FUNDAMENTALS

OF ABM 2

ZYRIECE CAMILLE CENTENO

 STATEMENT OF
COMPREHENSIVE
INCOME
 LEARNING
OBJECTIVES
At the end of this lesson, the learners
shall be able to:

• Recall key features of the Statement of

Comprehensive Income (SCI);
• Identify the elements of SCI;
• Describe each of the elements of SCI for a
service and merchandising business;
• Prepare a SCI for a service business using
single-step approach;
• Prepare SCI for merchandising business using
multi-step approach.
UY LAW OFFICE
Statement of Comprehensive Income
01
Key Features of
Income Statement
STATEMENT OF COMPREHENSIVE INCOME
 KEY FEATURES OF INCOME STATEMENT
• The Title
The Statement of Comprehensive Income is a financial report. As a financial report, it must
be properly identified and dated.

EXAMPLE
UY LAW OFFICE
Statement of Comprehensive Income
For the Year Ended December 31, 2021

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 KEY FEATURES OF INCOME STATEMENT
• Revenues
Revenues arises in the course of the ordinary activities of an entity and is referred to by a
variety of different names including sales, fees, interests, dividends royalties, and rent.
• Expenses
Arising in the course of the ordinary activities of the entity include, cost of sales, wage, and
depreciation. They usually take the form of an outflow or depletion of assets such as cash
and cash equivalents, inventory, property, plant and equipment.

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 KEY FEATURES OF INCOME STATEMENT
• Gains and Losses
It represents other items that meet the definition of income and may or may not, arise in the
course of the ordinary activities of an entity.
• Other Items
Other items included in the computation of the total comprehensive are income taxes and
items of other comprehensive income.

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02
Forms of Income
Statement
STATEMENT OF COMPREHENSIVE INCOME
FORMS OF INCOME STATEMENT
● Natural Form
It is otherwise called the nature of expense method, it
presents expenses according to nature. This type of
income statement is used in a service business. It is
also called the single-step income statement since a
single step of deducting expenses from revenue is
performed to arrive at the net income or net loss.
FORMS OF INCOME STATEMENT
● Functional Form
It is otherwise known as the cost of sales method, it
presents expenses according to function. This type is
used in a merchandising business. It is also called the
multi-step income statement since a series of step is
performed to arrive at the net income or net loss.
Comparisons of the
Natural Form and
Functional Form
NATURAL FORM
Income from Services ₱ xxx
Less: Operating Expenses xxx
Net Income/Loss ₱ xxx
 NATURAL FORM

A single step income statement is a

financial statement format that lists all expenses
including cost of good sold in one column. In
other words, the single step income
statement presentation doesn't break expenses out
into categories like cost of goods sold, operating,
non-operating, and other
NATURAL FORM
• Service Income
• Salaries Expense
• Utilities Expense
• Supplies Expense
• Insurance Expense
• Depreciation Expense
• Uncollectible Accounts
• Interest Expense
FUNCTIONAL FORM

Net Sales ₱ xxx

Less: Cost of Good Sold xxx
Gross Profit xxx
Less: Operating Expenses xxx
Net Income/Loss ₱ xxx
NET SALES
Gross Sales ₱ xxx
Less: Sales Return & Allowances ₱ xxx Sales
Discount xxx xxx
Net Sales ₱ xxx
COST OF SALES
Merchandise Inventory ₱ xxx
Add: Net Cost of Purchases
Purchases ₱ xxx
Less: Purchase Returns & Allowances ₱ xxx
Purchase Discount xxx xxx
Net Purchases ₱ xxx
Add: Freight in xxx xxx
Goods Available for Sale ₱ xxx
Less: Merchandise Inventory, End xxx
Cost of Sales ₱ xxx
FUNCTIONAL
FORM
Net Sales is the first line after the
heading of the income statement is the
net sales. To show the detail of its
computation, it is supported by a note to
financial statement. Net sales is
computed as follows:
ILLU
STR
ATIV
E
PRO
BLE
M
 FUNCTIONAL
FORM
• Net Sales
• Cost of Sales
• Other Income
• Distribution/Selling Expense
• General/Administrative Expense
• Other Expenses
• Finance Cost
 FORMS OF INCOME STATEMENTS

Notice that in the natural form income statement, a single-step of

deducting total expenses from total revenues was done to get the net
income/loss from operations. However, in the functional form income
statement, a series of step was done showing several activities of the
business before finally arriving at the net income/loss from operations
Thank You!
That would be all for today.

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