STATEMENT OF

COMPREHENSIVE
INCOME
Subject Teacher: KIMROSE R. POLOPOT
 The Statement of Comprehensive Income is an action-packed financial statements.
In contrast, the Statement of Financial Position is still photograph. The SCI is a statement
that explains some of the changes that occur between two SFPs taken one year apart.
What are the actions reported on the SCI? Income and Expenses are the general terms used
to describe the elements of the SCI. Income refers to a transaction that increases assets
and/or decreases liabilities leading to increase in equity resulting from operations of the
business and not from the owner’s contribution. Expenses, on the other hand, are
transactions that decrease asset and/or increase liabilities leading to decrease in equity
resulting from the operations of the business and not because of distribution to owners.
There are two kinds of income – revenue and gains. Revenues are income generated from
the primary operations of the business. Gains, on the other hand are income derived from
other activities of the business. Sale of merchandise to Juana’s costumer is an example of
revenue. It is because the primary operation of the store is to sell its inventories.
Interest income from the time deposit is considered gains and other income and not
revenue.
It is because investment in time deposit is not part of the primary operations of the store.

Like income, there are also two kinds of expenses – expenses and losses. Expenses are
Related to the primary operations of the business. Losses are from other activities of the
Business. Recall that the primary operation of Juana’s store is selling activities. The cost
of the merchandise sold by Juana’s store is part of the store’s selling activities. Therefore,
it is classified as an expense. Interest expense from notes payable is not part of the selling
activities of the store. It is classified as losses and other expenses.
 ACCRUAL CONCEPT OF ACCOUNTING

Accrual is one of the fundamental concepts of financial accounting.

Specifically, this is the concept that dictates when an item must be
reported on the SCI. Accrual states that revenue must be reported on the
accounting period that it was earned. Similarly, expenses must be
reported during the same reporting period they were incurred.
 ELEMENTS OF THE
STATEMENT OF THE
COMPREHENSIVE INCOME
 Revenue
Service Income
The service income account is generally used to describe revenue derived from rendering
of services. A more specific account name may be used to identify the services rendered
such as Rental Income, Professional Fee, Referral Revenue and Tuition Fee Revenue.

Sales
The sales revenue account is generally used to describe revenue derived from selling
of goods. A more specific account name may be used to identify the goods sold such as
Office Supplies Sales, Books Sales, Food Sales, etc.
 Expenses
Cost of Goods Sold ( Cost of Sales )
This is an account used by the companies that sells goods instead of services. For trading
operations, Cost of Sales collects the cost of the merchandise sold. This includes the
purchase price of the inventory, brokerage and shipment cost to bring the goods to the
Premises of the company. This shipment cost is called Freight-In.

Operating Expenses
Operating expenses refer to all other expenses related to the operation of the business, other
than cost of sales. These includes salaries of employees, supplies, utilities, bad debt expense,
Depreciation and amortization.
 Other Expenses and Other Income

Losses and other expenses as well as gains and other income are reported after the
operating section of the SCI. Line items included under this section are interest income
from outside investments of excess cash, interest expense from borrowings and gain or
Loss from sale of equipment.
 PRESENTATION OF
STATEMENT
OF COMPREHENSIVE INCOME
Single-Step Statement of Comprehensive Income
ABC Company
Statement of Comprehensive Income
For the year ended December 31, 20XX

Service Revenue xxx

Rental Income xxx
Interest Income xxx
Increase in Inventory* xxx
TOTAL REVENUES AND INCOME XXX
Net Purchases xxx
Depreciation Expense xxx
Utilities Expense xxx
Salaries Expense xxx
Interest Expense xxx
Insurance Expense xxx
Supplies Expenses xxx
TOTAL EXPENSES XXX
NET INCOME ( Total Revenues and Income less Total Expenses XXX
Multi-Step Statement of Comprehensive Income

ABC Company
Statement of Comprehensive Income
For the year ended December 31, 20XX

Gross Sales A
Sales Return and Allowances B
Sales Discount C
Net Sales D=A-B-C
Cost of Good Sold E
Gross Profit F=D-E
Operating Expenses:
General and Administrative expense G
Selling Expense H I=G+H
Income from Operations J=F-I
Interest Income K
Interest Expense L
NET INCOME J+K-L
 STATEMENT OF
CHANGES IN
NET ASSETS/EQUITY
 ABC Company
Statement of Changes in Net Assets/Equity
For the year Ended December 31, 20XX

Beginning Balance XXX

Add:
Additional Contribution XXX
Net Income* XXX
Less:
Withdrawal XXX
Net Loss* XXX
EQUITY ENDING BALANCE** XXX
• *Based on Statement of Comprehensive Income
• ** Equity Balance in Statement of Financial Position