STAT E M E N T O F

CO M PR EH EN SIV E I NC O M E
SCI
STATEMENT OF COMPREHENSIVE INCOME

•THE “STATEMENT OF COMPREHENSIVE INCOME” OR

“STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME” IS THE 2ND COMPONENT OF A
COMPLETE SET OF FINANCIAL STATEMENTS.
STATEMENT OF COMPREHENSIVE INCOME SHOWS
INFORMATION ON AN ENTITY’S FINANCIAL
PERFORMANCE DURING THE PERIOD. IT SHOWS THE
FOLLOWING:
1.PROFIT OR LOSS;
2.OTHER COMPREHENSIVE INCOME; AND
3.COMPREHENSIVE INCOME
THE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME IS DIFFERENT FROM THE INCOME STATEMENT.
Income Statement – profit or Statement of profit or loss and other
loss comprehensive income

Income P 1000 Income P 1000

Expenses (600) Expenses (600)
Profit or loss 400 Profit or loss 400
Other comprehensive income 50
Comprehensive income P 450
THE STANDARDS REQUIRE ENTITIES TO PRESENT
A “STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME”. MEANING,
PRESENTING AN INCOME STATEMENT ALONE
WITHOUT “OTHER COMPREHENSIVE INCOME” IS
PROHIBITED.
BUT SOMEHOW STANDARDS ALLOW THE
PRESENTATION OF AN INCOME STATEMENT
TOGETHER WITH THE STATEMENT OF
COMPREHENSIVE INCOME. IT IS CALLED TWO-
STATEMENT PRESENTATION.
SINGLE-STATEMENT COMPREHENSIVE INCOME

ABC Co.
Statement of Comprehensive Income
For the period ended December 31, 2017

Income P 1,000
Expenses ______(600)
Profit for the year 400
Other comprehensive income ________50
Comprehensive income for the year ______ P450
 TWO-STATEMENT PRESENTATION
FIRST OF TWO STATEMENTS SECOND OF TWO
– THE INCOME STATEMENT STATEMENTS
ABC Co.
ABC Co. Statement of Comprehensive Income
Statement of Comprehensive Income For the period ended December 31, 2017
For the period ended December 31, 2017

Profit or loss P 400

Income P 1,000
Other comprehensive
Expenses ______(600)
Income _______50
Profit or loss _______400
Comprehensive Income __450
OTHER COMPREHENSIVE INCOME WILL BE DISCUSSED
IN HIGHER ACCOUNTING

FOR NOW “SINGLE-STATEMENT” PRESENTATION OF

COMPREHENSIVE INCOME
 ELEMENTS OF THE STATEMENT OF COMPREHENSIVE
INCOME

1. INCOME – ARE INCREASE IN ECONOMIC BENEFITS DURING

THE PERIOD IN THE FORM OF INFLOWS OR ENHANCEMENTS OF
ASSETS OR DECREASES OF LIABILITIES THAT RESULT IN
INCREASE IN EQUITY, OTHER THAN THOSE RELATING TO
INVESTMENTS BY THE BUSINESS OWNERS.
 INCOME INCLUDES BOTH REVENUE AND GAINS
A. REVENUE – ARISES IN THE COURSE OF THE ORDINARY ACTIVITIES OF A
BUSINESS AND IS REFERRED TO BY A VARIETY OF DIFFERENT NAMES INCLUDING
SALES, FEES, INTEREST, DIVIDENDS, ROYALTIES AND RENT.

•SERVICE BUSINESS – RENDERING SERVICE OR SERVICE FEES

•MERCHANDISING BUSINESS – SALES OF GOODS OR SALES
REVENUE OR SIMPLY SALES
B. GAINS – REPRESENTS OTHER ITEMS THAT MEET
THE DEFINITION OF INCOME AND MAY OR MAY NOT
ARISE IN THE COURSE OF THE ORDINARY ACTIVITIES
OF AN ENTITY.
 EXPENSES
ARE DECREASES IN ECONOMIC BENEFITS DURING THE
PERIOD IN THE FORM OF OUTFLOWS OR DEPLETIONS OF
ASSETS OR INCREASE OF LIABILITIES THAT RESULT IN
DECREASES IN EQUITY, OTHER THAN THOSE RELATING TO
DISTRIBUTIONS TO THE BUSINESS OWNERS.
THE DIFFERENCE BETWEEN INCOME AND EXPENSE
REPRESENTS PROFIT OR LOSS

