SHS

Fundamentals of Accountancy,
Business, and Management 2
Module 2:
Statement of Comprehensive Income

AIRs - LM
 ABM – FUNDAMENTALS OF ACCOUNTANCY, BUSINESS, AND
MANAGEMENT 2
Module 2: Statement of Comprehensive Income
Second Edition, 2021

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Region I

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LU_ Fundamentals of Accountancy, Business and Management 2_Module2

 SHS

Fundamentals of Accountancy,
Business, and Management 2
Module 2:
Statement of Comprehensive Income

LU_ Fundamentals of Accountancy, Business and Management 2_Module2

 Introductory Message
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LU_ Fundamentals of Accountancy, Business and Management 2_Module2

 Target

Statement of Comprehensive Income for a Service Organization

Having a business is a relish thought of being a boss, making much money

than if we worked for someone else, and the idea of job security. It connotes that
the business entity does not separate itself from the owner, which means that the
business owner is liable for the operation of the business. As an owner, one must
know how to manage the business to produce wealth. Knowing the know-how
accounting works will also help control the assets and liabilities and protect the net
worth.
When a person wants to put up his own business, the ultimate reason is to
earn profit. Profit or Income is obtained when the amounts received from the
customers and clients are higher than the cost of goods or services incurred or
used up. Thus, as a future business owner or accountant, it is necessary to know
the key features and prepare the Statement of Comprehensive Income (SCI). The
information provided by SCI is used to evaluate the overall value of a company and
its share price. Furthermore, it indicates profits, its timely reporting, and its
classifications of revenues and expenses.

This learning material is focused on the general requirements for the

presentation of the Statement of Comprehensive Income of a service business using
a single-step approach and merchandise using a multi-step approach. You will
explore how transactions are recorded and prepare a simple SCI. This learning
material is highly interactive, with a wide range of applied exercises. Upon
successful completion of this learning material, you are expected to:

Learning Competency:
➢ Prepare a Statement of Comprehensive Income of a service business using
the single-step (ABM_FABM12-Ic-d-6); and multi-step approach
(ABM_FABM12-Ic-d-7)

Sub-tasks:
➢ Understand the purpose of Statement of Comprehensive Income (SCI).
➢ Identify the elements of the SCI.
➢ Describe each of the elements of the SCI.
➢ Differentiate the single-step and multi-step approach in the service business
➢ Prepare the statement of SCI of service business using the single-step and
multi-step approach
➢ Interpret the result of the company’s operation.

LU_ Fundamentals of Accountancy, Business and Management 2_Module2

 Jumpstart

For a better understanding of the lesson, do this activity.

INC si EXP Activity!

Direction: Below is the transactions of Amado’s Driving Services for September

2021. Identify the following transaction, whether it is an income or expense. If it is
an income, write INC while expense EXP. Write your answer on a sheet of paper.

______1. The business was registered with the Bureau of Internal Revenue
for P 500.00.

______2. Received cash from clients for driving services performed, P

20,000.00.

______3. Provided driving lesson to two (2) students on credit, P 5,000.00

each.

______4. Rendered driving services to Mr. Balcita worth P 15,000.00.

______5. San Juan Municipality issued a business permit for P3,750.00.

______6. Paid PLDT for the business line and internet fee, P 2,500.00.

______7. Paid the rental of the building for the month, P 6,500.00.

______8. Salaries of workers paid amounted to P 10,000.00

______9. Received payment from client, P 10,000.00

______10. Supplies used up amounted to P 2,700.00

LU_ Fundamentals of Accountancy, Business and Management 2_Module2

 Discover

Statement of Comprehensive Income

A statement of comprehensive income is conventionally compared to a

running video because it presents an entity’s business activities from the start to
the end of the period. ( Beticon et al., 2016). It is usually presented to determine
the p, profit which is needed to be able to prepare the capital statement. It is also
known as the result of the operation of the entity, which is the summary of income
earned and expenses incurred for a period of time, Manuel 2018.

Understanding the purpose of Statement of Comprehensive Income

A comprehensive income statement helps business owners decide whether

they can generate profit by increasing revenues, by decreasing costs, or both. It
also shows the effectiveness of the strategies that the business set at the beginning
of a financial period. The business owners can refer to this document to see if the
strategies have paid off. Based on their analysis, they can come up with the best
solutions to yield more profit. (https://www.zoho.com/books/guides/what-is-an-
income-statement.html)

Nature of Statement of Comprehensive Income

SCI is described as a “for the period” report. This means that the amounts
presented on the report include only those that occurred within the given period.
For example, “for the month ended January 31, 2020”, indicates that the reported
revenue is generated from January 1 to 31, 2020. If it is described as “ for the year
ended December 31, 2020, this implies that the reported revenue is generated from
January 1 to December 31, 2020. Revenue generated from 2019 or 2022 was not
counted in this particular report.

