STATEMENT OF

COMPREHENSIVE
INCOME

Week 2 – Sept. 11-15, 2023

 LOOKING
BACK…
THE COMPLETE SET OF
FINANCIAL STATEMENT
FINANCIAL STATEMENTS are the
means by which the information
accumulated and processed in financial
accounting are periodically communicated.
- to provide information about the
financial position, financial performance and
cash flows of an entity as basis for the
different users in MAKING SOUND
ECONOMIC DECISIONS.
 WHO ARE THE USERS OF
FINANCIAL STATEMENT?
Investors
Need information about the profitability,
dividend yield and price earnings ratio in
order to assess the quality and the price
of shares of a company

Lenders
Need information about the profitability
and solvency of the business in order to
determine the risk and interest rate of
loans
Management
Need information for planning, policy
making and evaluation
Suppliers and trade creditors
Need information about the liquidity of
business in order to access the ability to
repay the amounts owed to them

Government
Need information about various
businesses for statistics and formulation
of economic plan
Customers
Interested in long-tem stability of
the business and continuance of the
supply of particular products
Employees
Interested in the stability of the
business to provide employment,
fringe benefits and promotion
opportunities
Public
Need information about the trends
and recent development
PRINCIPAL FINANCIAL REPORTS

1.Income Statement
2.Statement of Changes in Equity
3.Statement of Financial Position
4.Cash Flow Statement
5. Notes to Financial Statements
1. INCOME STATEMENT – shows the
results of
business operations whether net
income
or net loss for a given period of
time.

2. STATEMENT OF CHANGES IN
EQUITY – it
presents a summary of the changes
that
occurred in the owner’s equity of
the
entity during a specific time period.
4. CASH FLOWS STATEMENT – reports
the firm’s
receipts and disbursements of cash
which are classified according to the
company’s
major activities, namely (1)
operating,
(2) investing, and (3) financing.

5. NOTES TO FINANCIAL
STATEMENTS -
or Supplementary Notes, provides
information in addition to those
presented
Have you thought of …
Can I prepare Cash Flow
first before the Income
Statement?
Or Balance Sheet before
Statement of Changes in
Equity?
Or Statement of Equity
before Income
Statement?
 RELATIONSHIPS OF
FINANCIAL
STATEMENTS
The net income from the Income
Statement is used in the Statement of
Changes in Equity. Remember that income
and expenses affect capital.

The ending balance of capital in the

Statement of Owner's/Partners'/SH's
Equity is forwarded to the Balance Sheet
(under Capital).
The cash balance presented in the
Balance Sheet is supported by the
Statement of Cash Flows. The
ending balance of cash in the
Statement of Cash Flows is the same
amount presented in the Balance
Sheet.

The notes to financial statements

show supporting computations of
the amounts and additional
information about the items
INCOME STATEMENT
- also called as the Statement of profit
and loss or statement of financial
performance.

- summarizes the results of business

operation for a period of time.

- a report that shows whether or not

the business achieved its primary
objective of earning a profit or net
income.
HOW TO PREPARE
AN INCOME
ListSTATEMENT?
the revenues earned during the
period
List the expenses incurred in
earning the revenue; and
Subtracting the expenses from the
revenue to determine if a net
income or a net loss was incurred
 CONTENT OF THE
INCOME STATEMENT
INCOME ACCOUNTS –
represents the
amount of services or sale
of
merchandise for a period
of
time. (inflow)

EXPENSE ACCOUNTS -
outflow of
assets due to the
 INCOME ACCOUNTS
 SERVICE INCOME – the term generally
used to
refer to any kind of income from
services
rendered.
• Professional fees
• Medical fees
• Legal fees
• Dental fees
• Accounting fees
• Management fees
OTHER INCOME – income from sources
other
than the principal line of activity of
the
business.

