
    sales on account.
    2. Service Income - The earning derived from service rendered
    by a service business to its customers. This includes cash and
    on account service.
    3. Professional Fees - The earning derived from services
    rendered by a professional or professional servicing firm which
    could be in cash or in collectibles to its clients.
    4. Interest Income - The earning representing the time value of
    money derived from promissory notes received by the business,
    whether in cash or collectibles in the future.
    5. Rent Income - The income earned from allowing others to use
    property or facility of the business.
    6. Gain on Sales of other Assets - The income derived from the
    sales of assets used in the business operation. There is a gain on
    sale if the proceeds exceed the book value or cost of disposed
    asset.
    Cost of Sales and Expenses

    1. Cost of Sales or Cost of Goods Sold - The value of


    merchandise sold.
    2. Salaries and Wages Expense - The amount paid to service
    rendered by the employees in the operation of the business.
    3. Utilities Expense - This includes telephone, water, and
    electricity used.
    4. Rent Expense - This includes rentals for the use of equipment, office,
    building, and land spaces owned by others.
    5. Supplies Expense - The amount of supplies consumed or used by the
    business during the period. Examples: used in papers, inks, ballpoint
    pens, etc.
    6. Transportation Expense - This includes fare for trips and travels;
    cost of gasoline and oil used for company vehicles.
    7. Depreciation Expense - This includes portion of the cost of building
    and equipment allocated to one accounting period.
    8. Representation Expense - This includes the amount paid to
    restaurants, hotels for treating customers and others.
    9. Interest Expense - This includes interest on debts or
    monetary obligations.
    10. Insurance Expense - The amount of insurance policy
    incurred during the current period.. Examples; premiums on
    building insurance, life insurance, plant insurance, etc.
    11. Taxes and Licenses Expenses - The cost of local as well as
    national taxes that are incurred and required to be paid in
    connection with the conduct of the business. Examples; cost to
    acquire mayor’s permit, registration cost of the building,
    percentage tax on sales, etc.
    12. Doubtful Account Expenses - The estimated amount of
    losses the uncollectible accounts arising from credit sales of the
    current period. This is also called the debt expense or
    uncollectible account expense.

    13. Loss from sale of assets - If the cash received is less than
    the asset's book value, the difference is recorded as a loss.
    PRESENTATION OF SCI - There are two formats for the SCI,
    namely the single – step and the multi-step.

    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.
    Multi-step – multi-step because there are several steps needed in order to
    arrive at the company’s net income.
    a. Emphasizes that the two are only formats and will yield the
    same amount of net income/loss
    b. Discuss that single-step SCI is more commonly used by service
    companies while multi-step format is more commonly used by
    merchandising companies.
    The Statement of Comprehensive Income or Income Statement contains:
    A. The Heading
    1. Name of the Business
    2. Title of the Report
    3. Period
    4. Currency (in Philippine Peso)
    The SCI of a sole proprietorship shall include the following:
    1. Revenue
    2. Costs and Expenses
    3. Net Income
    Steps in preparing single-step SCI
    1. Start with writing the heading
    2. List the income account and the amounts
    3. List the cost and expense accounts on another amounts
    column
    4. Compute the total cost and expenses
    5. Deduct total expenses from the income to arrive at the net
    income
    6. Write the peso sign on the first amount column and on the
    totals. Double rule.
    LEARNING IS FUN COMPANY
    STATEMENT OF COMPREHENSIVE INCOME Heading
    FOR THE MONTH OF DECEMBER 31, 2016

    Service Revenue Revenues Php 100,000.00


    Expenses: Expenses
    Salaries Expense Php 40,000.00
    Rent Expense 20,000.00
    Depreciation Expense 10,000.00
    Utilities Expense 5,000.00
    Miscellaneous Expense 1,000.00 76,000.00

    Net Income Net income/loss Php 24,000.00


    Liberty Medical Services
    Nominal Accounts
    For the Year Ended December 31, 2019
     
    Debits Credits
    Service income ₱ 9,660,000.00
    Cost of Services ₱ 6,030,000.00
    Salaries Expense 1,200,000.00
    Employees Benefits 200,000.00
    Professional Fees 180,000.00
    Utilities Expense 360,000.00
    Rent Expense 480,000.00
    Taxes and Licenses 120,000.00
    Supplies Expense 175,000.00
    Advertising Expense 132,000.00
    Transportation Expense 240,000.00
    Depreciation Expense 60,000.00
    Representation Expense 180,000.00
    Interest Expense 20,000.00
    Totals ₱ 9,377,000.00 ₱ 9,660,000.00
    Liberty Medical Services
    Statement of Comprehensive Income
    For the Year Ended December 31, 2019

    Service income ₱ 9,660,000.00


    Cost of Service ₱ 6,030,000.00
    Salaries Expense 1,200,000.00
    Employees Benefits 200,000.00
    Professional Fees 180,000.00
    Utilities Expense 360,000.00
    Rent Expense 480,000.00
    Taxes and Licenses 120,000.00
    Supplies Expense 175,000.00
    Advertising Expense 132,000.00
    Transportation Expense 240,000.00
    Depreciation Expense 60,000.00
    Representation Expense 180,000.00
    Interest Expense 20,000.00
    Total Cost and Expenses 9,377,000.00
    Net Income ₱ 283,000.00
    Individual Activity:

    At the end of the first month of operations for Juan’s Service Company,
    the business had the following accounts: Cash, Php19,000; 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.
    Individual Activity:

    Direction: Prepare a single-step Statement of comprehensive Income using the


    following:

    Revenues = 20,000 Utilities expense = 2,000


    Rent expense = 3,000 Salaries expense = 4,000

    Note: use any business name and the end of the current year for the
    heading.
    Thank you

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