Unit 29: Statement of Comprehensive Income

1. Purpose of a Statement of Comprehensive Income

Definition: A financial document showing a firm's income and expenditure over a specific time period.
Profit: Money remaining after all costs have been subtracted from revenue.
Gross Profit: Calculated as sales revenue minus the cost of sales.
Operating Profit: Gross profit minus expenses.

Revenue: Money received from selling goods and services.
Cost of Sales:
- For manufacturers: Includes costs such as raw materials and factory worker wages.
- For retailers: Includes the cost of buying inventory.
Gross Profit: Revenue minus the cost of sales.
Administrative Expenses: General overheads like office salary and stationery supplies.
Other Operating Expenses: Expenses not included in administrative expenses, e.g., office supplies, postage.
Selling Expense: Costs directly related to selling products, e.g., sales commissions, advertising.
Operating Profit: Calculated as gross profit minus operating and administrative expenses.
Finance Cost: Interest paid if the business borrows money.
Profit for the Year: Operating profit minus finance cost, before taxation.
Profit for the Year After Tax: Subtract tax from the profit for the year.

Normal Profit: Minimum profit necessary to retain the interest of business owners.
Importance: Acts as a measure of business performance.