T H E S TA T E M E N T O F

EL E M E N T S O F
R E PO R T F OR M A N D
IA L PO S I TI O N -
FINANC N SI V E I N CO M E
C O M P R EH E

WEEK 2-MODULE 2
 OBJECTIVES

A.FAMILIARIZE IN THE FORMAT OF FINANCIAL POSITION IN

ACCOUNT FORM  
B.PREPARE AN SFP USING THE ACCOUNT FORM WITH PROPER
CLASSIFICATION OF ITEMS AS CURRENT AND NON-CURRENT
C.DIFFERENTIATE REPORT FORM AND ACCOUNT FORM OF SFP
D.IDENTIFY THE ELEMENTS OF THE STATEMENT OF
COMPREHENSIVE INCOME
E. DESCRIBE EACH OF THE ITEMS OF THE
STATEMENT OF COMPREHENSIVE INCOME FOR A
SERVICE BUSINESS AND A MERCHANDISING
BUSINESS
F. REFLECT ON THE IMPORTANCE OF PREPARING
STATEMENT OF COMPREHENSIVE INCOME.
 PR E –TEST

TRUE OR FALSE. DIRECTIONS: WRITE “/” IF THE STATEMENT IS TRUE AND “X” IF
THE STATEMENT IS FALSE.  

1. IN A STATEMENT OF FINANCIAL POSITION WRITTEN IN ACCOUNT FORM,

ASSETS ARE WRITTEN ON THE LEFT SIDE WHILE

THE LIABILITIES AND OWNER’S EQUITY ARE WRITTEN ON THE RIGHT SIDE.

2. THERE ARE DIFFERENCES IN THE CONTENTS OF SFP IN THE ACCOUNT FORM

AND IN THE REPORT FORM.

3. THE ACCOUNT FORM FOLLOWS THE GENERAL T-ACCOUNT FORMAT-ASSETS

ON THE LEFT AND LIABILITIES AND EQUITY ON THE RIGHT.
4. UNLIKE THE REPORT FORM, THE ACCOUNT FORM OF
SFP IS BASED ON THE ACCOUNTING EQUATION ASSETS
= LIABILITIES + OWNER’S EQUITY.
5. THE ACCOUNT FORM DOES NOT CLASSIFY THE
ASSETS AND LIABILITIES INTO CURRENT AND NON-
CURRENT.
 LE SSO N