A financial statement is a set of interconnected reports. Statement of

Comprehensive Income is prepared first. The bottom line of the SCI is net income.
Net income is transferred out to the Statement of Changes in Equity (SCE) to be
included in the determination of the Owner’s Equity balance as of the year ended.
The owner’s equity balance us transferred to the Statement of Financial Position
(SFP). If double-entry accounting is implemented correctly, the SFP will balance.
This means that the SFP will show total assets equal to the sum of liabilities and
owner’s equity. ( Salazar, 2017)

LU_ Fundamentals of Accountancy, Business and Management 2_Module2

 Elements of Statement of Comprehensive Income

The SCI shows the business's income, expenses, gains, and losses. The end
product of these transactions is net income or a net loss. Below are the elements of
the SCI:
1. Net sales. (Revenue)
Sales revenue from goods or services sold to customers. The firm
earns revenue from the sale of its principal products. Sales are usually
shown net of any discounts, returns, and allowances.

2. Cost of Goods Sold (Cost of Sales)

This category shows the cost of goods sold to produce revenue. For a
retailing firm, the cost of goods sold equals beginning inventory plus
purchases minus ending inventory. In a manufacturing firm, the cost of
goods manufactured replaces purchases since the goods are produced rather
than purchased. A service firm will not have the cost of goods sold or the
cost of sales, but it will often have the cost of services.

3. Other Operating Revenue.

Depending on the operations of the business, there may be other
operating revenue, such as lease revenue and royalties.

4. Operating Expenses.
Operating expenses consist of two types: selling and administrative.
Selling expenses, resulting from the company’s effort to create sales,
include advertising, sales commissions, sales supplies used, and so on.
Administrative expenses related to the general administration of the
company’s operation. They include office salaries, insurance, telephone, bad
debt expense, and other costs difficult to allocate.

5. Other Income or Expense

In this category are secondary activities of the firm, not directly
related to the operations. For example, if a manufacturing firm has a
warehouse rented, this lease income would be other income. Dividend and
interest income and gains and losses from the sale of assets are also
included here. Interest expense is categorized as other expenses.

Source: https://www.wisdomjobs.com/e-university/financial-reporting-and-analysis-
tutorial-95/basic-element-of-the-income-statement-12490.html

Methods in Constructing the SCI

There are two main formats for preparing the Statement of Comprehensive
Income (SCI), namely, the single-step and multi-step. The single-step is closely
related to the nature of the expense format. On the other hand, the multi-step
approach is also associated with the function of expense.

LU_ Fundamentals of Accountancy, Business and Management 2_Module2

 Single-Step of the Statement of Comprehensive Income of Service
Business

The single-step income statement presents information in a simplified

format using only one step deducting the total expenses from the total revenues.
This is done by subtotaling all the revenues and gains at the top of the income
statement and subtotaling all the expenses and losses below the revenues.
(https://link.springer.com/chapter/10.1007%2F978-3-319-99984-5_12) The
expenses and losses are then subtracted from the sum of the revenues and gains to
arrive with a net income or loss appearing at the bottom of the report. This format
is most commonly used by small and service businesses because of the simple
operations, with few items reported.

Procedures on the Preparation of the Single-Step of the Statement of

Comprehensive Income of Service Business

1. Draft the appropriate title/ heading.

The heading comprises the name of the entity, followed by the name of the
report and the period it covers. It should be written at the center of the working
paper.

2. Identify and sum all the revenues.

Revenue is the first line item of the Statement of Comprehensive Income (SCI).
These may come from interests, dividends, royalties, gains from sales of equipment
and other junk items, and other business income sources. Add all the revenue
received by the entity to complete the revenue section of the SCI.

3. Identify and total all the expenses.

For service type of business, expenses are comprised of the different costs
involved in running a business. This includes depreciation, permits and licenses,
rent, salaries, supplies, utility, and others. Get the total of the expenses incurred
by the entity.

4. Determine the Net Income/Net Loss

Subtract the entity’s total expenses from its total revenue. If the resulting figure
is positive, then it is a net income or net profit. If negative, it is a net loss. Net
Income is the space money left over at the end of the monthly report or the end of a
financial year. The business might use it to invest, expand, save, or as dividends.

Sources: Josefina Loria Beticon, James Christopher Domingo and Fermin Antonio Yabut.
"Fundamentals of Accountancy, Business and Management 2." 31-44. Quezon City:
Vibal Group Inc., 2016.

