Single-Step Income Statement

A single step income statement is a format of income statement, which uses just a single subtraction i.e. the total of all revenues, incomes, and gains minus the total of all expenses and losses.

An income statement is an accounting document that summarizes the net profit or loss of a company by subtracting the expenses from the income. A single-step income statement does this by grouping all the revenues and gains together at the top of income statement and then subtracts all the expenses and losses, thus arriving at net income. No sub-classification of incomes and expenses is shown.

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

Single-step income statement is one of the two commonly used income statement formats, the other being the multi-step income statement. The net income calculated using the single-step income statement is equal to that which is calculated using a multi-step income statement.

Example and Format

The title of an income statement typically follows the format:

  1. Starts with the name of the company on the first line.
  2. Second line states the document name such as "Income statement" or "Profit and loss statement".
  3. Since the income statement shows the change in financial position from last balance sheet date to current balance sheet date, the third line displays this period that is covered by the income statement. This is usually worded as "for the year/quarter/month ended xyz date".

The following example shows the format of a single-step income statement.

Company A
Income Statement
For the month ended December 31, 20X0
Sales Revenues$64,510 
Interest Revenues1,650 
Gain on Sale of Investments5,000 
Total Revenues$71,160
Cost of Goods Sold$31,400 
Depreciation Expense7,980 
Rent Expense8,000 
Advertising Expense1,000 
Salaries Expense13,500 
Utilities Expense1,360 
Loss due to Theft300 
Total Expenses−63,540
Net Income$7,620

A major drawback of single-step income statement is that it does not calculate the gross profit of a business. To calculate gross profit, revenues and expenses must be classified. This is why most businesses use multi-step income statement.

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