INCOME > EXPENSE = PROFIT

INCOME < EXPENSE = LOSS
 ACCOUNTS DEBIT CREDIT

Trial Service fees P 870,000

Interest Income 60,000
balance of Gains 20,000

ABC co. on Salaries Expense

Rent Expense
P300,000
30,000
December Utilities Expense 20,000
Supplies Expense 10,000
31, 2017 Depreciation Expense 40,000

shows the Taxes and Licenses

Transportation and Travel Expense
70,000
5,000
following Interest Expense 2,000

information
Miscellaneous Expense 1,000
Loses 15,000

. Totals P493,000 P950,000

 ACCOUNTS DEBIT CREDIT
ABC Corporation
Service fees P 870,000
Statement of Comprehensive
Interest Income 60,000
Income
Gains 20,000
For the period ended December
Salaries Expense P300,000
31, 2017
Rent Expense 30,000

Utilities Expense 20,000

INCOME
Supplies Expense 10,000
Service Fees P870,000
Depreciation Expense 40,000

Taxes and Licenses 70,000

Interest Income 60,000
Transportation and Travel Expense 5,000 Gains 20,000
Interest Expense 2,000 TOTAL INCOME P950,000
Miscellaneous Expense 1,000

Loses 15,000 FIRST PORTION

Totals P493,000 P950,000
 ACCOUNTS DEBIT CREDIT EXPENSES

Service fees P 870,000 Salaries expense 300,000

Interest Income 60,000 Rent Expense 30,000

Gains 20,000 Utilities Expense 20,000

Salaries Expense P300,000 Supplies Expense 10,000

Rent Expense 30,000 Depreciation Expense 40,000

Utilities Expense 20,000 Taxes and Licenses 70,000

Supplies Expense 10,000 Transportation Expense 5,000

Depreciation Expense 40,000 Interest Expense 2,000

Taxes and Licenses 70,000 Miscellaneous Expense 1,000

Transportation and Travel Expense 5,000 Loses 15,000

Interest Expense 2,000 TOTAL EXPENSES 493,000

Miscellaneous Expense 1,000

Loses 15,000 SECOND PORTION

Totals P493,000 P950,000
 ABC Corporation EXPENSES
Statement of Comprehensive Income Salaries expense 300,000
For the period ended December 31, 2017 Rent Expense 30,000
Utilities Expense 20,000
INCOME Supplies Expense 10,000
Service Fees P870,000 Depreciation Expense 40,000
Interest Income 60,000 Taxes and Licenses 70,000

Gains 20,000 Transportation Expense 5,000

Interest Expense 2,000
TOTAL INCOME P950,000
Miscellaneous Expense 1,000
PROFIT FOR THE YEAR 457,000 Loses 15,000

OTHER COMPREHENSIVE - TOTAL EXPENSES 493,000

INCOME
COMPREHENSIVE INCOME FOR P457,000
THE YEAR

Third PORTION
 PRESENTATION OF EXPENSES
EXPENSES MAY BE PRESENTED IN THE STATEMENT OF
COMPREHENSIVE INCOME USING EITHER OF THE FOLLOWING
METHODS:
1. NATURE OF EXPENSE METHOD
2. FUNCTION OF EXPENSE METHOD (COST SALES METHOD)
 EXPENSE
NATURE OF EXPENSE METHOD IN GENERAL
•DEPENDS ON NATURE ( DEPRECIATION, PURCHASES OF MATERIAL,
TRANSPORT COST, EMPLOYEES BENEFITS AND ADVERTISING COST) AND
ARE NOT REALLOCATED AMONG THEIR FUNCTIONS WITHIN THE ENTITY.
•VERY SIMPLE BECAUSE NO REALLOCATIONS OF EXPENSES ARE
NECESSARY
•IT IS REFERRED TO AS A SINGLE STEP – APPROACH
•THIS METHOD IS COMMONLY USED IN SERVICE BUSINESS
 FUNCTION ON EXPENSE METHOD
EXPENSE ARE CLASSIFIED AND PRESENTED ACCORDING TO THEIR
FUNCTION AS PART OF COST OF SALES OR, FOR EXAMPLE, THE
COST OF DISTRIBUTION OR ADMINISTRATIVE ACTIVITIES. AT A
MINIMUM, AN ENTITY DISCLOSES ITS COST OF SALES UNDER
THIS METHOD SEPARATELY FROM OTHER EXPENSES.
COMMONLY USED IN MERCHANDISING AND MANUFACTURING
BUSINESS
A TYPE OF COMPREHENSIVE INCOME
THAT SHOWS EXPENSES BY THEIR
FUNCTION IS REFERRED TO AS
PREPARED USING A MULTI-STEP
APPROACH.
MAJOR CATEGORIES OF EXPENSE UNDER THE FUNCTION OF
EXPENSE METHOD:

1. COST OF SALES (OR COST OF GOODS SOLD)

2. DISTRIBUTION COST (SELLING EXPENSES)
3. ADMINISTRATIVE EXPENSE ( GENERAL AND ADMINISTRATIVE EXPENSE)
4. OTHER EXPENSES
5. INTEREST EXPENSES (FINANCE COST)
6. INCOME TAX EXPENSE
 DISTRIBUTION COST(SELLING EXPENSES)

COST ATTRIBUTE TO SELLING ACTIVITIES. EXAMPLE INCLUDES:

FREIGHT-OUT OR DELIVERY EXPENSES, SALES COMMISSIONS,
ADVERTISING, SALARIES OF SALES PERSONNEL, DEPRECIATION
ON DELIVERY EQUIPMENT, RENT PERTAINING TO SPACE
OCCUPIED BY THE SALES DEPARTMENT, AND THE LIKE.
 ADMINISTRATIVE EXPENSES
A RESIDUAL CATEGORY OF EXPENSE .
AN EXPENSES THAT DOES NOT QUALIFY FOR CLASSIFICATION UNDER THE OTHER
CATEGORIES IS INCLUDED IN THIS CATEGORY. ( COST SALES, DISTRIBUTION COST,
OTHER EXPENSES AND INTEREST EXPENSES)

(INSURANCE, TAXES AND LICENSES (EXCEPT INCOME TAX EXPENSE) , SALARIES OF

NON-SALES PERSONNEL DEPRECIATION OF ASSETS NOT USED BY THE SALES
DEPARTMENT, RENT PERTAINING TO OFFICE SPACE, AND THE LIKE
OTHER EXPENSES

INCLUDES, LOSSES LIKE CASUALTY

LOSSES AND LOSSES ON SALE OF
PROPERTIES.
 INCOME TAX EXPENSE

INCLUDES TAXES ON INCOME. OTHER TAXES ARE

PRESENTED IN ADMINISTRATIVE EXPENSES CATEGORY
UNDER THE “TAXES AND LICENSES” ACCOUNT.
FUNCTION EXPENSE
Entry Cost

Cost of good sold P 250,00

Insurance expense 120,000

Advertising expense 18,000

Freight Out 36,000

Loss on sale of equipment 4,000

Rent Expense (1/2 pertains sales department) 120,000

Salaries expense ( 1/4 pertains to non-sale personnel) 200,000

Sales commission expense 20,000

Bad debts expense 6,000

Interest expense 1,000

Determine the amounts of expenses classified as (1) distribution cost and
(2) administrative expense

1. Selling Expense 2. Administrative Expense

Advertising Expense P 18,000 Insurance Expense P 120,000
Freight out 36,000 Rent Expense (120,000 x ½) 60,000
Rent Expense (120,000 x ½) 60,000 Salaries expense (200,000 x 1/4) 50,000
Salaries expense (200,000 x ¾) 150,000 Bad debts 6,000
Sales commission expense 20,000 Administrative expenses P 236,000
Selling expenses P 284,000
BAD DEBTS EXPENSE IS CLASSIFIED AS
ADMINISTRATIVE EXPENSES.

THIS IS BECAUSE CREDIT GRANTING IS AN ADMINISTRATIVE

FUNCTION AND BAD DEBTS NORMALLY RESULT FROM POOR
CREDIT POLICIES OR DECISIONS. HOWEVER,IF MATERIAL, THE
AMOUNT OF BAD DEBTS SHALL BE PRESENTED SEPARATELY AND
NOT INCLUDED IN CATEGORIES OF EXPENSE.
•COST OF GOOD SOLD IS PRESENTED SEPARATELY
•LOSS ON SALE OF EQUIPMENT IS UNDER OTHER
EXPENSE (MATERIAL AMOUNT OF LOSSES SHALL
BE PRESENTED SEPARATELY
•INTEREST EXPENSE IS PRESENTED SEPARATELY
THE TRIAL BALANCE OF ABC CO. ON DECEMBER 31,2017 SHOWS
THE FOLLOWING INFORMATION
Account Debit Credit Salaries Expense 300,000
Sales P900,000 Rent Expense 30,000
Interest Income 60,000 Depreciation Expense 40,000
Gains 20,000 Utilities Expense 20,000
Inventory Beginning P50,000 Supplies Expense 10,000
Purchases 200,000 Transportation and travel 5,000
expense
Freight-In 10,000 Insurance expense 12,000
Purchase Returns 5,000 Taxes and Licenses 70,000
Purchases Discounts 7,000 Interest Expense 2,000
Freight-out 25,000 Misc. Expense 1,000
Sales Commission 30,000 Loss on the sale of 15,000
equipment
Advertising Expense 15,000 Totals P835,000 P835,000
ADDITIONAL INFORMATION

•A. ENDING INVENTORY P80,000

•B. ONE-HALF OF THE SALES, RENT, AND DEPRECIATION
EXPENSES PERTAIN TO THE SALES DEPARTMENT. THE
SALES DEPARTMENT DES NOT SHARE OTHER EXPENSES.
 REQUIREMENTS

•PREPARE THE STATEMENT OF COMPREHENSIVE INCOME USING

THE FOLLOWING.
a.NATURE OF EXPENSE METHOD (SINGLE-STEP APPROACH)
b.FUNCTION OF EXPENSE METHOD (MULTI-STEP APPROACH)