Manuel, Zenaida Vera Cruz. "21st Century Accounting Process ." By Zenaida Vera
Cruz-Manuel, 71-74. Quezon City: Raintree Trading & Publishing, Inc., 2018.

LU_ Fundamentals of Accountancy, Business and Management 2_Module2

 Let us have an illustration for a better understanding. Given are the figures
from the account of Kuya Boyet’s Vulcanizing Shop, prepare a single-step of
Statement of Comprehensive Income.

Kuya Boyet's Vulcanizing Shop

Trial Balance
June 30, 2021

Debit Credit
Cash ₱26,200.00
Accounts Receivable 10,500.00
Prepaid Insurance 1,200.00
Automobile 150,000.00
Accounts Payable ₱ 12,000.00
Notes Payable 5,500.00
B. Sabado, Capital 130,000.00
B. Sabado, Drawing 7,500.00
Service Income 76,000.00
Gains from Sales of Automobile 12,500.00
Salary Expense 15,000.00
Rent Expense 7,500.00
Advertising Expense 2,500.00
Automobile Expense 5,000.00
Supplies Expense 3,500.00
Miscellaneous Expense 1,500.00
Utility Expense 5,600.00
Total ₱236,000.00 ₱236,000.00

1. Draft the appropriate title

Based on the given information above, the appropriate title is the
company's name, followed by the title of the report and the period it covers. The
title /should be written in the center of the report, as shown below:

Kuya Boyet's Vulcanizing Shop

Statement of Comprehensive Income
For the Month ended June 30, 2021

2. Total revenues

Based on the trial balance, identify and total all the revenues of the entity.

Kuya Boyet's Vulcanizing Shop

Statement of Comprehensive Income
For the Month ended June 30, 2021

Revenue
Service Income ₱76,000.00
Gains from Sales of Automobile 12,500.00
Total Revenue ₱ 88,500.00

LU_ Fundamentals of Accountancy, Business and Management 2_Module2

 3. Total Expenses

Identify and calculate the total expenses.

Kuya Boyet's Vulcanizing Shop

Statement of Comprehensive Income
For the Month ended June 30, 2021

Revenue
Service Income ₱76,000.00
Gains from Sales of Automobile 12,500.00
Total Revenue ₱ 88,500.00
Expenses
Salary Expense 15,000.00
Rent Expense 7,500.00
Advertising Expense 2,500.00
Automobile Expense 5,000.00
Supplies Expense 3,500.00
Miscellaneous Expense 1,500.00
Utility Expense 5,600.00
Total Expenses 40,600.00

4. Determine the Net Income/Loss.

Subtract the total expenses from the total revenue of the entity.

Kuya Boyet's Vulcanizing Shop

Statement of Comprehensive Income
For the Month ended June 30, 2021

Revenue
Service Income ₱76,000.00
Gains from Sales of Automobile 12,500.00
Total Revenue ₱ 88,500.00
Expenses
Salary Expense 15,000.00
Rent Expense 7,500.00
Advertising Expense 2,500.00
Automobile Expense 5,000.00
Supplies Expense 3,500.00
Miscellaneous Expense 1,500.00
Utility Expense 5,600.00
Total Expenses 40,600.00
Net Income ₱47,900.00

LU_ Fundamentals of Accountancy, Business and Management 2_Module2

 Preparation of the Statement of Comprehensive Income Using the
Multi-Step Approach for Merchandising Business
The multi-step Statement of Comprehensive Income is one of the two
formats that can be used to report the profits of the business. It comprises the
company’s revenues, expenses, and overall profit or loss for a specific accounting
period. It is more detailed than the single-step and uses multiple equations to
calculate the business’ net income. Furthermore, it segregates the operating
expenses and administrative expenses, which gives insights into how the
company’s primary business activities generate income and affect costs as
compared to the performance of its non-essential activities, Beticon et al., 2016

Generally, with the multi-step approach, the Merchandise Company can

facilitate its operation along with planning, controlling, and decision-making. A
multi-step approach will appear in two ways depends upon the preferences of the
company.
First Option:
Gross Sales xxxxx
Less:
Sales Discount xxxx
Sales Returns and Allowance xxxx xxxxx
Net Sales xxxxxx
Less: Cost of Sales
Merchandise Inventory,
January 1 xxxxx
Add Net Cost of Purchases
Purchases xxxx
Add: Freight-In xxxx
Total Cost of Goods
Delivered xxxx
Purchases
Less: Discounts xxx
Purchases Returns and
Allowances xxx xxxx xxxxx
Total Goods Available for
Sale xxxxx
Less: Merchandise Inventory,
December 31 xxxxx xxxxxx
Gross Income xxxxxx
Less: Operating Expenses
Selling Expenses xxxx
Administrative
Expenses xxxx xxxxx
Operating Income xxxxx
Add: Other Income xxx
Less: Other Expenses xx
NET INCOME xxxxx