• Interest income – may come from a

payee from for a loan, or
income earned from
the money deposited in a
bank.
• Dividend income – income earned in
investing
cash in stocks of other
 EXPENSE ACCOUNTS
In service business, the following are the
common expenses:

• Salaries expense - Bad debts or

Doubtful
• Rent expense
accounts expense
• Office supplies expense - Donations and
Contributions
• Utilities expense expense
• Taxes and licenses expense - Miscellaneous
expense
• Transportation expense
• Gas and oil expense
• Representation expense
For the sale of merchandise or recording acquisition
of a merchandising or trading business:

• Sales
• Sales Returns and allowances
• Sales Discount
• Purchases
• Purchase Returns and allowances
• Purchase discount
• Transportation In or Freight In
• Transportation Out or Freight Out
• Merchandise Inventory
 FORMS OF
INCOME
As providedSTATEMENT
in the revised Philippine
Accounting Standard (PAS)1, (PFRS, 2008):
1. Natural Form - usually prepared by
the
service oriented businesses. (single
step)

2. Functional Form – trading and

manufacturing firms. (multiple-
step)
Natural Form (single-step)
Under this presentation, it arranges all
income accounts in one group, all expense
account in another group and then deducts
the total expenses from the total income in
a single-step operation of subtraction to
arrive at a final result of net income or net
loss. Minus Net
All
All Income
Revenu
expens /Net
es
es Loss
REMEMBER:
1. ALL financial statements have a HEADING.
It is written in the TOP CENTER of the report.
It is composed of the following:
Name of the Company
Statement of Comprehensive Income
For the year ended/for the month of/for the period of
_________

2. We use “For the year ended/for the month

of/for the period” on the date as this is
measured on a given period of time only.
3. Single-step for service business; multi-step
for merchandising and manufacturing
business.
 Strauss Printing Services
Income Statement
For the Year Ended December 31, 2016

$
Service Revenue
160,000
Less: Expenses
Salaries Expense $ 40,000
Supplies Expense 26,100
Rent Expense 20,500
Utilities Expense 11,300
Depreciation Expense 5,000 102,900
$
Net Income
57,100
IS BS
 STATEMENT OF
COMPREHENSIVE
INCOME
(Multi-Step)

Week 3 (Sept. 18-22,

2023)
et’s Review:

ecap
hecking of What I have Learne
WHAT I HAVE LEARNED:
Functional Form (multi-step)

Distribution
Expense Total Income
Net Sales
+ Administrative - Operating
-Cost of Sales
Expense Expenses
= Gross Profit
+ Other Expense = Net Income or
+ Other Income
+ Finance Costs Net Loss
= Total Income
= Operating
Expenses
In a multi-step income statement, several
steps are taken before we could arrive at the
net income. We need to sequentially compute
for:
Gross Profit = Sales - Cost of Sales
Total Operating Expenses = Selling Expenses +
Administrative
Expenses
Operating Income = Gross Profit - Total Operating
Expenses
Income before Tax = Operating Income +/- Other
Revenues and
Expenses
 ABC Company
Income Statement
For the Year Ended December 31, 2016
Sales $ 120,000
Less: Cost of Sales 62,000
Gross Profit $ 58,000
Less: Operating Expenses
Selling Expenses
Salaries Expense - Sales $ 10,000
Utilities Expense - Store 5,000
Store Supplies Expense 4,000
Depreciation Expense - Store 2,000
Advertising Expense 2,000 $ 23,000
Administrative Expenses
Salaries Expense - Office $ 8,000
Utilities Expense - Office 5,000
Office Supplies Expense 4,000
Depreciation Expense - Office 3,000 20,000
Total Operating Expenses $ 43,000
Operating Income $ 15,000
Other Revenues and Expenses
Interest Income $ 6,000
Gain on Sale of Investments 5,000
Loss on Sale of Equipment (1,000) 10,000
Income before Tax $ 25,000
Less: Income Tax Expense 9,750
Net Income $ 15,250
 ASSIGNMENT

Write your answer

in your notebook.
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