Statement of Comprehensive

INCOME
(INCOME STATEMENT)
BY THE END OF THE CHAPTER, THE STUDENTS
SHOULD BE ABLE TO
•Identify the elements of the statement of
Comprehensive income
•Describe the nature of accounts reported on
the SCI
•Prepare a single step Statement of
Comprehensive Income for a service
company
Prepare your personal Income Statment
• get a ¼ piece of paper
• write your monthly allowance (computed by daily allowance x
number of days in a month)
• write the amount you spend on food, transportation, phone load, etc.
(make it monthly to match their allowance)
• deduct the amount they spend from the amount of your allowance
allowance
• Rewrite the results like the format written on the board.
Statement of comprehensive
Income
•It is a financial statement
that reports the results of
operations of the business
for one accounting period.
Content of an Income
Statement
•Revenue generated by operating
the business
•Cost spent to generate the
revenue
•Net income/net loss of the
business
Elements of an income statement

•Income
•expenses
 Income
•Income refers to a transaction
that increases assets or
decreases liabilities of the
business leading to increase in
equity resulting from the
operations of the business
Two types of income
•Revenues- income from the
primary operations of the
business
•Gains – income from other
operations of the business
Expenses
•These are transactions that
decreases assets/increases
liabilities leading to decrease in
equity resulting from the
operations of the business
Two types of expenses
•Expenses – are related to the
primary operations of the
business
•Losses – are from other
activities of the business
You should be able to
classify an accounts if it’s
income or expense to
prepare a Statement of
Comprehensive Income.
Income or Expense
1. Sales
2. Service Revenue
3. Cost of Goods Sold
4. Depreciation Expense
5. Interest expense
6. Interest income
7. Purchases
8. Transportation expenses
9. Freight cost
10.Rent expense
Single Step Income Statement
•It is commonly used
for a service
company.
Example # 1
• Make a Statement of Comprehensive Income for Simbulan Rental
Services.
1. Rental Income – Php 252,000
2. Depreciation expense –Php 1500
3. Utility Expense – Php 3500
4. Salary Expense –Php 16, 000
5. Taxes and Licenses – Php 2800
6. Laundry expense – Php 2,200
7. Interest Income - Php 12,000
QUIZ #1
Make a Single Step Financial Statement for Dantes, Rivera and
Associates.
1. SSS/PhilHealth/PAG-IBIG contributions -25,000
2. Repair and Maintenance -12, 000
3. Office supplies expense - 800
4. Service Revenue - 53,250
5. Taxes and Licenses - 6250
6. Power, Water and Communication Expenses -3200
Multi-Step Income
Statement
Lesson Objectives

•Prepare a multi-step Statement of

Comprehensive Income for a merchandising
company
•Determine the normal balances of the
elements of the statement of
Comprehensive Income (SCI)
Multi-Step Income Statement

•It is commonly
used for a
merchandising
business
Content of a Multi-Step Income
Statement
I. Net Sales
II. Cost of Goods Sold
III.Gross Profit
IV. Expenses
V. Net Income
I. NET SALES

Net sales =SALES –

CONTRA REVENUE
ACCOUNTS
EXAMPLE 1.
• COMPUTE FOR THE NET SALES
1. SALES 150, 000
2. SALES DISCOUNT 6, 000
3. SALES RETURN AND ALLOWANCES 4, 000
II. Cost of Goods Sold
There are many things you need to consider in finding the cost of goods
sold.
A. Beginning inventory
B. Net cost of purchases
C. Cost of Goods Available for Sale
D. Ending inventory
E. Cost of Goods Sold
IIA. Beginning Inventory
•The amount of
inventory in the
beginning of
accounting period
IIB. Net cost of Purchases
Net Purchases =
Purchases – Contra
Purchases Accounts
IIC. Cost of Goods Available for
Sale
=Beginning
Inventory + Net
Purchases
IID. Ending Inventory
•The amount of
inventory at the end of
an accounting period
IIE. Cost of Goods Sold
= Cost of Goods
Available for Sale –
Ending Inventory
Example 2
Compute for the cost of Goods Sold.
1. Beginning Inventory 30,000
2. Purchases 50, 000
3. Purchase Discount 8, 000
4. Purchase Return and Allowance 3, 000
5. Ending Inventory 15, 000
III. Gross Profit
GP= NET SALES –
COST OF GOODS
SOLD
EXAMPLE 3
•COMPUTE FOR THE
GROSS PROFIT OF
EXAMPLE 1 AND 2
Operating EXPENSES
List all your expense
and add all the
amounts to get the
total expenses
Example 3
1. Depreciation expense 4,000
2. Salary expense 32, 000
3. SSS/Philhealth/PAGIBIG 3,000
4. Miscellaneous expense 5, 000
5. Utility expense 10, 000
6. Rent expense 10, 000
V. Net Income
Net income/loss
= Gross Profit –
Total Expenses
• Prepare the multi-step income statement of Tesla Merchandising for the year
2017 using the following amounts.
1. Sales 500,000
2. Sales discount 10, 000
3. Sales return and allowances 30, 000
4. Beginning inventory 250, 000
5. Purchases 115, 000
6. Purchase return and allowances 20, 000
7. Purchase discount 10, 000
8. Ending inventory 50, 000
9. Salary expense 20, 000
10. Taxes and licenses 3, 000
11. Utility expense 5, 000
12. Depreciation expense 5, 000