LU_ Fundamentals of Accountancy, Business and Management 2_Module2

 Second Option:
Net Sales (Note 1) XXXXX
Cost of Sales (Note 3) XXXXX
Gross Profit Operating Income XXXXX
Selling expenses (Note 4) XXXXX
Administrative Expense (Note 5) XXXXX
NET INCOME XXXXX

Procedures on the Preparation of the Multi-Step of the Statement of

Comprehensive Income of Merchandising Business

1. Draft the appropriate title/ heading.

The title or the heading of your multi-step statement of comprehensive
income conveys essential information to readers. It states the name of the
business, identifies the document as an income statement, and defines the
reporting period covered by the document.

Gapasin’s Law Office

Statement of Comprehensive Income
For the Month Ended March 31, 2021

2. Determine the Net Sales

The top sections cover sales. Since it is a merchandising business, its
revenue will come from sales. A sale is generated from selling the goods. The sales
are to be presented net of discounts, returns, and allowances. The calculation may
appear as follows:

Gross Sales
Less:
Sales Discount
Sales Returns and Allowance
Net Sales

3. Determine the Net Purchases

From gross purchases, freight-in is added to arrive at the Total Cost of
Goods Delivered. For the Total Cost of Goods Delivered, purchases discounts and
purchases returns and allowances are deducted to arrive at Net Purchases. The
calculation may appear as follows:

Purchases
Add: Freight-In
Total Cost of Goods Delivered
Less: Purchases Discounts
Purchases Returns and Allowances
Net Purchases

LU_ Fundamentals of Accountancy, Business and Management 2_Module2

 4. Determine the Cost of Goods Sold and Gross Profit
The Cost of Goods Sold is based on the inventory beginning, which will be
added to the Net Purchases, and the ending inventory will be deducted. Cost of
Goods Sold will be computed as follows:

Merchandise Inventory, January 1

Add Net Cost of Purchases
Less: Merchandise Inventory, December 31
Cost of Goods Sold

Net Sales
Less: Cost of Sales
Gross Profit

5. Determine Selling Expenses.

One should now appropriately allocate the given percentage used in storing,
promoting, packaging, and delivering the merchandise such as Freight-Out, Sales
Salaries, Advertising, sales Commission, Depreciation Expense, and other
expenses, which pertains to selling.

6. Determine the Administrative Expenses

It consists of the expenses needed in the general administration of the office
other than the store, such as the permits and licenses, office salaries expenses,
utilities expenses, depreciation expenses, and others.

7. Determine the Net Income

The final step in creating a multi-step income statement is calculating net
income. The Cost of goods sold is deducted from net sales to come out with gross
profit less than the operating expenses to arrive at the net income. If it is a positive
number, you’re reporting a profit. If the total is a negative number, you’re recording
a loss.

Sources:
Josefina Loria Beticon, James Christopher Domingo and Fermin Antonio Yabut.
"Fundamentals of Accountancy, Business and Management 2." 31-44. Quezon City:
Vibal Group Inc., 2016.

Manuel, Zenaida Vera Cruz. "21st Century Accounting Process ." By Zenaida Vera Cruz-
Manuel, 71-74. Quezon City: Raintree Trading & Publishing, Inc., 2018.

Manuel, Zenaida Vera Cruz. "21st Century Accounting Process 9th edition." 46-49. Quezon
City: Raintree Trading & Publishing, Inc., 2010.

Salazar, Dani Rose C. "Fundamentals of Accountancy, Business and Management 2." By Dani
Rose C. Salazar, 33-47. Manila, Philippines: Rex Book Store, 2017.

10

LU_ Fundamentals of Accountancy, Business and Management 2_Module2

 To demonstrate the use of a multi-step income statement approach, let us
use the information of Jess Boutique for the year 2020. Salaries, rent, insurance,
and depreciation are appropriately 35% pertains to sales and the rest to the office.

Abat, Capital 220,000.00

Abat Drawing 30,000.00
Sales 150,000.00
Sales Discount 2,500.00
Sales Returns and Allowances 1,250.00
Purchases 50,000.00
Freight-in 2,500.00
Purchases Discount 1,000.00
Purchases returns and Allowances 2,500.00
Advertising Expenses 3,000.00
Commission Expenses 2,500.00
Insurance Expense 500.00
Salaries Expense 25,000.00
Rent Expense 10,000.00
Depreciation Expense 1,500.00
Inventory, Jan 1, 2020 60,000.00
Inventory, December 31, 2020 45,000.00

Let’s do it by following the procedures.

