STATEMENT OF

COMPREHENSIVE
INCOME

MODULE 3
OBJECTIVES

Understand the purpose of the SCI

Identify the elements of the SCI

Describe the nature of the accounts reported on the SCI

Prepare a single-step SCI for a service company

Prepare a multi-step SCI for a merchandising company

Determine the normal balances of the elements of the SCI

ELEMENTS OF COMPREHENSIVE INCOME

EXPENSES:

- EXPENSES, these are outflows of cash intended to settle goods or services

used in carrying out other activities of the business.
Other account names used in expenses:
- Purchases – goods or merchandise bought with the intention of selling
- Purchase Returns & Allowances – goods or merchandise returned to supplier
due to poor quality, with defects or wrong shipment
- Purchase Discount – reduction given by the supplier when purchased goods
are within the discount period
ELEMENTS OF COMPREHENSIVE INCOME

EXPENSES:

- EXPENSES, these are outflows of cash intended to settle goods or services

used in carrying out other activities of the business.
Other account names used in expenses:
- Freight In – when the buyer pays for the transportation expense of goods
from the point of origin to the location of his business (added to Purchases)
- Freight Out – when the seller pays the transportation expense from his place
to the place of the buyer (added to Operating Expense)
ELEMENTS OF COMPREHENSIVE INCOME

EXPENSES:

- EXPENSES, these are outflows of cash intended to settle goods or services

used in carrying out other activities of the business.
Other account names used in expenses:
- Inventory – an itemized list of assets of a company
- * Perpetual Inventory Method – records inventory movement when they
happen through a card catalogue or an inventory system
- * Periodic Inventory Method – records inventory movement at the end of an
accounting cycle (normally after doing physical count
ELEMENTS OF COMPREHENSIVE INCOME

EXPENSES:

- OPERATING EXPENSES, all other expenses related to the operation of the

business, other than cost of sales (cost of goods sold).
Examples:
- Salaries, Wages, Supplies, Utilities, Gasoline, Representation, Bad Debts,
Depreciation, Amortization, etc.
- BAD DEBTS EXPENSE - is an operating expense related to Accounts
Receivable.
OTHER EXPENSES and INCOME

- GAINS and LOSSES – these are income or loss coming from the sale of other
assets other than the main operation of the business.

- Accrued Income – income already earned but payment has yet to be received
- Accrued Expense – expenses already incurred but payment has yet to be
made
PRESENTATION OF SCI

- Single-Step (Natural), in this presentation, all revenues and expenses are

presented into separate groups and then in a single-step, subtracts expenses
from revenue to arrive at Income or Loss.

- Multi-Step (Functional), in this presentation, all information is grouped in a

particular group before proceeding to necessary mathematical operation.
This follows a step by step procedure and grouping of particular accounts.
PRESENTATION OF SCI

Service Income
PRESENTATION OF SCI
PRESENTATION OF SCI
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