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Statement of Comprehensive Income

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21 views33 pages

Statement of Comprehensive Income

Uploaded by

willowbyee
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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FABM 2

STATEMENT OF
COMPREHENSIVE
INCOME
01/01/2023
Statement of
Comprehensive
Income
Also known as the income statement. 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.
Temporary Accounts

Also known as nominal accounts are the


accounts found under the SCI. These
accounts are set to zero at the start of
each accounting period and are closed
at its end period to maintain an
accurate record of accounting activity
for that period.

Examples are: Rent Expense, Revenue,


Key Features of Statement of
Comprehensive Income
1. The Heading
The statement of comprehensive income is a
financial report. As a financial report, it must be
properly identified and dated. The appropriate
title of the statement will enable the user to
differentiate the statement of comprehensive
income from the other financial reports issued by
the entity.
Key Features of Statement of
Comprehensive Income
Key Features of Statement of
Comprehensive Income
2. Revenues
Revenues economic benefits that flow to the
business in the form of an increase in assets.
Sales - refers to the account title for
merchandise sold either in cash or
account.
Professional Income - the account title
generally used by professionals for
Key Features of Statement of
Comprehensive Income
3. Expenses
Expenses arising 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 assets such as
cash and cash equivalent, inventory,
Two Approach in Making Statement of
Comprehensive Income

Single-step

Called single-step because all revenues are listed in


one section while all expenses are listed in another.

Net income = Total Revenues - Total


Expenses.
Two Approach in Making Statement of
Comprehensive Income

Multi-step
–Called multi-step because there are several
steps needed in order to arrive at the
company’s net income.

The single-step SCI is more commonly used by


service companies while the multi-step format
is more commonly used by merchandising
companies
FABM 2
SINGLE STEP
SCI
01/01/2023
Steps in Preparing a Statement of
Comprehensive Income

• Draft the Appropriate Title

2. Determine Total Revenue


Steps in Preparing a Statement of
Comprehensive Income

• Determine Total Operating Expenses

• Determine the net income/losses


FABM 2
MULTI -STEP
SCI
01/01/2023
Preparing a Statement of
Comprehensive Income for a
Merchandising Concern
* Draft the appropriate Title
I. Determine the Revenues (Note 1)
a. Gross Sales - the total amount of
revenue that the company was able to
generate from
selling products.
b. Contra revenue accounts – are called
contra because it is on the opposite side
of
the sales account.
b.1 Sales returns – This account is
b.2 Sales discount – This is where
discounts given to customers who pay
early are recorded.
c. Net Sales - Sales less Sales returns
and Sales discount is Net Sales.
Preparing a Statement of
Comprehensive Income for a
Merchandising Concern
I. Determine the Revenues (Note 1)
II. Determine the Net Purchases, Cost of
Sales and Gross Profit
a. Purchases – the amount of goods
bought during the current accounting
period.
b. Contra Purchases –An account that is
credited being “contrary” to the normal
balance of the Purchases account.
b.1 Purchase discount – Account used
to record early payments by the
company to the suppliers of
b.2 Purchase returns – Account used to
record merchandise returned by the
company to their suppliers.
b.3 Freight In – This account is used to record
transportation costs of merchandise
purchased by the company. It is called freight
in because this is
recorded when goods are transported into
the company. Add to the net purchases.
Net Purchases = Purchases – (Purchase
Beginning inventory – This is the
amount of inventory at the beginning of
the accounting period. This is also the
amount of ending inventory from the
previous
period.
Ending Inventory – amount if inventory
presented in the Statement of Financial
Position. Total cost of inventory unsold at
III. Determine the Selling Expenses (Note 4)

Selling Expenses – These expenses are those


that are directly related to the main
purpose of a merchandising business: the
sale and delivery of merchandise.

Examples: Freight-out, Salaries Expense,


Rent Expense, Utilities, Depreciation
V. Determine the General and Administrative
Expenses (Note 5)
General and Administrative Expenses –These
expenses are not directly related to the
merchandising function of the company but are
necessary for the business to
operate effectively.

Examples: Salaries Expense, Utilities, Repairs and


Maintenance, Depreciation, Permit and Licenses,
Miscellaneous Expense
V. Determine the General and Administrative
Expenses (Note 5)
General and Administrative Expenses –These
expenses are not directly related to the
merchandising function of the company but are
necessary for the business to
operate effectively.

Examples: Salaries Expense, Utilities, Repairs and


Maintenance, Depreciation, Permit and Licenses,
Miscellaneous Expense
Thank you!

01/01/2023

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