1. Draft the appropriate title.

Abat Boutique
Statement of Comprehensive Income
For the Year-ended December 31, 2020

2. Determine the Net Sales

Abat Boutique
Statement of Comprehensive Income
For the Year-ended December 31, 2020

Net Sales (Note 1) ₱ 96,250.00

Note 1:
Sales ₱100,000.00
Less: Sales Discount 2,500.00
Sales Returns and Allowances 1,250.00
Net Sales ₱ 96,250.00

11

LU_ Fundamentals of Accountancy, Business and Management 2_Module2

 3. Determine the Net Purchases
Abat Boutique
Statement of Comprehensive Income
For the Year-ended December 31, 2020

Net Sales (Note 1) ₱ 96,250.00

Note 1:
Sales ₱100,000.00
Less: Sales Discount 2,500.00
Sales Returns and Allowances 1,250.00
Net Sales ₱ 96,250.00

Note 2:
Purchases ₱ 50,000.00
Add: Freight-in 2,500.00
Total Cost of Goods Delivered 52,500.00
Less Purchases Discount 1,000.00
Purchases Returns and
Allowances 2,500.00
Net Purchases ₱ 49,000.00

4. Determine the Cost of Goods Sold and Gross Profit

Abat Boutique
Statement of Comprehensive Income
For the Year-ended December 31, 2020

Net Sales (Note 1) ₱ 146,250.00

Less: Cost of Sales (Note 3) 64,000.00
Gross Profit 82,250.00

Note 1:
Sales ₱ 150,000.00
Less: Sales Discount 2,500.00
Sales Returns and
Allowances 1,250.00
Net Sales ₱146,250.00

Note 2:
Purchases ₱ 50,000.00
Add: Freight-in 2,500.00
Total Cost of Goods Delivered 52,500.00
Less Purchases Discount 1,000.00
Purchases Returns
and Allowances 2,500.00
Net Purchases ₱ 49,000.00

12

LU_ Fundamentals of Accountancy, Business and Management 2_Module2

 Note 3:
Merchandise Inventory, January 1, 2020 ₱ 60,000.00
Add: Net Purchases 49,000.00
Total Goods Available for Sales 109,000.00
Less: Inventory, December 31, 2020 45,000.00
Cost of Sales ₱ 64,000.00

4. Determine Selling Expenses and Administrative Expenses.

Based on the problems, selling is allocated as 35% of insurance, salaries,

rent, and depreciation while the remaining, which is 65%, is incurred by the office.
While advertising and commission pertain to selling. Below is the allocation
schedule.

100% 35% 65%

Selling Administrative
Advertising Expenses ₱ 3,000.00 ₱ 3,000.00
Commission Expenses 2,500.00 2,500.00
Insurance Expense 500 175.00 ₱ 325.00
Salaries Expense 25,000.00 8,750.00 16,250.00
Rent Expense 10,000.00 3,500.00 6,500.00
Depreciation Expense 1,500.00 525.00 975.00
Total ₱42,500.00 ₱18,450.00 ₱ 24,050.00

Based on the allocation schedule, you can now determine the selling
expenses, which are note 4, while administrative expenses as note 5.

Abat Boutique
Statement of Comprehensive Income
For the Year-ended December 31, 2020

Net Sales (Note 1) ₱ 146,250.00

Less: Cost of Sales (Note 3) 64,000.00
Gross Profit 82,250.00
Selling Expenses (Note 4) 18,450.00
Administrative Expenses (Note 5) 24,050.00

Note 1:
Sales ₱ 150,000.00
Less: Sales Discount 2,500.00
Sales Returns and Allowances 1,250.00
Net Sales ₱146,250.00

Note 2:
Purchases ₱ 50,000.00
Add: Freight-in 2,500.00
Total Cost of Goods Delivered 52,500.00
Less Purchases Discount 1,000.00

13

LU_ Fundamentals of Accountancy, Business and Management 2_Module2

 Purchases Returns and Allowances 2,500.00
Net Purchases ₱ 49,000.00
Note 3:
Merchandise Inventory, January 1, 2020 ₱ 60,000.00
Add: Net Purchases 49,000.00
Total Goods Available for Sales 109,000.00
Less: Inventory, December 31, 2020 45,000.00
Cost of Sales ₱ 64,000.00
Note 4:
Advertising Expenses ₱ 3,000.00
Commission Expenses 2,500.00
Insurance Expense 175.00
Salaries Expense 8,750.00
Rent Expense 3,500.00
Depreciation Expense 525.00
Total Selling Expenses ₱ 18,450.00
Note 5:
Insurance Expense ₱ 325.00
Salaries Expense 16,250.00
Rent Expense 6,500.00
Depreciation Expense 975.00
Total Administrative Expense ₱ 24,050.00

