STATEMENT OF COMPREHENSIVE INCOME (SCI)

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. (Haddock, Price, & Farina, 2012)
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 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)
Examples of temporary accounts include:
-revenues
-sales
-utilities expense
-supplies expense
-salaries expense
-depreciation expense
-interest expense among others

SAMPLE OF SCI

Format of SCI
The two formats are only formats. They will still yield the same amount of net income/loss.
However, single-step SCI is more commonly used by service companies while multi-step format is more
commonly used by merchandising companies.
1. Single-step Format
-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)
2. Multi-step Format
-Called multi-step because there are several steps needed in order to arrive at the company’s net income.
(Haddock, Price, & Farina, 2012)
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.
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:
-Service company will separate all revenues and expenses (as seen in the single-step format)
-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 (as seen in the multi-step format).

Parts of SCI in Single-step Format

PARTS OF SCI in SINGLE-STEP

Heading:
a. Name of the Company
b. Name of the Statement
c. Date of preparation
(emphasis on the wording – “as of
Sample:
a. First part is Revenues
-the total amount of revenue that the company was able to generate from providing services to customers.
b. Second part is Expenses
-can be broken down into General and Administrative and Selling Expenses.
c. Revenues less Expenses
-Net income for a positive result and net loss for a negative result.

SAMPLE AND PARTS OF SCI in MULTI-STEP FORMAT

PARTS OF SCI in MULTI-STEP

a. First part is Sales
-the total amount of revenue that the company was able to generate from selling products
b. Second part compose of Contra Revenue
-Called contra because it is on the opposite side of the sales account.
-The sales account is on the credit side while the reductions to sales accounts are on the debit side.
-This is “contrary” to the normal balance of the sales or revenue accounts.
Sales returns
-this account is debited in order to record returns of customers or allowances for such returns.
-Occur when customers return their products for reasons such as but not limited to defects or change of
preference
Sales discount
– This is where discounts given to customers who pay early are recorded.
- Also known as cash discount.
-This is different from trade discounts which are given when customers buy in bulk.
- is awarded to customers who pay earlier or before the deadline.
c. Sales less Sales returns and Sales discount is Net Sales
d. Third part is Cost of Goods Sold
-This account represents the actual cost of merchandise that the company was able to sell during the year.
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
Purchases
-Amount of goods bought during the current accounting period.
Contra Purchases
-An account that is credited being “contrary” to the normal balance of Purchases account.
Net Cost of Purchases = Purchases + Freight In
Net Purchases = Purchases – (Purchase discount and purchase returns)
Purchase discount
-Account used to record early payments by the company to the suppliers of merchandise. -This is how buyers
see a sales discount given to them by a supplier.
Purchase returns
-Account used to record merchandise returned by the company to their suppliers. -This is how buyers see a sales
return recorded by their supplier .
Add Beginning inventory and Net cost of Purchases to get Cost of Goods Available for Sale
Ending inventory
-amount if inventory presented in the Statement of Financial Position.
-Total cost of inventory unsold at the end of the accounting cycle.
e. Sales less Cost of Goods Sold is Gross Profit
f. Fourth Part is 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.
Example of general and administrative expenses include:
-utilities for home office
- and salaries of admin personnel.
g. Fifth Part is Selling Expenses
-These expenses are those that are directly related to the main purpose of a merchandising business: the sale and
delivery of merchandise.
-This does not include cost of goods sold and contra revenue accounts.
Examples of selling expenses include:
-sales commissions
-delivery expenses
-advertising expense

h. Gross Profit less General and Administrative Expenses less Selling Expenses is Net Income for a
positive result while Net Loss for a negative result.

Simpler SCI in Multi-step Format: