SENIOR

Entrepreneurship HIGH
SCHOOL

Module
Income Statement 17
Quarter 2
Entrepreneurship
Quarter 1 – Self-Learning Module 17: Income Statement
First Edition, 2020

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Entrepreneurship
SENIOR
HIGH
SCHOOL

Self-Learning
Module

17
Quarter 2

Income Statement
Introductory Message

For the facilitator:

Welcome to the Entrepreneurship with Grade 12 Self-Learning Module on

Income Statement.
This Self-Learning Module was collaboratively designed, developed and
reviewed by educators from the Schools Division Office of Pasig City headed by its
Officer-in-Charge Schools Division Superintendent, Ma. Evalou Concepcion A.
Agustin, in partnership with the City Government of Pasig through its mayor, Honorable
Victor Ma. Regis N. Sotto. The writers utilized the standards set by the K to 12 Curriculum
using the Most Essential Learning Competencies (MELC) in developing this instructional
resource.

This learning material hopes to engage the learners in guided and

independent learning activities at their own pace and time. Further, this also aims to
help learners acquire the needed 21st century skills especially the 5 Cs, namely:
Communication, Collaboration, Creativity, Critical Thinking, and Character while
taking into consideration their needs and circumstances.

In addition to the material in the main text, you will also see this box in the body
of the module:

Notes to the Teacher

This contains helpful tips or strategies that
will help you in guiding the learners.

As a facilitator you are expected to orient the learners on how to use this
module. You also need to keep track of the learners' progress while allowing them to
manage their own learning. Moreover, you are expected to encourage and assist the
learners as they do the tasks included in the module.
 For the learner:

Welcome to the Entrepreneurship Self-Learning Module on Income Statement.

This module was designed to provide you with fun and meaningful
opportunities for guided and independent learning at your own pace and time. You
will be enabled to process the contents of the learning material while being an
active learner.

This module has the following parts and corresponding icons:

Expectations - This points to the set of knowledge and skills that

you will learn after completing the module.

Pretest - This measures your prior knowledge about the lesson at

hand.

Recap - This part of the module provides a review of concepts

and skills that you already know about a previous lesson.

Lesson - This section discusses the topic in the module.

Activities - This is a set of activities that you need to perform.

Wrap-Up - This section summarizes the concepts and

application of the lesson.

Valuing - This part integrates a desirable moral value in the

lesson.

Posttest - This measures how much you have learned from the
entire module.
 EXPECTATIONS

LEARNING OBJECTIVES: At the end of this module, you are expected to:

1. Identify the elements of the SCI;

2. Categorize parts of Income Statement and;

3. Compute Statement of Comprehensive Income.

PRETEST

Identification: Direction. Identify if the account is part of the general and

administrative expenses or selling expenses: Write A for Administrative Expenses and S
for Selling Expense.

_____________________1. Salaries of admin personnel

_____________________2. Salaries of janitors

_____________________3. Salaries of sales agents

_____________________4. Utilities of home office

_____________________5. Rent of office building

_____________________6. Depreciation of office equipment

_____________________7. Depreciation of delivery van

_____________________8. Advertising
 RECAP =
Pick a word. Direction: Pick a word inside the box and identify if it is under
the investing, operation, or financing Activities.

1. Purchases of Property and Equipment, 2.Long term loan from a bank

3. Withdrawal by owners, 4. Receipt from customers, 5.payment to suppliers
& employees

financing investing operating

LESSON

Personal income. Direction: Prepare a Personal Statement of Comprehensive Income

Write your allowance and amount you spend on food, transportation, phone load,
etc.) and deduct the amount you spend from the amount of your allowance and
Associate allowance with revenue and spending with expense with the net amount
as net income

Description Amount Daily Monthly

Allowance

Fewer Expenses:

Savings
 Guide Questions:

1. what is the importance of Savings? Expenses?

2. Do the business can still earn even without having cash?
3. Can they still lose money even with a full bank account?

The importance of saving money cannot be understated. In fact, with so many

proven benefits, saving money is one of the best financial habits you can
adopt. But, if saving money doesn’t come easy to you, or you just don’t see the
point, it’s natural to ask yourself, why is saving money important?