5. Determine the Net Income

Abat Boutique
Statement of Comprehensive Income
For the Year-ended December 31, 2020

Net Sales (Note 1) ₱ 146,250.00

Less: Cost of Sales (Note 3) 64,000.00
Gross Profit 82,250.00
Selling Expenses (Note 4) 18,450.00
Administrative Expenses (Note 5) 24,050.00
NET INCOME ₱ 39,750.00

Note 1:
Sales ₱ 150,000.00
Less: Sales Discount 2,500.00
Sales Returns and Allowances 1,250.00
Net Sales ₱146,250.00
Note 2:
Purchases ₱ 50,000.00
Add: Freight-in 2,500.00
Total Cost of Goods Delivered 52,500.00
Less Purchases Discount 1,000.00
Purchases Returns and Allowances 2,500.00

14

LU_ Fundamentals of Accountancy, Business and Management 2_Module2

 Net Purchases ₱ 49,000.00
Note 3:
Merchandise Inventory, January 1, 2020 ₱ 60,000.00
Add: Net Purchases 49,000.00
Total Goods Available for Sales 109,000.00
Less: Inventory, December 31, 2020 45,000.00
Cost of Sales ₱ 64,000.00
Note 4:
Advertising Expenses ₱ 3,000.00
Commission Expenses 2,500.00
Insurance Expense 175.00
Salaries Expense 8,750.00
Rent Expense 3,500.00
Depreciation Expense 525.00
Total Selling Expenses ₱ 18,450.00
Note 5:
Insurance Expense ₱ 325.00
Salaries Expense 16,250.00
Rent Expense 6,500.00
Depreciation Expense 975.00
Total Administrative Expense ₱ 24,050.00

An income statement is a rich source of information about the key factors

responsible for a company’s profitability. It gives you timely updates because it is
generated much more frequently than any other statement. The income statement
shows a company’s expense, income, gains, and losses, which can be put into a
mathematical equation to arrive at the net profit or loss for that period. This
information helps you make timely decisions to make sure that your business is on
a good financial footing.

Furthermore, based on the presented Statement of Comprehensive Income

way determine whether our expenses whether what minimizing or maximizing. This
can be as well the basis for creating business strategies. For example, we spend the
salaries of our employees underselling is only P 16,250.00 yet we have a net sale of
P 146,250.00, this can be an indicator whether our force performed well or not.
Thus we can perhaps increase their salaries or add incentives of other monetary
benefits to motivate them to keep going. We have a net income of P 39, 750.00
which will give us an idea of what to do to improve sales, the productivity of our
men, and how to increase our profit. Simply looking at the SCI provides the
management with information on the overall performance of the company for a
certain period.

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LU_ Fundamentals of Accountancy, Business and Management 2_Module2

 Explore

Enrichment Activity: SINGLE ONLY!

Instruction: Answer the following exercises on the journal sheet. Prepare the
Statement of Comprehensive Income using the Single method. You will be rated
based on this rubric.

5 3 1 0
The answer is The answer is The answer Did not
correct with no correct with few contains many submitted any
errors errors errors project

1. At the end of the first month of operations for Cardo’s Car Wash, the business
had the following accounts: Cash, Php19,000; Prepaid Rent, Php500; Equipment,
Php5,000, and Accounts Payable Php2,000. By the end of the month, Cardo's had
earned Php25,000 of Revenues, Php5,000 of Utility Expenses, 1,500.00 supplies,
and Php7,500 of Salaries Expenses. Prepare the SCI of the shop for January 2021.

2. Using the information provided, prepare a Statement of Comprehensive Income

for March 2021 of Luisito Surveying Services

Paid salaries of secretary 10,000.00

Consultancy services 150,356.00
Paid the water bill 2,500.00
paid the insurance 4,250.00
Paid the electric bill 4,350.00
Paid the water bill 1,225.00
Gains from the sales of the equipment 3,425.00
Received dividends from the investment 10,548.50
Paid the rent 5,000.00
Permits and licenses 6,580.00

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LU_ Fundamentals of Accountancy, Business and Management 2_Module2

 Deepen

Problem Solving. Choose the letter of the correct answer. The following are
the accounts of Sing Song Merchandise for December 31, 2020.

Sales 1, 000, 000.00

Salaries Expenses 50,000.00
Supplies Expenses 30,000.00
Depreciation Expenses 21,000.00
Freight-in 50,000.00
Freight-out 2,500.00
Permits and Licenses 10,000.00
Beginning Inventory 750,000.00
Purchases 450,000.00
Purchases Discount 60,000.00
Sales Discount 100,000.00
Ending Inventory 550,000.00

Accordingly, 40% of salaries, depreciation, and supplies pertain to the sales office,
while the rest pertains to the corporate office.

