The Statement of Comprehensive Income

The statement of comprehensive income is to provide detailed information to user on financial performance such as revenue, income, expenses, profit share, profit losses and expenditure of a business over an accounting period. Unlike income statement which only provide a financial view of the profit and loss items, statement of comprehensive income includes components such as gain or loss from investment of equity instrument which are not recognized under profit or loss in Income Statement. The statement of comprehensive income is heavily used by accountants and business owner as it allows them to determine the financial position of the entity through its investment profile and in times able to reveal the possibility of major financial losses in the long run.

Income as defined by the Conceptual Framework for Financial Reporting is the revenue and gains of an entity in an accounting period. Revenue arises from an entity's daily course of activities which includes from providing labor and services, sales, interest, royalties and also profits made through rental of properties.

Gain on the other hand represents items that may or may not usually arises from an entity's daily course of activities but is still considered as income generated by the entity within the accounting period. Gain are items which generally increases the entity's financial standing which is no different from the definition of revenue and hence, it is not considered a separate reporting item. Example of gains includes increase in valuation of holding assets such as securities and equities.

Expenses as defined under the Conceptual Framework for Financial Reporting is the outflow of cash arises from an entity's daily course of activities and also losses. Expenses arising from an entity's daily course of activities are taken into two forms, one which is required to keep the entity's operation running such as employee's wages, material cost and rental cost. The other form of expenses will be the depreciation of assets such as cash due to currency transfer rate changes, inventory, property, furniture and equipments.

On the flip side, losses are items that may or may not usually arises from an entity's daily course of activities but is still considered as expenses incurred by the entity within the accounting period. Losses are item which generally decreases the entity's financial standing within the account period. Example of losses includes the decrease in valuation of holding assets such as securities and equities. Losses also includes financial damages inflicted by natural disasters such as earthquake or floods.

The general  purpose of the statement of financial position also known as balance sheet is to identify all assets gained and all liabilities incurred by an entity and also determine whether is there any net assets left over all within the accounting period (Martin 2016). The statement of financial position can provide information about an entity's financial position in the market, its debt position and also the liquidity of the entity. However, all the information tabulated is based on historical stats. The statement only shows the items that were identified on the last day of the accounting period rather than forecasting the stats over a period of time.