Statement of Comprehensive

Income (SCI)
Learning Objectives:
- identify the elements of the SCI and describe each
of these items for a service business and a
merchandising business
- prepare an SCI for a service business using single-
step approach
- prepare the elements for a merchandising business
using the multi-step approach
Define the following terms:

1. Statement of Comprehensive Income

2. Temporary Accounts
3. Contra Purchases
4. Cost of Goods Sold
5. General and Administrative Expenses
6. Selling Expenses
7. Single-step
8.Multi-step
Review:
Remembering the following terms
a. Accrual
b. Revenues
c. Expenses
d. Service business
e. Merchandising business
Statement of Comprehensive Income
- Also known as the income statement.
Temporary Accounts
- Also known as nominal accounts are the accounts
found under the SCI.
Single-step – all revenues are listed down in one section
while all expenses are listed in another
Multi-step – there are several steps needed in order to
arrive at the company’s net income.
Sales returns – this account is debited in order to record
returns of customers or allowances for such returns.
Sales discounts – this is where discounts to customers
who pay early are recorded.
Cost of Goods Sold – this account represents the actual
cost od merchandise that the company was able to sell
during the year.
Contra Purchases – an account that is credited being
“contrary” to the normal balance of purchase account.
Purchase discount – account used to record early
payments by the company to the suppliers of
merchandise.
Purchase returns – account used to record merchandise
returned by the company to their suppliers.
Freight In – this account used to record transaction cost
of merchandise purchased by the company.
General and Administrative Expenses
- These expense are not directly related to the merchandising
function of the company but are necessary for the business too
operate effectively.
Selling Expenses
- These expense are those that are directly related to the main
purpose of a merchandising business: the sale and delivery of
merchandise.
 HAPPY SELLING COMPANY
STATEMENT COMPREHENSIVE INCOME
FOR THE YEAR DECEMBER 31, 2016

Net Sales P460,000

Cost of Goods Sold (285,000)
Gross Profit P175,000
_____________________________________________________________________________________________________________________________
General & Administrative Expenses
Salaries Expense (20,000)
Rent Expense (15,000)
Depreciation expense (10,000)
Utilities expense (5,000)
Miscellaneous Expense (1,000) (51,000)
Selling Expenses
Salaries Expense (10,000)
Rent Expense (8,000)
Depreciation Expense (7,000)
Utilities Expense (6,000) (31,000)
____________________________________________________
Net Income Php 93,000