A. 8,400.00 F. 30,000.00 K. 146, 500.00 P. 650,000.00

B. 12,000.00 G. 40,400.00 L. 260,000.00 Q. 900,000.00

C. 12,600.00 H. 42, 900.00 M. 390,000.00 R. 1,000,000.00

D. 18,000.00 I. 60,600.00 N. 440,000.00 S. 1,190,000.00
E. 20,000.00 J. 70,600.00 O. 640,000.00 T. 1,200,000.00

_______1. How much is sales?

_______2. How much is the net sales?
_______3. How much is the net purchases?
_______4. How much is the Total Goods Available for Sale?
_______5. How much is the Cost of Sale?
_______6. How much is the Gross Profit?
_______7. How much is the Selling Expenses under Salaries?
_______8. How much is the Selling Expenses under Depreciation?
_______9. How much is the Selling Expenses under Supplies?
_______10. How much is the total Selling Expenses
_______11. How much is the Administrative Expenses under Salaries?
_______12. How much is the Administrative Expenses under Depreciation?
_______13. How much is the Administrative Expenses under Supplies?
_______14. How much is the Total Administrative Expenses?
_______15. How much is the Net Income of the entity?

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LU_ Fundamentals of Accountancy, Business and Management 2_Module2

 Gauge

Instruction: Multiple Choice. Choose the letter of the best answer and use the
space provided.
___1. Which of the following BEST describe a Statement of Comprehensive
Income (SCI)?
A. reports the changes in equity for corporations throughout an
accounting period.
B. displays the assets of a company and its sources of financing and
equity.
C. shows the results of operations of the company as of the cut-off date.
D. explains the net change in cash for the end of the accounting period.

___2. Which of the following is an element of the Statement of Comprehensive?

Income for merchandising business?
A. Accounts Receivable B. Cash C. Freight-in D. Supplies

___3. Which of the following is an appropriate date for the SCI?

A. For the month of January 31, 2020 B. 2020January 31, 2020
C. 31th of January D. January 30, 2020

___4. Which of the following Best describes a merchandising type of business?

A. Income received by a vulcanizing shop for the service rendered.
B. Gains on sale of property, plant, and equipment.
C. Sales revenue earned by a department store.
D. Consultation fee charged by a doctor.

____5. Which of the following is classified as an administrative expense?

A. Cash B. Freight-out C. Permits D. Salaries of a salesclerk

II. Given the following information from Betty’s RTWs for the year ended 2020.
You are tasked to prepare the Statement of Comprehensive Income. You will be
rated based on the rubric below. ( 10 points)

Depreciation Expenses 1,250.00

Purchases 125,000.00
Sales 250,000.00
Insurance Expense 750.00
Purchases Discount 2,750.00
Purchases Returns and Allowance 1,000.00
Rent Expense 5,000.00
Salaries Expense 12,000.00
Sales discount 2,700.00
Utilities Expense 3,400.00

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LU_ Fundamentals of Accountancy, Business and Management 2_Module2

 Based on the actual count P 100,500 is the beginning inventory while the ending
is P 75,000. Selling expenses of 20% on rent, salaries, and utilities and the rest on
the administrative. You were tasked to prepare the Statement of Comprehensive
Income for 2020 and report the following amount to Miss Betty. The rating will be
based on the rubric below.

10-9 8-7 6-5 4-3 2-1

Needs No
Advanced Proficient Poor
Improvement Submission
Preparation of Preparation of Preparation of The student The student
the Statement the Statement Statement of does not submitted an
of of Comprehensive demonstrate incomplete
Comprehensive Comprehensive Income an project.
Income is Income is contains many understanding
correct with no correct, with errors of how to
errors few minor prepare the
errors Statement of
Comprehensive
Incomes. Work
is incomplete

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LU_ Fundamentals of Accountancy, Business and Management 2_Module2