Saving money is important because it helps protect you in the event of a

financial emergency and can help you pay for large purchases, avoid debt,
reduce your financial stress, leave a financial legacy, and provide you with a
greater sense of financial freedom. That’s why many companies use an
income statement to track revenues and expenses so that you can determine
the operating performance of your business over a while. Small-business owners
use these statements to find out what areas of their business are over budget
or under budget.

Statement of Comprehensive Income ( SCI) – Also known as the income statement.

Contains the results of the company’s operations for a specific period which is called
net income if it is a net positive result while a net loss if it is a net negative result. This
can be prepared for a month, a quarter, or a year. (Haddock, Price, & Farina, 2012)

The Income Statement sometimes called the profit and loss statement, is the financial
record, which summarizes the activities of a business over a while. It reports the
revenues of the business and the expenses incurred in obtaining the revenues and it
shows the profit or loss resulting from these activities. The income statement
complements the balance sheet, both reports are necessary for a full understanding
of the operation of the business.

Point out the different parts of the Statement of Comprehensive Income (SCI)

Heading
Happy Selling Company
Statement of Comprehensive Income
For the year ended December 31, 2016
Net Sales Php xxxxxx
Less: Revenue Revenues (xxxxx)
Gross Profit xxxxxx

__________________________________________________________________

General & Administrative Expenses :

Salaries Expense (xxxxxx)

Rent Expense (xxxxxx)
Depreciation Expense (xxxxxx)
Utilities Expense (xxxxxx)
Miscellaneous Expense Expenses (xxxxxx) (xxxxxx)

Selling Expenses:

Salaries Expense (xxxxxx)

Rent Expense (xxxxxx)
Depreciation Expense (xxxxxx)
Utilities Expense (xxxxxx) (xxxxxx)
_______________________________________
Net Income Net Income xxxxxx
______________________________________________________________________________

[Formula for Income Statement : Revenue - Expenses = Net Income/Loss(amount of

money that is left )].

A. Heading includes the Name of the Company, Name of the Statement, and the
Date of preparation.

b. Sample Statement of Comprehensive Income – Refer to the one above :

I. First part is revenues This is the total amount of revenue that the company
was able to generate from providing services to customers.

ii. Second part is expenses.

iii. Revenues fewer Expenses equals Net income for a positive result and net
loss for a negative result.

The following categories are found in the most income statements.

Revenue

= is the income that a business has from its normal business activities, usually from the
sale of goods and services to customers. Revenue is also referred to as sales or
turnover. Some companies receive revenue from interest, royalties, or other fees.
Sales

= the major activity of most businesses is the sale of products and services and the
bulk of revenue comes from sales. In recording sales, the figure used is net sales- that
is sales after discounts, allowances, and returned goods have been accounted for.

Cost of goods sold

= an important item in calculating profit or loss is the cost of goods that the business
has sold. This item is difficult to calculate accurately. Since the goods sold come from
inventory and since the business may have bought parts of its inventory at several
prices, it is hard to determine exactly the cost of the particular part of the inventory
that was sold.

Gross profit margin

= the difference between sales and cost of goods sold is called the gross profit margin
this item is often expressed as a percentage of sales as well as in peso figures. The
gross profit percentage is a very significant figure because it indicates what the
average mark up is on the merchandise sold.

Operating Expenses

= there are other costs of running a business besides the cost of goods sold. The cost
is called operating expenses. Some typical operating expenses are salaries and
wages, electricity, depreciation, rent, administrative expense, supplies , bad debts,
advertising, and interest payments.

Most of these payments are self-explanatory but there are few that merit further
comment. The most important thing about expenses is to be sure to include all of the
expenses that the business incurs. This does not only help you get a more accurate
picture of the operation, nut it allows you to take full advantage of the tax deductions
that legitimate expenses offer.

Direct Expenses

= is an expense incurred that varies directly with changes in the volume of a cost
object. A cost object is any item for which you are measuring expenses, such as
products, product lines, services, sales regions, employees, and customers. ... The
materials used to construct a product for sale. The cost of the freight needed to
transport goods to and from a manufacturing facility, The labor incurred to produce
hours billable to a client, Labor and payroll taxes paid based on the number of units
produced, Production materials consumed during the manufacture of goods, The
commission and payroll taxes related to the sale of goods or services

There are many more types of expenses that are not direct - they are called indirect
expenses because they do not vary with changes in the volume of a cost object.
Examples of indirect expenses are: Facility rent, Salaried compensation, Secretarial
wages, Depreciation, and amortization, Research and development
Net Profit

= when operating expenses are subtracted from gross profit, the remainder is net
profit. If the business receives revenue from sources other than sales, such as rents,
dividends on securities, or interest on money loaned, it is added to profit at this point.

