STATEMENT OF

COMPREHENSIVE
INCOME
CHAPTER 3 (FABM2 BOOK)
MS. JACEL D. GADON
STATEMENT OF COMPREHENSIVE INCOME

• In the context of corporate financial reporting the income

statement summarizes the company's revenues and expenses
quarterly and annually for its fiscal year. The final net figure as
well as various others in the statement, is of major interests to
the investment community.
• So, in order to really understand the money, we must first
understand the different kinds of income.
INCOME

• 1. Service income – Revenues earned by performing or rendering services

for a fee. In hospitality industry these include talent fees paid for entertainers
or consultants.
• 2. Sales- Revenues earned as a result of exchange or sale of merchandise
goods or services. In hospitality industry this includes sales of
lodging/accommodation, food and beverages.
• 3. Miscellaneous other form of revenue aside from sales or service income.
In hospitality industry, these includes interest income, franchise fee and
management fees.
EXPENSES

• According to the matching principle, all expenses must be recorded in the

same accounting period as the revenue that they helped to generate.
• In most industries, expenses are divided into two main categories:
• 1. Direct expenses this are the expenses that vary with the level of production.
Example: Expenses in producing a product
Expenses in calling the customer for services.
• 2. Indirect Expenses .These are the expenses that do not vary with the level of production and
divided into two different categories:
• A. Fixed charges. Examples might include rent, insurance, property taxes, and interest expense.
For, these very expenses are incurred for the benefit of the hotel as a whole not for the benefit of
each single department. To illustrate, the business insures itself against fire, thest and burglary,
and one day some valuable equipment has been stolen, from any department whatsoever the
insurance company will indemnify the company.
• 2. Undistributed expenses. Examples might include electricity, energy, and water expenses. For
usually the company receives a total energy bill to be paid. In the old days some companies went
for allocating this amount according to certain factors (example: surface, department usage).
However, this practice proved to be misleading, since it might under- allocate energy expenses
for some departments and over allocate it for others.
OTHER TYPES OF EXPENSES INCLUDE :

• 1. Commissions expenses. This accounts includes payments by the hotel to

authorized agents that bring room business to the hotel.
• 2. Reservation expenses. This expense account represents any payment to
various agents contracting to bring potential room revenue business to the
hotel.
• 3. Contract Cleaning Expenses. This expense account represents payment to
contracting outside cleaning agency.
• 4. Laundry and Dry-cleaning expenses. This cost apply to outside laundry and
dry-cleaning costs for the Rooms Division Department.
• 5. Transportation expenses. This expenses includes the cost of transporting the product or service
to the customers.
• 6. Linen expenses. This specific expense account includes the allocation of linen expenditure for a
specific period of time.
• 7. Supplies expenses. This account includes the various supplies used by the company. Some sub-
accounts of supplies expenses might include:
• A. Newspapers expenses
• B. Shoe cloth expenses
• C. Coffee expenses
• D. Writing supplies expenses
• E. Toilet requisites expenses
• F. Flower expenses
• G. Ice expenses
• H. Candy expenses
• 8. Printing and Stationery expenses. This expense account includes printed format(example: virgin registration
records, reservation records, and guest folios) office supplies(example: pens, pencil, rubbers, erasers) printed
manuals and guidelines for the use of the rooms division employees. Some sub-accounts of printing and
stationary expenses might include:
• A. Binders expenses
• B. Floor plans expenses
• C. Pencils and pens expenses
• D. Vouchers expenses
• E. Rack card expenses
• F. Report expenses
• G. Deskpad expenses
• H. Envelope expenses
• I. Ink expenses
• J. Folio expenses
• 9. Uniform expenses. This expense account includes the allocation portion of uniforms asset(if the
hotel purchase uniform) for a certain period of time along with the expense of repairing and cleaning
them.

The important thing to remember about an income statement is that it represents a period of time. This
contrasts with the statement of financial position, which represents a single moment in time. Income
statements should help investors and creditors determine the past financial performance of the
enterprise, protect future performance and assess the capability of generating future cash flows through
report of the income and expenses however information upon income statement has several limitations.
SINGLE STEP AND MULTISTEP APPROACH FOR
STATEMENT OF COMPREHENSIVE INCOME
3 TYPES OF INCOME STATEMENT ACCORDING
TO BUSINESS ENTITY
• 1. SERVICE BUSINESS - SINGLE STEP APPROACH
• 2. MERCHANDISING COMPANY- MULTISTEP APPROACH
• 3. MANUFACTORING BUSINESS- MULTISTEP APPROACH
SERVICE BUSINESS
MERCHANDISING COMPANY
MANUFACTURING COMPANY