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Date Submitted: 02/15/2016 09:19 PM
Murdoch Bridging
Accounting for Managers Assignment
A)
A statement of comprehensive income is a financial report that basically shows the financial performance and results of a particular entity or business within a certain period of time. It is also important to note that only changes in the shareholders equity is logged and transactions arising from owners are excluded from such a statement. For example, owner related transactions such as share issues and dividends are not part of the statement of comprehensive income. In addition to tracking of revenue, the statement of comprehensive income also allows users to track and compare the expenses from year to year (cost management). Therefore, a statement of comprehensive income is important for its main users such as businesses top management, middle managers, potential investors, key stakeholders, etc to understand and analyse whether the business is profitable or not during the period reported.
The 2 key components in a statement of comprehensive income are:
1) Income: Income is the measurable increases in economic benefits within the
accounting period. This can be in the form of revenue inflows, appreciation of asset values or decreases in liabilities that can result in increases in equity. Therefore, income is basically the increase in net assets of the entity within the accounting period. There are mainly 2 types of income namely revenue and gains. Revenue are directly associated to the income earned via standard / ordinary course of business activities while gains refer to income that does not arise from the standard/ordinary course of business activities. For example, income generated when a furniture company sells furniture can be classified as revenue while income generated when a furniture company sells away one of their factory will be classified as gain.
2) Expenses: Expenses are the outflow of money or decrease in net asset
within an accounting period, as payment for an entity or...