Fundamentals

of
Accountancy, Business &
Management

2
Fundamentals of ABM 2 by: Ferrer & Millan
 Chapter 2
Statement of Comprehensive Income

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
the single-step approach.
• Prepare an SCI for a merchandising business
using the multistep approach.

Fundamentals of ABM 2 by: Ferrer & Millan

Income statement vs. Statement of
comprehensive income

Fundamentals of ABM 2 by: Ferrer & Millan

Single-statement vs. Two-statement presentation

Fundamentals of ABM 2 by: Ferrer & Millan

Single-statement vs. Two-statement presentation

Fundamentals of ABM 2 by: Ferrer & Millan

Elements of the Statement of Comprehensive Income

• INCOME – are increases in economic benefits during the period

in the form of inflows or enhancements of assets or decreases of
liabilities that result in increases in equity, other than those
relating to investments by the business owners. Income includes
both revenue and gains.
• EXPENSES – are decreases in economic benefits during the period
in the form of outflows or depletions of assets or increases of
liabilities that result in decreases in equity, other than those
relating to distributions to the business owners. Expenses include
both expenses and losses.
• The difference between income and expense represents profit or
loss.
 If income is greater than expenses, the difference is profit.
 If income is less than expenses, the difference is loss.
Fundamentals of ABM 2 by: Ferrer & Millan
 Presentation of Expenses
a. Nature of expense method
b. Function of expense method (Cost of sales
method)

Fundamentals of ABM 2 by: Ferrer & Millan

Nature of Expense (Single-step)

Fundamentals of ABM 2 by: Ferrer & Millan

Major categories of expenses under the function of expense
method

a. Cost of sales (or Cost of goods sold)

b. Distribution costs (or Selling expenses)
c. Administrative expenses (or General and
administrative expenses)
d. Other expenses
e. Interest expenses (or Finance cost)
f. Income tax expense

Fundamentals of ABM 2 by: Ferrer & Millan

Function of Expense (Multi-step)

Fundamentals of ABM 2 by: Ferrer & Millan

OPEN FORUM
QUESTIONS????
REACTIONS!!!!!

Fundamentals of ABM 2 by: Ferrer & Millan

 END

Fundamentals of ABM 2 by: Ferrer & Millan