PALARIS COLLEGES

San Carlos City, Pangasinan

MODULE IN FUNDAMENTALS OF ACCOUNTANCY,

BUSINESS AND MANAGEMENT (Grade 12)

Statement of Comprehensive Income (SCI)

Quarter 1 Week 2-3 Module 1

Most Essential Learning Competencies (MELCs):

Identify the elements of the SCI and describe each of these items for a service business and a
merchandising business (ABM_FABM12-Ic-d-5)

Prepare an SCI for a service business using the single-step approach (ABM_FABM12-Ic-d-6 )

Prepare an SCI for a merchandising business using the multistep approach

(ABM_FABM12-Ic-d-7)
 Let’s Discuss

STATEMENT OF COMPREHENSIVE INCOME (SCI)

Statement of Comprehensive Income is one of the important financial statements in a complete set
of final accounts of the entity. As opposed to Balance Sheet that tells the financial position of the
entity at a particular date, Statement of Comprehensive Income reflects the financial performance
of the entity over a period of time. 

Financial performance of the entity is judged by comparing the two of the five elements of financial
information namely income/revenue/gain and expense/cost/loss. The entity is supposed to be
doing good if it is able to generate income that exceeds the cost that is incurred to generate such
income. If the income exceeds the expenses entity is said to be making profits and if expenses are
more than the income then entity is in losses. Mathematically it is represented as:

Profit/Loss = Income – Expense

Profit if: Income > Expenses

Loss if: Income < Expenses

Entity’s income is a sum of revenues and gains whereas expense is a sum of costs and losses

incurred during the period.

“ For the Period”

The SCI is described as a “for the period” report. This means that the amount presented on the
report include only those that occurred within the given period.

ABC Company
Statement of Comprehensive Income
For the year ended December 31, 2019

REVENUES P 1, 290,000
Less : EXPENSES 890,000
______________________________________________________________________________________________________________________________________________________________________________

Net Income 400,000

______________________________________________________________________________________________________________________________________________________________________________
 Elements of Statement of Comprehensive Income

1. Revenue

a. Service Income
Account generally used to described revenue derived from rendering services such as
rental income, professional fee and tuition fee revenue.

b. Sales
Revenue account generally used to describe revenue derived from selling of goods such as
office supplies sales, book sales, food sales

Revenue from sales of goods is recognized when goods have been delivered.

2. Expenses

a. Cost of Goods Sold/Cost of Sales

Account used by companies that sells goods instead of services such as price of inventory,
brokerage, shipment cost/freight-in.

b. Operating expenses
Refers to all other expense related to the operation of the business, other than cost of sales
such as salaries of employees, supplies, utilities, gasoline, representation, bad debts,
amortization, and depreciation.

Net Sales
Only net sales is reported on the face of the SCI

Gross Sales
Less: Sales Returns and Allowances
Sales Discount
NET SALES

Example:
SALES P 450.00
Less: Sales Returns and Allowances 75.00
Sales Discount 7.50
NET SALES P 367.50

Cost of Goods Sold/ Cost of Sales

Part of inventory accounting

Beginning Inventory Purchases

Add: Net Purchases Add: Freight-In
Less: Purchase Returns
Cost of Goods Available for Sale
Purchase Discounts
Less: Ending Inventory NET PURCHASES
COST OF GOODS SOLD
Example:

Beginning Inventory P 0.00

Purchases P 55, 344.00
Add: Freight-In 430.00
Less: Purchase Returns 760.00
Net Purchases 55, 014.00
Cost of Goods Available for Sale 55, 014.00
Less: Ending Inventory 2, 320.00
COST OF GOODS SOLD P 52, 694.00

Presentation of Statement of Comprehensive Income (SCI)

There are two formats for the SCI, namely the single-step and multi-step.

Single -Step SCI

Closely related to the nature of expense format. It lists down the expenses based on
the source of expenses such as salaries, purchases, supplies, utilities, fuel and
depreciation.

Groups all revenue items together and all the expense items together.

So called because net income is computed using only one step, deducting total
expenses from total revenues.

Generally used by small businesses and service businesses because of its simplicity.

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 yyy
Depreciation Expense yyy
Utilities Expense yyy
Salaries Expense yyy
Interest Expense yyy
Insurance Expense yyy
Supplies Expense yyy
TOTAL EXPENSES YYY
______________________________________________________________________________________________________________________________________-______________________________________________________

NET INCOME XXX-YYY

______________________________________________________________________________________________________________________________________________________________________________________-___-____
 Multi-Step SCI

Associated with the function of expense.

Characterized by the presentation of several subtotals until net income is

determined. It is popularly used in business.

The subtotals are additional information that give the readers more understanding of
the operations of the business.

First subtotal is GROSS PROFIT

Next subtotal is INCOME FROM OPERATIONS
Last is the bottom line which is the NET INCOME

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

Gross Sales A
Sales Returns and Allowances (B)
Sales Discounts _____________________________________________________________________________________________________________________________
(C)
Net Sales D=A-B-C
Cost of Good Sold ________ _____________________________________________-____
E
Gross Profit F=D-E

Operating Expenses:
General and administrative expenses G
Selling Expense ______________________________________________________________________________________________________________________________________________
H I=G+H
Income from Operations J= F-I

Interest Income K
Interest Expense L
______________________________________________________________________________________________________________________________________________________________________________

NET INCOME J+K-L

_______________________________________________________________________________________________________________________________________________________________________________

Try This

ACTIVITY
Prepare single-step and multi-step Statement of Comprehensive Income (SCI) using
the provided accounting worksheet.
Single- Step Statement of Comprehensive Income
Multi-Step Statement of Comprehensive Income