 LU_ Fundamentals of Accountancy, Business and Management 2_Module2
20
JUMPSTART:
1. EXP 6. EXP
2. INC 7.EXP
3. INC 8. EXP
4. INC 9. INC
5. EXP 10. EXP
EXPLORE:
CARDO'S CAR WASH
STATEMENT OF COMPREHENSIVE INCOME
FOR THE MONTH ENDED JANUARY 31, 2021
Revenue ₱ 20,000.00
Utilities Expenses 1,000.00
Supplies Expense 1,500.00
Salaries Expenses 7,500.00
Total Expense 10,000.00
NET INCOME ₱10,000.00
II.
LUISITO SURVEYING SERVICES
STATEMENT OF COMPREHENSIVE INCOME
FOR THE MONTH ENDED MARCH 31, 2021
Consultancy services ₱ 150,356.00
Gains from the sales of the equipment 3,425.00
Received dividends from the investment 10,548.50
Total Income 164,329.50
Less: Operating Expenses
Paid salaries of secretary 10,000.00
Paid the water bill 2,500.00
paid the insurance 4,250.00
Paid the electric bill 4,350.00
Paid the water bill 1,225.00
Paid the rent 5,000.00
Permits and licenses 6,580.00 33,905.00
NET INCOME ₱130,424.50
Answer Key
 LU_ Fundamentals of Accountancy, Business and Management 2_Module2
21
DEEPEN
1. R 6. L 11. F
2. Q 7.E 12. C
3. N 8. A 13. D
4. S 9. B 14. J
5. O 10. H 15. K
GAUGE:
1.C 2. C 3. A 4. C 5. C
II.
Betty's RTWs
Statement of Comprehensive Income
For the Year-ended December 31, 2020
Net Sales (Note 1) ₱ 247,300.00
Less: Cost of Sales (Note 3) 146,750.00
Gross Profit 100,550.00
Selling Expenses (Note 4) 4,080.00
Administrative Expenses (Note 4) 18,320.00
NET INCOME ₱ 78,150.00
Note 1:
Sales ₱ 250,000.00
Less: Sales Discount 2,700.00
Net Sales ₱247,300.00
Note 2:
Purchases ₱ 125,000.00
Add: Freight-in -
Total Cost of goods Delivered 125,000.00
Less Purchases Discount 2,750.00
Purchases Returns and Allowances 1,000.00
Net Purchases ₱121,250.00
Note 3:
Merchandise Inventory, January 1, 2020 ₱ 100,500.00
Add: Net Purchases 121,250.00
Total Goods Available for Sales 221,750.00
Less: Inventory, December 31, 2020 75,000.00
Cost of Sales ₱146,750.00
Note 4: Selling-20% Admin 80%
Rent Expenses ₱ 5,000.00 1,000.00 4,000.00
Salaries Expenses 12,000.00 2,400.00 9,600.00
Utilities Expenses 3,400.00 680.00 2,720.00
Depreciation Expense 1,250.00 1,250.00
Insurance Expenses 750.00 750.00
Total Expenses ₱ 22,400.00 4,080.00 18,320.00
 References

Books:

Josefina Loria Beticon, James Christopher Domingo and Fermin Antonio Yabut.
"Fundamentals of Accountancy, Business and Management 2." 31-44.
Quezon City: Vibal Group Inc., 2016.

Manuel, Zenaida Vera Cruz. "21st Century Accounting Process ." By Zenaida Vera
Cruz-Manuel, 71-74. Quezon City: Raintree Trading & Publishing, Inc.,
2018.

Manuel, Zenaida Vera Cruz. "21st Century Accounting Process 9th edition." 46-49.
Quezon City: Raintree Trading & Publishing, Inc., 2010.
Salazar, Dani Rose C. "Fundamentals of Accountancy, Business and Management
2." By Dani Rose C. Salazar, 33-47. Manila, Philippines: Rex Book Store,
2017.
Websites:

Fresh Books. “How to Create a Multi-Step Income Statement: A Guide to In-Depth

Financial Reporting.” FreshBooks Cloud Accounting, 2019.
https://www.freshbooks.com/hub/accounting/multi-step-income-
statement.
lumen. “Financial Accounting,” 2020. https://courses.lumenlearning.com/sac-
finaccounting/chapter/alternative-formats-and-terminology-for-financial-
statements/.
Openstax. “Principles of Accounting.” Rice University, 2020.
https://openstax.org/books/principles-financial-accounting/pages/6-6-describe-
and-prepare-multi-step-and-simple-income-statements-for-merchandising-
companies

Links:
https://www.zoho.com/books/guides/what-is-an-income-statement.html)
https://www.wisdomjobs.com/e-university/financial-reporting-and-analysis-
tutorial-95/basic-element-of-the-income-statement-12490.html

https://link.springer.com/chapter/10.1007%2F978-3-319-99984-5_12

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LU_ Fundamentals of Accountancy, Business and Management 2_Module2

 For inquiries or feedback, please write or call:

Department of Education – SDO La Union

Curriculum Implementation Division
Learning Resource Management Section
Flores St. Catbangen, San Fernando City La Union 2500
Telephone: (072) 607 - 8127
Telefax: (072) 205 - 0046
Email Address:
[email protected]
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LU_ Fundamentals of Accountancy, Business and Management 2_Module2