FUNDAMENTALS OF ACCOUNTING AND BUSINESS MANAGEMENT 2

LESSON 2:
STATEMENT OF
COMPREHENSIVE
INCOME (SCI)
Prepared By: Glaiza Estrecho/Maureen A. Acob
 LEARNING OBJECTIVES

• Identify the elements of the SCI and describe each of these

items for a service business and a merchandising business
• Differentiate the single-step approach and multi-step
approach.
• Prepare a Statement of Comprehensive Income

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STATEMENT OF
COMPREHENSIVE
INCOME (SCI)
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 What is SCI?

A structured financial statement that shows the financial

performance of a business entity for a given period –
monthly, quarterly, semi-annually, or annually. It is also
called profit and loss statement, statement of operations, or
statement of comprehensive income.

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 3 TYPES OF ACCOUNT

REAL PERSONAL NOMINAL

Personal accounts are related to individuals, firms, Accounts which are related to
All assets of a firm, which are tangible or
intangible, fall under the category of companies, etc. Few examples are debtors, expenses, losses, incomes or gains
‘Real Accounts’.
creditors, banks, outstanding account, prepaid
are called Nominal accounts.
Tangible real accounts are related to accounts, accounts of customers, accounts of goods

suppliers, capital, drawings, etc.

things that can be touched and felt

physically. Few examples of tangible real

accounts are building, machinery, stock,

land, etc.
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 SINGLE-STEP APPROACH

• A single-step income statement is one of two commonly used formats for the income
statement or profit and loss statement.

• The single-step format uses only one subtraction to arrive at net income.

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Reference:
https://www.accountingcoach.com/in 7
come-statement/explanation/3
 MULTI-STEP APPROACH

• The multiple-step profit and loss statement segregates the

operating revenues and operating expenses from the non
operating revenues, non operating expenses, gains, and
losses.

• The multiple-step income statement also shows the gross

profit (net sales minus the cost of goods sold).

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Reference:
https://www.accountingcoach.com/in 9
come-statement/explanation/4
Net Income VS Net Loss

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•Net Income is the result if revenues are greater than
expenses while Net Loss is the result if expenses are
greater than revenue.Your Net Income or Net Loss equals
your total revenues minus your total expenses for an
accounting period. If your revenues are greater than
expenses, you have Net Income. If revenues are less than
expenses, you have a Net Loss.

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REVENUE
ACCOUNTS
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 OPERATING REVENUE

•revenues arising from the primary activities of a business. May

either be Sales Revenues or Service Revenues.

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SALES INCOME/REVENUE
• are revenue account for merchandising type of business organization
that is used in selling merchandise.

SERVICE INCOME/REVENUE
• can be used for companies which render services in order to earn an
income like the services rendered

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SALES DISCOUNT
• represents cash discounts given to customers for settling the
accounts on time.
SALES RETURN
• represent actual returns made by the customers due to wrong delivery,
wrong shipment or defective merchandise.
SALES ALLOWANCE
• present no actual returns but to an allowance given instead for the
defective merchandise delivered.
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 NON OPERATING REVENUE

•revenues arising from secondary activities of a business.

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INTEREST INCOME

•company income earned out of lending its money or depositing money

with a banking institution.

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EXPENSE
ACCOUNTS
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 OPERATING EXPENSES

•expenses that are incurred in order to earn normal operating revenues.

This covers…

selling (expenses resulting from the company’s efforts to make sales ) and

administrative (expenses of general administration ) expenses.

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PURCHASE
•are merchandise purchase, which are intended for sale.

PURCHASE DISCOUNT
•is a discount given by merchandisers when you pay your liabilities on
time.

PURCHASE RETURNS
• actual returns of merchandise you return to your supplier
due to wrong delivery, wrong shipment or defective
merchandise. 20
PURCHASE ALLOWANCES
• it is given by the supplier presenting reduction of price for purchased
merchandise due to defects.

EMPLOYEE BENEFITS
• represent the labor payments to the employees other than the basic
payments that are highly discretionary on the part of the employer.

OFFICE SUPPLIES EXPENSE

• represents various office supplies used by the office like coupon
bonds, pencils, ball point pen, paper clips, etc.
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INSURANCE EXPENSE
• represents fire & burglary insurance of the various assets of the
business.

ADVERTISING EXPENSE
• the cause of promotion & advertising the products of the business for
the purpose of improving its sales performance.

RENT EXPENSE
• the rental expenses of the business.
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•Income Tax – taxes levied on income before income tax.

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 ▰ EXERCISE 1: MAKE A SINGLE-STEP SCI.

▰ Salaries Expense Php 40,000.00

▰ Rent Expense Php 20,000.00

▰ Building Php 10,000,000.00

▰ Cash Php 1,000,000.00

▰ Truck P 1,500,000.00

▰ Service Revenue Php 100,000.00

▰ Depreciation Expense Php10,000.00

▰ Utilities Expense Php 5,000.00

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▰ ANSWER: ABM 1

▰ SCI

▰ AUG.31, 2021

SERVICE REVENUE P 100,000.00

EXPENSES:

SALARIES EXPENSE P 40,000.00

RENT EXPENSE 20,000.00

UTILITIES EXPENSE 5,000.00

MISCELLANEOUS EXPENSE 1,000.00

DEPRECIATION EXPENSE 10,000.00

TOTAL EXPENSES: P 76,000.00

NET INCOME P 24,000.00

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 multi-step SCI. QUIZ 4

▰ Net Cost of Purchases P 250,000.00 Salaries Expense P 20,000.00

Rent Expense 15,000.00
▰ Purchases P 100,000.00 Depreciation Expense 10,000.00
Utilities Expense 5,000.00
▰ Purchase Returns P 20,000.00
Miscellaneous Expense 1,000.00

▰ Purchase Discounts P 10,000.00

Selling Expenses
Salaries Expense P 10,000.00

▰ Net Purchases P 70,000.00 Rent Expense 8,000.00

Depreciation Expense 7,000.00
▰ Freight In P 15,000.00 Utilities Expense 6,000.00

▰ Sales P 500,000.00

▰ Sales Returns P 30,000.00 26

▰ ANSWER:

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THANKS!!!

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