Statement of Comprehensive Income (SCI)

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Statement of Comprehensive Income (SCI) is also known as Income Statement or the Statement of Financial Performance.

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It presents the success or failure of business operations of a company for a given period, in terms of profitability.

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Temporary accounts are also known as nominal accounts.

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They are accounts found under the SCI that have only temporary amounts and result in zero beginning balances at the start of the following year.

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Income includes both revenue and gains.

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Revenue arises during the ordinary activities of a business, while gains may arise from other items not related to ordinary activities.

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Expenses are decreases in economic benefits during the period.

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They include both expenses and losses, arising during the ordinary activities of the business.

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The main difference between servicing and merchandising businesses lies in how they generate revenues.

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A service company provides services, while a merchandising company sells goods.

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Service Revenue represents charges to clients for services rendered.

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Examples include Professional Fees, Laundry Fees, and Repair Income.

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Cost of Goods Sold (COGS) is the cost of inventory sold to customers.

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It is a key expense account for merchandising businesses.

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The single-step approach for preparing SCI involves listing total revenues and subtracting total expenses to find net profit or loss.

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This method is commonly used in servicing businesses.

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The multi-step approach for preparing SCI separates operating revenues and expenses from non-operating items.

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It provides a more detailed view of a company's financial performance.

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Net Sales is calculated by subtracting Sales Returns and Allowances and Sales Discounts from Gross Sales.

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It represents the actual revenue earned from sales.