Lesson 1: Elements of Statement of Comprehensive Income (SCI)
Statement of Comprehensive Income (SCI) also known as an income statement, reports the result
of the company’s operations for a specific period of time which is called net income or a net loss. It reports
the amounts earned and incurred for a specific accounting period.
In a service business, service income or service revenue is used when it earned money by providing
services to their customers. It also incurs expenses during its operations.
On the other hand, a merchandising business earns money through selling goods or merchandise,
and it is called sales or sales revenue/income. Its expenses are divided into two categories: cost of goods
sold (COGS) and operating expenses (OP) are expenses incurred in the process of earning sales revenue
that is deducted from gross profit in the income statement.
Lesson 2: Preparation of SCI – Single Step SCI for a Service Business
SCI can be prepared using the single-step and multi-step approach. The single-step approach is
commonly used by a service business where all revenues are listed in one section while all expenses are
listed in another. Net income is computed using a “single-step”, which is Total Revenue minus Total
Expenses.
The multi-step approach is used to prepare the SCI of merchandising business because there are
several steps needed in order to arrive at the company’s net income. A merchandising company will present
total sales and cost of goods sold on the first part of the statement which will net to the company’s gross
profit before presenting the other expenses, which are classified as either administrative expenses or selling
expenses.
Parts of the Single-Step SCI:
1. Heading (Name of the Company, Name of the Statement, and Date of preparation)
2. Service Income/Revenue
3. Expenses
4. Net income/ Net Loss
, Example#1:
Single-Step SCI
STUDY AND LEARN COMPANY
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2020
Service Revenue $ 8,700.00
Expenses:
Salaries Expense $ 3,200.00
Rent Expense 1,500.00
Depreciation Expense 800.00
Utility Expense 200.00
Miscellaneous Expense 100.00
Total Expenses $ 5,800.00
Net Income $ 2,900.00
Example#2:
At the end of January 2013, the first month of operations of Emilia’s Service Company, the business had
earned revenues of $ 2,150.00; Utility Expenses of $ 65; Salaries expenses of $ 331; and Rent expenses of
$ 874. How much is the net income to be reported by the company for the end of its first month?
EMILIA’S SERVICE COMPANY
STATEMENT OF COMPREHENSIVE INCOME
FOR THE MONTH ENDED, JANUARY 2013
Service Revenue $ 2,150.00
Expenses:
Salaries Expense $ 331.00
Rent Expense 874.00
Utility Expense 65.00
Total Expenses $ 1,270.00
Net Income $ 880.0
Statement of Comprehensive Income (SCI) also known as an income statement, reports the result
of the company’s operations for a specific period of time which is called net income or a net loss. It reports
the amounts earned and incurred for a specific accounting period.
In a service business, service income or service revenue is used when it earned money by providing
services to their customers. It also incurs expenses during its operations.
On the other hand, a merchandising business earns money through selling goods or merchandise,
and it is called sales or sales revenue/income. Its expenses are divided into two categories: cost of goods
sold (COGS) and operating expenses (OP) are expenses incurred in the process of earning sales revenue
that is deducted from gross profit in the income statement.
Lesson 2: Preparation of SCI – Single Step SCI for a Service Business
SCI can be prepared using the single-step and multi-step approach. The single-step approach is
commonly used by a service business where all revenues are listed in one section while all expenses are
listed in another. Net income is computed using a “single-step”, which is Total Revenue minus Total
Expenses.
The multi-step approach is used to prepare the SCI of merchandising business because there are
several steps needed in order to arrive at the company’s net income. A merchandising company will present
total sales and cost of goods sold on the first part of the statement which will net to the company’s gross
profit before presenting the other expenses, which are classified as either administrative expenses or selling
expenses.
Parts of the Single-Step SCI:
1. Heading (Name of the Company, Name of the Statement, and Date of preparation)
2. Service Income/Revenue
3. Expenses
4. Net income/ Net Loss
, Example#1:
Single-Step SCI
STUDY AND LEARN COMPANY
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2020
Service Revenue $ 8,700.00
Expenses:
Salaries Expense $ 3,200.00
Rent Expense 1,500.00
Depreciation Expense 800.00
Utility Expense 200.00
Miscellaneous Expense 100.00
Total Expenses $ 5,800.00
Net Income $ 2,900.00
Example#2:
At the end of January 2013, the first month of operations of Emilia’s Service Company, the business had
earned revenues of $ 2,150.00; Utility Expenses of $ 65; Salaries expenses of $ 331; and Rent expenses of
$ 874. How much is the net income to be reported by the company for the end of its first month?
EMILIA’S SERVICE COMPANY
STATEMENT OF COMPREHENSIVE INCOME
FOR THE MONTH ENDED, JANUARY 2013
Service Revenue $ 2,150.00
Expenses:
Salaries Expense $ 331.00
Rent Expense 874.00
Utility Expense 65.00
Total Expenses $ 1,270.00
Net Income $ 880.0
