Teodoro M.

Luansing College of Rosario

SENIOR HIGH SCHOOL DEPARTMENT

National Rd., Brgy. Namunga, Rosario, Batangas, 4225 Philippines

Tel. No.: 0917-187-2929/ 043 781 1483
Email: luansingcollege@yahoo.com
 Teodoro M. Luansing College of Rosario

Name of Teacher: Cristine C. Bathan
Subject: Fundamentals of ABM 2
Academic Year: 2020-2021
Semester: First Quarter: 1
Duration: 8 days
Reference: Fundamentals of Accountancy, Business and Management2
Author: Rodiel C. Ferrer, Zeus Vernon B. Millan
Topic: Statement of Comprehensive Income
Pages: 34 - 49
Module: 2

CONTENT STANDARD
The learners demonstrate an understanding of the service income and operating expenses
of a service business as well as sales, contra sales, purchases, contra purchase accounts, cost of
goods sold and general administrative and selling expenses of a merchandising business that will
equip him/ her in the preparation of SCI for both service and merchandising business.

PERFORMANCE STANDARD
The learners are able to solve exercises and problems that require the preparation of an SCI
for a service business and merchandising business.

CODE: ABM_FABM12-Ic-d-5
ABM_FABM12-Ic-d-6
ABM_FABM12-Ic-d-7

I LEARNING OBJECTIVES
1. Understand the importance of preparing the SCI.
2. Identify the elements of SCI
3. Identify the difference of the two formats (single-step and multi-step)
4. Prepare an SCI using single step and multistep approach

II INTRODUCTION
The statement of comprehensive income- short for statement of profit or loss and other
comprehensive income- is the 2nd component of a complete set of financial statements.

III DISCUSSION
Statement of Comprehensive Income

The “Statement of Comprehensive Income” shows information on an entity’s financial

performance during the period. More specifically, it shows the following:
1. Profit or loss;
2. Other comprehensive income; and
3. Comprehensive income.
The “Statement of profit or loss and other comprehensive income” is different from the
“Income statement”. The income statement shows only the profit or loss while the statement
of profit or loss and other comprehensive income shows profit or loss and other comprehensive
income.

National Rd., Brgy. Namunga, Rosario, Batangas, 4225 Philippines

Tel. No.: 0917-187-2929/ 043 781 1483
Email: luansingcollege@yahoo.com
 Teodoro M. Luansing College of Rosario

Difference of the Statement of Comprehensive Income of a Service Company and of a

Merchandising Company
The main difference of the Statements of the two types of business lies on how they generate
their revenue. 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. On the other hand, 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. 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) while
a merchandising company will present total sales and cost of goods sold on the first part of the
statement which will net to the company’s gross profit before presenting the other expenses which
are classified as either administrative expenses or selling expenses.
*There are differences between the statement of comprehensive income of a service company and
a merchandising company. Ang pagkakaiba ng comprehensive income ng dalawa ay makikita kung
paano sila maggenerate ng income. Sa service company, ang cost na naincur nila bago makakuha
ng income o kita ay magmumula sa labor ng kanilang employees which is makikita natin as
salaries expense. Pagdating naman kay merchandising company, ang cost na magagamit nila to
generate revenue ay ang tinatawag nating cost of goods sold or cost of sales. This cost of goods
sold o cost of sales ay ang gastos ni merchandising company sa pagproduce o paggawang
products na inioofer sa market. Another difference between the statement of comprehensive
income of the two companies is the way of presenting it. Si service business, gumagamit lamang
sya ng single step approach, wherein income and expenses are written separately on a vertical
manner. From the trial balance, kokopyahin lamang lahat ng income at pagsasama-samahin, at
kokopyahin lamang din ang lahat nge expenses at pagsasama-samahin. Sa merchandising
business, the statement of comprehensive income is presented in a multi-step approach. Ibig
sabihin po, mayroong parts ang statement of comprehensive income, the first part of the report
presents the total sales and cost of goods sold to get the gross profit. The second part presents the
expenses of the company which are classified as either administrative and selling expenses.

Elements of the Statement of Comprehensive Income

1. Income- are the increases in economic benefits during the period in form of inflows or
enhancements of assets or decreases of liabilities that result in increase in equity, other than
those relating to investments by the business owners. Income includes both revenue and
gains:
a. Revenue arises in the course of the ordinary activities of the business, e.g., sales and
service fees.
o Service fees refer to revenue earned by service business from rendering services.
o Sales revenue or sales refer to the revenue earned by a merchandising business from
selling goods.
b. Gains represent other items that meet the definition of income and may or may not
arise in the course of the ordinary activities of an entity

National Rd., Brgy. Namunga, Rosario, Batangas, 4225 Philippines

Tel. No.: 0917-187-2929/ 043 781 1483
Email: luansingcollege@yahoo.com
 Teodoro M. Luansing College of Rosario

*May pagkakaiba po angrevenue at gains. Pag sinabi natin na revenue, eto yung income
na nakuha natin sa tinatawag na ordinary activities of the business. Halimbawa, ang
business mo ay pagtitinda ng barbecue, yung tubo sa pagtitinda ng barbecue ang
tinatawag natin na revenue. Si gain naman ay kita din pero hindi sya nakukuha sa usual o
ordinary activity of the business. Halimbawa, sa barbecue business mo, bumili ka ng
ihawan for ₱1, 000, pero naisip mo na dapat pala mas malaking ihawan na ang binili mo
kaya bumili ka ulit ng bago. Hindi mo na magagamit yung nauna mong binili kay binenta
mona lang at nabenta mo yun ng ₱1, 500, ang ₱500 ang tinatawag natin na gain,
.
2. 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. Expenses include both expenses and
losses:
a. Expenses arise in the course of the ordinary activities of a business.
b. 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.
*May pinagkaiba din po ang expenses at losses. Pag sinabi nating expenses, eto ang
counterpart ng revenue, ito ay nakuha natin sa ordinary course of the business.
Halimbawa, sa business mo na pagtitinda ng barbecue, lahat ng ginastos mo para sa
business ang expenses. Si losses naman ang counterpart ng gains, hindi din sya nakukuha
sa usual o ordinary activity ng business. Halimbawa, sa barbecue business mo, ang ihawan
na pinalitan mo na nabili mo ng ₱1, 000 ay naibenta mo lang ng ₱800, yung ₱200 ang
tinatawag nating loss.

The difference between income and expense represents profit or loss.

 If income is greater than expenses, the difference is profit.
 If the income is less than expenses, the difference is loss.

National Rd., Brgy. Namunga, Rosario, Batangas, 4225 Philippines

Tel. No.: 0917-187-2929/ 043 781 1483
Email: luansingcollege@yahoo.com