Actual Sample of Income Statement

The table shows the five years income statement of My Tshirt Company. Each year
has increasing by 10%. All amounts are carried over in the Cash Flow Statement.

The income statement for a particular business should be tailored to fit the activities
of that business and there is no rigid format that must be followed in constructing this
report.

Maintaining a record-keeping system shouldn’t be taught of as a necessary

nuisance but as an important tool for the entrepreneurs’ own use in managing his
business. The record keeping system must follow basic accounting principles but is
tailored made for the business. Remember that a good record-keeping system is
not just a pile of facts, it is a source of information that can help you as an
Entrepreneur to maximize your profits and stay in business.
 ACTIVITIES

Activity 1. Identifying Elements. Direction: Identify the account titles of the following
Comprehensive Income Statements and Fill the blanks with the correct answer.

1. _____________________________
2.___________________________________
3._____________________________________

4.________________ 175,000.00
_____________________________________________________________________________

5.________________________ :

Salaries Expense (Php 20,000.00)

Rent Expense (15,000.00)
Depreciation Expense (10,000.00)
Utilities Expense (5,000.00)
Miscellaneous Expense (1,000.00) 7._____________
6._________________:
Salaries Expense (Php 10,000.00)
Rent Expense (8,000.00)
Depreciation Expense (7,000.00)
Utilities Expense 6,000.00) 8. ___________
_______________________________________
9.________________ 10._____________

Activity 2. Search on the internet at least 5 account titles under Revenue,

Expenses,and Income.

Revenue Expenses Income

1.
2.
3.
 4.
5.

Activity 3. Computation. Prepare a Statement of Comprehensive Income using the

following You can use any business name and the end of the current year for the
heading.
Rent expense – 3,000
Salaries expense – 4,000
Revenues – 20,000
Utility expense – 2,000

WRAP-UP

Key Points Summary. Make a list of bulleted key points of the learning from the lesson.

VALUING

1. Track your allowance and expenses last year and make your Income
Statement. If there is a Net income or Net loss explain why?

POSTTEST

Direction: Write True if the statement is correct. Write False if the statement is wrong.
__________1. Examples of indirect expenses are Facility rent, Salaried compensation,
Secretarial wages, Depreciation and amortization, and Research and
Development.
__________2. Net profit contains the results of the company’s operations for a specific
period which is called net income if it is a net positive result while a net loss
if it is a net negative result.
__________3. There is no rigid format that must be followed in constructing this report.
__________4. Revenue is the income that a business has from its normal business
activities, usually from the sale of goods and services to customers.
Revenue is also referred to as sales or turnover. Some companies receive
revenue from interest, royalties, or other fees.
__________5. The major activity of most businesses is the profit of products and services
and the bulk Profit of revenue comes from profit.
 KEY TO CORRECTION
5. false
4. True
8. Selling expenses ( S ) 3. True
7. Selling expenses ( S ) 2. False
6. . General & Admin expenses ( A ) 1. true
5. . General & Admin expenses ( A ) POST TEST
4. . General & Admin expenses ( A )
3. Selling expenses ( S )
2. General & Admin expenses ( A )
1.General & Admin expenses ( A )
PRETEST

References
The Commission on Higher Education in collaboration with the Philippine Normal
University., Chairperson: Patricia B. Licuanan, Ph.D., Teaching Guide for Senior High
School FUNDAMENTALS OF ACCOUNTANCY, BUSINESS, AND MANAGEMENT 2., Quezon
City., Published by the Commission on Higher Education, 2016

Camposano, Jorge., 2010.Entrepreneurship for Modern Business., Mandaluyong City,

National Bookstore

Revenue.,https://en.wikipedia.org/wiki/Revenue#:~:text=In%20accounting%2
C%20revenue%20is%20the,%2C%20royalties%2C%20or%20other%20fees. this
page was last edited on 2 August 2020, at 10:54 (UTC).

AccountingTools_xsmall.jpg., Copyright 2020.,

https://www.accountingtools.com/articles/what-is-direct-expense.html.,
Steven Bragg