Accounting for Managers: General Purpose of Statement of Comprehensive Income

a) Describe the general purpose of the statement of comprehensive income. In addition,
explain the term income and expenses as defined by the Conceptual Framework for
Financial Reporting
b) Describe the general purpose of the statement of financial position. In addition, explain the
terms asset, Liability, and equity as defined by the conceptual Framework for financial
c) Explain the accrual basis of accounting by defining the principles involved. Illustrate your
answer by taking the example of the cost of sales adjustment in the statement of
comprehensive income.

Accounting for Managers: General Purpose of Statement of Comprehensive Income

Comprehensive income is the result of an increase in the equity of the owner without the contributions made by the owner. A general statement of income generally includes company-specific records of profits and losses, but does not take into account the fluctuations in a net asset that the comprehensive provides (Mahmood Mahmood and Mahmood 2019,). The structure of the statement combines all gains and revenues on one side, and all losses and expenses on the other and then adds them up to determine the differences that determines whether the company has made or earned money from its activities. The primary purpose of the extensive income statements is disclose the changes in net assets which can also be caused by the change in ownership or transfer of holdings, in addition to other factors that can cause financial transactions.

 These changes are a result of income earned from sales revenue, interest as well as dividends, rent paid and appreciation. A complete income statement shows changes such as stock increases or declines as well as general reserve and accrued profits (Rapana,2020). Additionally, it reveals changes in expenses such as maintenance, bills and bank charges as well as insurance and interest due among other things. Because of its holistic and complete nature, the report offers a comprehensive view of the business, without excluding the financial factors that are essential to the assessment of a company, like the statement of income.

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