FINANCIAL

STATEMENTS

Statement of
Comprehensive Income

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Agenda

What are Financial Statements?

What is a Statement of Comprehensive Income?

What are the diff erent forms of SCI?

How to make a SCI?

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 What are Financial Statements?
• Written records that convey the business activities
and the fi nancial per formance of an entity.

• A collection of summar y-level repor ts about an

organization's fi nancial results, fi nancial position,
and cash fl ows.

Four main fi nancial statements:

• Statement of Comprehensive Income

• Statement of Changes in Equity

• Statement of Financial Position

• Statement of Cash Flows

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Topic one
Statement of
Comprehensive Income
Statement of Comprehensive Income

• AKA Income Statement (with some minor diff erences)

• A fi nancial statement that highlights the company ’s earnings and expenses for the year.

• Contains information on a company ’s revenue, company ’s expenses, and a company ’s

income.

• It does not include changes due to equity or any of the assets and liabilities a company
holds.

• Two forms: Single-step and Multi-step approach

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Single-Step vs Multi-Step
Single-Step
• Temporar y accounts are grouped
according to whether they are
revenue or expense accounts.
• Utilizes the formula:
Revenues – Expenses = Net Income
• Typically used by ser vice
businesses.
Presentation Title
Multi-Step
• Temporar y accounts are grouped
into whether they are par t of gross
profi t, operating expenses, non-
operating expense, and non-
operating income.
• Utilizes multiple formulas.
• Used by merchandising and
manufacturing businesses.
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 Single Step Approach

PAGAWA Repair Ser vices has the following balances in their books af ter adjusting entries:

Write the income statement for the end of their accounting period on December 31, 2021.

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 Step 1: Heading

To write the heading, simply write the following on the fi rst three rows of the document.

Row 1: Company Name

Row 2: Name of Financial Statement

Row 3: For the [period] ended [date of end of period]

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Step 1: Heading

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 Step 2: Group the Accounts

Get all relevant accounts and group them according to whether they ’re revenue accounts or they
are expense accounts. Af ter wards, arrange them again either by their order on the char t of
accounts or by descending order.

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 Step 2: Group the Accounts

Get all relevant accounts and group them according to whether they ’re revenue accounts or they
are expense accounts. Af ter wards, arrange them again either by their order on the char t of
accounts or by descending order.

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 Step 3: List and Total

1. Leaving a row open af ter the heading, write down “Revenues” on the column with the largest
width.

2. On the row af ter, list down the revenue accounts in either char t of accounts order or
descending order, leaving a bit of an indent on each account.

3. Then, list down the amount on each account on the 4 t h column. Include the currency symbol
on the fi rst amount. Once all the amounts are listed, underline the last amount.

4. On the row af ter the last amount, write down “ Total Revenues” then on the 5 t h column, total
all revenues. Include the currency symbol here.

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 Step 3: List and Total

Af terwards, do the same for expenses, without having the currency in the total.
Instead, underline it.

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 Step 3: List and Total

It would look something like this

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 Step 3: List and Total

It would look something like this

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 Step 4: Get Net Income (or Loss)

1. Compute for Net Income by doing Total Revenue – Total Expenses.

2. Leave a row open af ter “Total Expenses.”

3. If the number is a positive number, write “Net Income” on the row af ter. If the number is a
negative number, write “Net Loss” instead.

4. On the last column and same row, write the results of Total Revenue – Total Expenses.
Include currency and double underline it.

5. If the number is a negative number, write the number in parentheses.

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You’re done!

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 Multi-Step Approach
For creating an Income Statement with the Multi-Step approach, you must remember a few
formulas (highlighted formulas are only for Periodic system businesses):

Net Sales = Sales – Sales Discounts – Sales Returns and Allowances

Total Purchases = Purchases + Freight-In

Net Purchases = Total Purchases – Purchase Returns and Allowances – Purchase Discount

Cost of Goods Available For Sale = Beginning Inventor y + Net Purchases

Cost of Goods Sold = Cost of Goods Available For Sale – Ending Inventor y

Gross Profi t = Net Sales – Cost of Goods Sold

Total Revenue = Gross Profi t + Other Income

Net Income = Total Revenue – Operating Expenses

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 Multi-Step Approach
BENTA Merchandising Company has the following balances in their books af ter adjusting entries:

Write the adjusting journal entr y for the end of their accounting period on December 31, 2021.

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 Step 1: Heading

To write the heading, simply write the following on the fi rst three rows of the document.

Row 1: Company Name

Row 2: Name of Financial Statement

Row 3: For the [period] ended [date of end of period]

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 Step 2: Group the Accounts

Get all relevant accounts and group them according to the formula that they would be used for.

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 Step 3: List by Formula
Star ting with Net Sales, compute for each of the things needed, ending up with something like
this.

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 Step 3: List by Formula
Note:

For businesses under the Perpetual Inventor y system, there is no need to compute for cost of
goods sold because the cost of goods sold account exists, you just need to get the balance of
that account upon the writing of the Financial Statement.

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Exercises
 Exercises
Ybot ’s Spor ts is a small merchandising business using the Periodic Inventor y System. See below
the relevant account balances and create a Multi-Step Income Statement for the end of their
fi scal year on March 31, 2022.

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