Comprehensive Income In Accounting

Name of Course: Accounting for Managers

Name of Awarding Institution and conducting institution: Murdoch University

Full name as according to Identity Card: Esther Ong Jing Yi

Name of Lecturer: M.A. Kader

a) Describe the general purpose of the statement of comprehensive income. In addition, explain the terms income and expenses as defined by the Conceptual Framework for Financial Reporting.

What is statement of comprehensive income? (DEFINITION)

Comprehensive income is a statement of all income and expenses recognized and calculated during that period or also known as the financial year end. The statement includes net sales, cost of goods sold like opening or closing stock, gross profit, other income like discount

(e.g. salaries)

• Operating Expenses:

Any form of expenses incurred to operate the business.

• Total Expenses:

Sum of all expenses incurred in operating your business. (usually not labelled)

• Taxes:

Amount of taxes owe to the government.

• Net Income:

Shows at the last line. If it is positive figure, the owner are earning for the year. If it is negative, the owner is in a loss. This is the profit or loss the business has made after all its income and all of its expenses have been taken into account. Image 1: Sample of SOCI

Based on the Conceptual Framework for Financial Reporting/ international financial reporting standards,

To define the terms of income and expenses:

(a) Income is increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants.

(b) Expenses are decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions to equity

Trade receivables are presented in the statement of financial position after the deduction of allowance for bad debts.

Liabilities:

A business owes to someone and its settlement involves the transfer of cash or other resources.

For examples,

Trade payables are due to suppliers or contractors for credit purchases.

Tax payables are payment to government.

Equity:

It is what the business owes to its owners. Equity equals to total assets minus total liabilities thus it represents the leftover interest in the business that belongs to the owners. In simple terms, equity is the financial value, or worth, of a company.

For examples,

Share capital represents the amount invested by the owners.

Retained Earnings means part of the income is retained by the company instead of distributing to the shareholder as dividends.

Based on the Conceptual Framework for Financial Reporting/ international financial reporting standards,

To define the terms of asset, liability and equity:

(a) An asset is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the