 Comprehensive means all. So we're looking at all income. So what did we miss from the income statement? So we need to do comprehensive income. Well, there are certain items that's gonna skip the income statement, but they do affect somehow income. And this is what we're gonna be accounted for, comprehensive income. This topic is covered on the CPA exam, intermediate accounting course, as well as advanced accounting. So whether you are an accounting student or a CPA candidate, don't sit for the exam unless you have a good understanding of comprehensive income. If you're taking a CPA review course, which you should, you can keep it. I can provide you alternative useful resources in addition to your CPA review course that's gonna help you understand the material better. I explain the concept, I explain the theory behind the concept, I provide examples, I provide journal entries, I go a little bit more in depth. The difference between what I do in a review course is I go a little bit more in depth than a review course. Your risk to try me is one month of subscription, your potential gain is passing the exam. If not for anything, take a look at my website to find out how well or not well your university doing on the CPA exam. If you have not connected with me on LinkedIn, please do so, take a look at my LinkedIn recommendation like this recording, share it with other connect with me on Instagram, Facebook, Twitter and Reddit. So let's talk about comprehensive income. What is comprehensive income? As we said, comprehensive means all, it means everything that affect equity. Well, what affect equity? Gains and losses affect equity, but there are certain gains and losses that we're gonna skip, we're gonna bypass the income statement for now. Sometime those gain and losses, they reverse themselves and they never see the income statement, and sometime they end up on the income statement depending on what we are dealing with. And as you progress in the course, you will see that what happened to certain comprehensive income items. Because the effect equity, we're gonna have to hit equity, but we don't hit the income with those changes. So they're listed initially on a statement of comprehensive income, then they are transferred from the statement of comprehensive income to the statements of equity, eventually end up on the equity section of the balance sheet, which we will see how things progresses. But what are those items? What are those mystery items? One of them is could be unrealized holding gain or losses on available for sale securities. For example, if you own a few invest in bonds and you have a bond and you happen to have a gain, as a result of this gain, let's assume $20,000 gain, you're going to credit unrealized gain of $20,000. Now that unrealized gain, it's gonna be an equity account. So simply put, the credit will be unrealized gain equity account, debit will be fair value adjustment. Now, if you don't know the debit and the credit here, don't worry about this now, this you will learn this in the investment, but simply put, this is a balance sheet account and this is a balance sheet account because unrealized gain is equity. Now you could have an unrealized gain and that account could be income, which will go on the income statement, but that's the point here that the unrealized gain is equity account. So those transactions, we don't want them to hit the income statement because this bond may go down in value and the gain will go away. Therefore, don't let it affect income statement because you would have wide fluctuation. Other examples will be changes in pension plan, the same concept. You might have a pension plan in some years, you might have gains, large gains and some year, large losses. Say just don't let it hit the income statement because it's not relevant. Cash flow hedges and translation of gains and losses on foreign currency, those you would learn more about in an advanced accounting course, but the point is I'm just showing you certain items that do go on the incomes, that do go on comprehensive income. So what is comprehensive income then? Well, comprehensive income is obviously net income plus those changes. So net income will be revenues, expenses, gains and losses plus those items that I listed here. Together they give you comprehensive income. So simply put, those items affect equity. In other words, anything that affects equity is part of comprehensive income except those transaction that deals with shareholders. So simply put, comprehensive income is everything that affects equity except, except those things that are shareholder related like contribution, withdrawals, dividend, those affect equity, but they're not part of comprehensive income. They're listed separately. Now, how do we present comprehensive income? Well, there are two ways to present comprehensive income. We can present comprehensive income in one step approach, which is it's a part of the income statement. So this is the income statement, sales minus cost of goods sold equal to gross profit minus operating expenses gives us net income and we keep going and we add or subtract other comprehensive income or loss to come up with comprehensive income. That's one way to do it. One step approach. Another approach is to actually, it's a two step approach to first create the income statement separately. So basically this is the income statement. We have an income statement separately then below the income statement or on another or we, and then we create the statement of comprehensive income separately. And this is the statement of comprehensive income. The statement of comprehensive income will start with their income 220 plus the 30,000 of unrealized holding gain and unrealized holding gains and losses are net of tax, just FYI. You'd learn about that later on. So let's see, let's take a look at where this number will end up eventually. So let's assume we are preparing the statements of stockholders equity for this company and we have the beginning balance retained earning of 60 common stock of 500,000. So we only have common stock and retained earning for this company, accumulated other comprehensive income. We don't have any. Therefore the total beginning equity is 560. The company generated $20,000 of income that's gonna increase to retained earnings. We're gonna assume no dividend. Then the company had $30,000 and unrealized holding gain. That's fine. Now we have unrealized holding gain and this is gonna increase the equity. So the ending balances and we had 500,000 of common stock. Nothing happened to common stock. So our retained earning end up to be 280, 60 plus 220. We had nothing in opening comprehensive income. Now we have 30,000. We have accumulated. Accumulated means it's running balance. It's accumulating of 30,000. We had nothing but the point is I started with nothing to keep it easy for you. You could have a prior balance but I'm gonna start with nothing. Common stock half a million end up with half a million. Now this is the statement of stockholders equity. Everything this, all these numbers will end up on the balance sheet in the following manner. The half a million of common stock will be part of the balance sheet. Retained earning 280 will be part of the balance sheet. Now we also have accumulated other comprehensive income. So this is the new equity account. And notice this 30,000 that appear on the statement of comprehensive income came to the statement of stockholders equity in the accumulated other comprehensive income then eventually made it to the equity section. So notice it never had the income. It never had the income statement. I hope this recording gave you a better idea what the comprehensive income is. Now the only reason you're gonna understand comprehensive income is when you actually get to those chapter to work with investments, to work with pensions because this is where you would really see how it's being done in the real world. At the end of this recording, I'm gonna remind you again to take a look at my material. I do provide supplemental. I don't replace your CPA review course. I am a useful addition to your CPA review course. My resources are a nominal at a nominal fee. You can improve your score by five to 10 points, help you understand your material better. Your CPA is an important investment. Give it everything that you have, study hard, good luck, and don't shortchange yourself. Stay safe.