THE STATEMENT OF FINANCIAL POSITION CAN BE PRESENTED

EITHER IN REPORT FORM (PREVIOUS LESSON) OR ACCOUNT
FORM, WHICH IS OUR TOPIC FOR TODAY. IN REPORT FORM, ALL
ASSETS, LIABILITIES, AND OWNER’S EQUITY ARE WRITTEN IN A
VERTICAL SEQUENCE. WHILE IN THE ACCOUNT FORM, IT SHOWS
ASSETS ON THE LEFT SIDE AND LIABILITIES AND OWNER’S
EQUITY ON THE RIGHT SIDE JUST LIKE THE DEBIT AND CREDIT
BALANCES OF AN ACCOUNT. EITHER FORM IS ACCEPTED.
ACCOUNT FORM ALSO HAS THE SAME KEY PARTS AS THE
REPORT FORM, SUCH AS HEADING, ASSET SECTION
CATEGORIZED INTO CURRENT AND NON-CURRENT,
LIABILITIES SECTION CATEGORIZED ALSO INTO
CURRENT AND NON-CURRENT, AND OWNER’S EQUITY
SECTION. IT IS EMPHASIZED THAT THE TWO ARE ONLY
FORMATS AND WILL YIELD THE SAME AMOUNT OF
TOTAL ASSETS, LIABILITIES, AND EQUITY. IN BOTH
FORMATS, ASSETS SHOULD ALWAYS BE EQUAL TO
LIABILITIES AND EQUITY.
STATEMENT OF COMPREHENSIVE INCOME
COMPREHENSIVE INCOME IS DEFINED BY THE
INTERNATIONAL ACCOUNTING STANDARDS AS THE
CHANGE IN EQUITY DURING A PERIOD RESULTING
FROM TRANSACTIONS AND OTHER EVENTS, OTHER
THAN THOSE CHANGES RESULTING FROM
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS
OWNERS. THIS INCLUDES THE COMPONENTS OF A
COMPANY’S PROFIT OR LOSS AND COMPONENTS OF
OTHER COMPREHENSIVE INCOME. (BINUYA 2016, 22)
KEY FEATURES / ELEMENTS OF STATEMENT
OF COMPREHENSIVE INCOME
1. THE TITLE OR HEADING
THE STATEMENT OF COMPREHENSIVE INCOME IS A FINANCIAL
REPORT. AS A FINANCIAL REPORT, IT MUST BE PROPERLY
IDENTIFIED AND DATED. THE APPROPRIATE TITLE OF THE
STATEMENT WILL ENABLE THE USER TO DIFFERENTIATE THE
STATEMENT OF COMPREHENSIVE INCOME FROM OTHER
FINANCIAL REPORTS ISSUED BY THE ENTITY. AN
APPROPRIATE COMPREHENSIVE TITLE OR HEADING INCLUDES
THE NAME OF THE ENTITY, THE TITLE OF REPORT (STATEMENT
OF COMPREHENSIVE INCOME, AND THE PERIOD IT COVERS.
2. REVENUE
REVENUES AS DEFINED BY INTERNATIONAL
ACCOUNTING STANDARDS ARE THE GROSS INFLOW
OF ECONOMIC BENEFITS (CASH, RECEIVABLES, OTHER
ASSETS) ARISING FROM THE ORDINARY OPERATING
ACTIVITIES OF AN ENTITY (SUCH AS SALES OF GOODS,
SALES OF SERVICES, INTERESTS, ROYALTIES, AND
DIVIDENDS). [IAS 18.7]
3. EXPENSES
THE CONCEPTUAL FRAMEWORKS FOR FINANCIAL
REPORTING (IASB, 2018) DEFINED EXPENSES AS
DECREASES IN ECONOMIC BENEFITS DURING THE
ACCOUNTING PERIOD IN THE FORM OF OUTFLOWS OR
DEPLETIONS OF ASSETS OR INCURRENCES OF
LIABILITIES THAT RESULT IN DECREASES IN EQUITY,
OTHER THAN THOSE RELATING TO DISTRIBUTIONS TO
EQUITY PARTICIPANTS.
BEGINNING INVENTORY IS THE AMOUNT OF
INVENTORY AT THE BEGINNING OF THE ACCOUNTING
PERIOD. THIS IS ALSO THE AMOUNT OF ENDING
INVENTORY FROM THE PREVIOUS PERIOD.
 GROSS PURCHASES ARE THE PRICE OF THE
INVENTORY YOU BUY DURING AN ACCOUNTING
PERIOD. THUS, A PURCHASE DISCOUNT IS A DEDUCTION
THAT A COMPANY MAY RECEIVE IF THE SUPPLIER
OFFERS IT AND THE COMPANY PAYS THE SUPPLIER'S
INVOICE WITHIN A SPECIFIED TIME. THE PURCHASE
DISCOUNT IS ALSO KNOWN AS A CASH DISCOUNT OR
EARLY-PAYMENT DISCOUNT.
4. GAINS AND LOSSES
THE CONCEPTUAL FRAMEWORKS FOR FINANCIAL
REPORTING (IASB, 2018) DEFINED GAINS AS THEY
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.
GAINS REPRESENT INCREASES IN ECONOMIC BENEFITS
AND AS SUCH ARE NO DIFFERENT IN NATURE FROM
REVENUE
5. OTHER ITEMS
OTHER ITEMS INCLUDED IN THE COMPUTATION OF
THE TOTAL COMPREHENSIVE INCOME ARE INCOME
TAXES AND ITEMS OF OTHER COMPREHENSIVE
INCOME. AN INCOME TAX IS A TAX THAT THE
GOVERNMENT IMPOSED ON INCOME GENERATED BY
BUSINESSES AND INDIVIDUALS WITHIN THEIR
JURISDICTION. (KAGAN 2020, 1).
 ACTIVITY

ACTIVITY 1
DIRECTIONS: BELOW IS THE POST-CLOSING TRIAL
BALANCE OF EC COMPANY FOR THE YEAR ENDED
DECEMBER 31, 2019. PREPARE A STATEMENT OF
FINANCIAL POSITION IN ACCOUNT FORM.
ACTIVITY 2: 
DIRECTIONS: YOU WERE HIRED BY MR. X TO
PREPARE HIS LAUNDRY SHOP’S STATEMENT OF
FINANCIAL POSITION. TO PREPARE THE STATEMENT,
YOU IDENTIFIED THE FOLLOWING ASSETS AND
LIABILITIES OF MR. X:
A. HIS LAUNDRY SHOP HAS CASH DEPOSITED IN A BANK
ACCOUNT AMOUNTING TO P547,500
B. THE LAUNDRY SHOP HAD A LOT OF UNCOLLECTED
SALES FROM CUSTOMERS AMOUNTING TO P22, 500
C. THE TOTAL AMOUNT OF SUPPLIES LEFT INSIDE THE
SHOP IS P2,000
D. HE ALREADY PAID ONE YEAR’S RENT IN ADVANCE
AMOUNTING TO P50,000
E. THE VALUE OF ALL THE SHOP’S FURNITURE AMOUNTED
TO P20,000
F. THE VALUE OF THE SHOP’S EQUIPMENT IS P240,000
G. THE VALUE OF SERVICE VEHICLE IS P50,000
 H. HE HAD AN ACCOUNT PAYABLE AMOUNTING TO P10,000 AND
ANOTHER ACCOUNT WITH PROMISSORY NOTE AMOUNTING
TO P25,000
1. HOW MUCH ARE THE TOTAL ASSETS OF MR. X?
2. HOW MUCH ARE HIS TOTAL LIABILITIES?
3. COMPUTE FOR HIS TOTAL EQUITY.
PREPARE A STATEMENT OF FINANCIAL POSITION FOR THE
COMPANY (ONE IN REPORT FORM AND ONE IN ACCOUNT FORM)
 G E N E RALI ZATI O N

