SCI

STATEMENT OF COMPREHENSIVE
INCOME
Statement of Operations
•The statement of operations is one of the
three primary financial statements used
to assess a company's performance and
financial position.
•The statement of operations summarizes
a company's revenues and expenses over
the entire reporting period.
Statement of Operations
•A company's ability to operate profitably
is important to current lenders and
investors, potential lenders and investors,
company management, competitors,
government agencies, labor unions, and
others.
Statement of Operations
•It shows the profitability of a company
during the time interval specified in its
heading.
•The period of time that the statement
covers is chosen by the business and will
vary.
Statement of Operations
• For example, the heading may state:
• "For the Three Months Ended December 31,
2011" (The period of October 1 through
December 31, 2011.)
• "The Four Weeks Ended December 27, 2011"
(The period of November 29 through December
27, 2011.)
• "The Fiscal Year Ended June 30, 2012" (The
period of July 1, 2011 through June 30, 2012.)
Statement of Operations
•Keep in mind that the Statement of
Operations shows revenues, expenses,
gains, and losses; it does not show cash
receipts (money you receive) nor cash
disbursements (money you pay out).
•People pay attention to the profitability of
a company for many reasons.
Statement of Operations
• For example, if a company was not able to
operate profitably—the bottom line of the
Statement of Operations indicates a net loss—a
banker/lender/creditor may be hesitant to
extend additional credit to the company.
• On the other hand, a company that has
operated profitably—the bottom line of the
Statement of Operations indicates a net
income—demonstrated its ability to use
borrowed and invested funds in a successful
manner.
Recognition principle
An entity shall recognize revenue from the sale
of goods when all the following conditions are
satisfied:
• (a) the entity has transferred to the buyer the
significant risks and rewards of ownership of the
goods.
• (b) the entity retains neither continuing
managerial involvement to the degree usually
associated with ownership nor effective control
over the goods sold.
Recognition principle
An entity shall recognize revenue from the sale
of goods when all the following conditions are
satisfied:
• (c) the amount of revenue can be measured
reliably.
• (d) it is probable that the economic benefits
associated with the transaction will flow to the
entity.
• (e) the costs incurred or to be incurred in respect
of the transaction can be measured reliably.
Capital Maintenance Approach
•The capital maintenance concept states
that a profit should not be recognized
unless a business has at least maintained
the amount of its net assets during an
accounting period. Stated differently, this
means that profit is essentially the
increase in net assets during a period.
Transaction Approach
•The transaction approach is the concept
of deriving the financial results of a
business by recording individual revenue,
expense, and other purchase
transactions. These transactions are
then aggregated to see if a business has
earned a profit or a loss.
ABACA COMPANY
STATEMENT OF OPERATIONS
Methods of Presenting
For the Year Ended December 31, 2016

Revenue -
•Single Step Approach
Sales P 2,061,939.81
Expenses-
Cost of Sales 1,085,231.48
Salaries and wages 178,067.08
Light and water 93,764.00
Communication 37,310.26
Transportation 75,880.00
Miscellaneous 5,662.00
Total Operating Expenses 1,475,914.82
Net Income P 586,025.00
Methods of Presenting
•Multi Step Approach
ABACA COMPANY
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2016

Sales P 2,061,939.81
Cost of Sales 1,085,231.48
Gross Profit 976,708.33
Operating Expenses-
Salaries and wages P 178,067.08
Light and water 93,764.00
Communication 37,310.26
Transportation 75,880.00
Miscellaneous 5,662.00
Total Operating Expenses 390,683.33
Net Income P 586,025.00
As a minimum, an entity shall include, in the statement of
comprehensive income, line items that present the
following amounts for the period:

(a) revenue
(b) finance costs.
(c) share of the profit or loss of investments in associates and jointly
controlled entities accounted for using the equity method
(d) tax expense excluding tax allocated to items (e), (g) and (h)
below
(e) a single amount comprising the total of
(i) the post-tax profit or loss of a discontinued operation, and
(ii) the post-tax gain or loss recognized on the measurement
to fair value less costs to sell or on the disposal of the net
assets constituting the discontinued operation.
As a minimum, an entity shall include, in the statement of
comprehensive income, line items that present the
following amounts for the period:

(f) profit or loss (if an entity has no items of other comprehensive

income, this line need not be presented).
(g) each item of other comprehensive income classified by nature
(excluding amounts in (h)).
(h) share of the other comprehensive income of associates and
jointly controlled entities accounted for by the equity method.
(i) total comprehensive income (if an entity has no items of other
comprehensive income, it may use another term for this line such as
profit or loss).
Income Statement Elements
• Income
Increases in economic benefits during the
accounting period in the form of inflows or
enhancements of assets or decreases of
liabilities that result in increase in equity, other
than those relating to contributions from equity
participants.

Encompasses both revenue and gains.

Income Statement Elements
• Revenue
Arises in the course of the ordinary activities of
an enterprise and is referred to by a variety of
different names including sales, fees, interest,
dividends, royalties and rent.

Ordinary activities are the primary activities of an

enterprise.
Gains
• Increases in economic benefits
• Similar to Revenues
• The distinguishing factor – it may, or may not
arise from the ordinary activities of an
enterprise
Expenses
• Decreases in economic benefits during the
accounting period in the form of outflows or
depletions of assets or incurrence of liabilities
that result in decreases in equity, other than
those relating to distributions to equity
participants.
• Encompasses losses as well as those expenses
that arise in the course of ordinary activities of
the enterprise.
Expenses - Classes
• Cost of Service / Cost of Goods Sold
• Distribution cost / Selling expenses
• Administrative expenses / Operating expenses
Losses
• Decreases in economic benefits
• Similar to Expenses
• The distinguishing factor – it may, or may not
arise from the ordinary activities of an
enterprise
ABACA COMPANY
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2016

Sales P 2,061,939.81
Cost of Sales 1,085,231.48
Gross Profit 976,708.33
Operating Expenses-
Salaries and wages P 178,067.08
Light and water 93,764.00
Communication 37,310.26
Transportation 75,880.00
Miscellaneous 5,662.00
Total Operating Expenses 390,683.33
Net Income P 586,025.00