Format Types of Income Statment

Hello Everyone,

We talked about income statement recently. Let me discuss here the two type of formats of income statements now. They include

• Single Step Income Statement
• Multi Step Income Statement

Single Step Income Statement

A single step income statement uses just one subtraction. This is done by subtotaling all the revenues and gains together at the top of income statement and subtotaling all the expenses and losses together below revenues. The sum of expenses and losses is then subtracted from the sum of revenues and gains to arrive at net income

Thus it basically is the illustration of equation

(Revenues + Gains) − (Expenses + Losses) = Net Income

Format

A sample format of Single Step Income Statement is here

Drawback

The major drawback of single-step income statement is that it does not calculate the gross profit of the business. To calculate gross profit, revenues and expenses must be classified.

Multi Step Income Statement

Multi-step income statement involves more than one subtraction to arrive at net income and it provides more information than a single-step income statement. The most important of which are the gross profit and the operating profit figures.

Multi-step income statement is divided into two main sections:

 The Operating Section 

The operating section contains information about revenues and expenses of the principle business activities. The gross profit and the operating profit figures are calculated in the operating section of a multi-step income statement. All operating revenues are grouped at the top of the income statement.

The Non-Operating Section

The non-operating section of a multi-step income statement, usually labeled as 'other incomes and expenses' contains those revenues and expenses which are not earned directly through principle business activities but are incidental to them. For example gains/losses on sales of INVESTMENTS or fixed assets, interest revenue/expense etc. It also includes extraordinary items of revenues and expenses which are infrequent and unusual such as loss due to natural calamity

A sample format of Multi Step Income statement has been shared in the previous post.

Stay Good.

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And in the end there is a message to me that I am not accepting so far

I’m sorry for all misdeeds
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In the future, I will be careful not doing like thi
Will you forgive please me? :(