COMPREHENSIVE INCOME IS THE VARIATION IN A

COMPANY'S NET ASSETS FROM NON-OWNER SOURCES
DURING A SPECIFIC PERIOD. COMPREHENSIVE INCOME
INCLUDES NET INCOME AND UNREALIZED INCOME,
SUCH AS UNREALIZED GAINS OR LOSSES ON
HEDGE/DERIVATIVE FINANCIAL INSTRUMENTS AND
FOREIGN CURRENCY TRANSACTION GAINS OR LOSSES.
 POST–TEST

DIRECTIONS: MULTIPLE CHOICE. ENCIRCLE THE LETTER OF THE BEST ANSWER.

1. THE REPORT OF FINANCIAL STANDING OF THE BUSINESS ON A GIVEN

DATE IS CALLED ____.

A. STATEMENT OF COMPREHENSIVE INCOME

B. STATEMENT OF CHANGES IN EQUITY

C. STATEMENT OF FINANCIAL POSITION

D. STATEMENT OF CASH FLOW

 2. THE DIFFERENCE BETWEEN A CURRENT ASSET AND A NON-CURRENT ASSET IS

A. ON HOW LONG THE ASSET HAS BEEN OWNED

B. WHETHER THE ASSET IS EXPECTED TO BE CONVERTED TO CASH OR USED WITHIN THE NORMAL OPERATING
CYCLE TO BENEFIT THE ENTITY

C. ON THE ABILITY TO DETERMINE THE CURRENT FAIR MARKET VALUE OF THE ASSET

D. WHETHER THE ASSET IS TANGIBLE OR INTANGIBLE

3. WHICH OF THE FOLLOWING IS NOT A CORRECT EXPRESSION OF THE STATEMENT OF FINANCIAL POSITION EQUATION?

A. ASSETS – LIABILITIES = OWNER’S EQUITY

B. LIABILITIES = ASSET – OWNER’S EQUITY

C. ASSETS = OWNER’S EQUITY

D. ASSETS – LIABILITIES + OWNER’S EQUITY

4. WHICH AMONG THE FOLLOWING IS NOT TRUE ABOUT THE
STATEMENT OF FINANCIAL POSITION ACCOUNT FORM?
A. IT SHOWS ASSETS ON THE LEFT SIDE
B. IT SHOWS LIABILITIES AND OWNER’S EQUITY ON THE RIGHT SIDE
C. IT HAS THE SAME CONTENT
D. IT IS THE SAME WITH THE REPORT FORM IN TERMS OF
PRESENTATION OF ASSETS, LIABILITIES AND OWNER’S EQUITY

5. WHICH AMONG THE FOLLOWING IS TRUE ABOUT THE STATEMENT OF

FINANCIAL POSITION ACCOUNT FORM?
A. IT HAS NO HEADING
B. THE ASSETS HAVE NO CATEGORY
C. IT HAS THE SAME KEY PARTS AS THE REPORT FORM
D. NO OWNER’S EQUITY ENTRY
6. WHICH AMONG THE FOLLOWING IS NOT INCLUDED IN THE MAIN
ELEMENTS OF THE STATEMENT OF COMPREHENSIVE INCOME?
A. TITLE OR HEADING
B. REVENUES AND EXPENSES
C. INVESTMENTS BY THE OWNER
D. GAINS AND LOSSES
7. FOR SERVICE ENTITIES, EXPENSES ARE USUALLY CATEGORIZED
AS COST OF SERVICE OR OPERATING EXPENSE.
A. THE STATEMENT IS CORRECT.
B. THE STATEMENT IS WRONG.
8. FOR A MANUFACTURING BUSINESS, THE EXPENSES ARE
CLASSIFIED AS COST OF SALES, SELLING EXPENSES, AND
ADMINISTRATIVE EXPENSES.
A. THE STATEMENT IS CORRECT.
B. THE STATEMENT IS WRONG.
9. THESE ARE EXPENSES THAT ARE DIRECTLY RELATED TO THE MAIN
PURPOSE OF A MERCHANDISING BUSINESS WHICH IS THE SALE AND
DELIVERY OF MERCHANDISE.
A. GENERAL AND ADMINISTRATIVE EXPENSES
B. TAX EXPENSES
C. SELLING EXPENSES
D. OTHER EXPENSES
10. WHAT IS THE RESULT IF BEGINNING INVENTORY IS ADDED WITH THE NET
PURCHASES, THEN DEDUCTED WITH THE ENDING INVENTORY?

A. GOODS AVAILABLE FOR SALE

B. GROSS PURCHASES

C. NET PURCHASES

D. COST OF SALES