Single-Step Income Statement

Single-step income statement is one of the two most commonly used income statement formats, the other being the multi-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:

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

The net income calculated using the single-step income statement is equal to that calculated using a multi-step income statement.

Example and Format

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

Company A
Income Statement
For the month ended December 31, 2010
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

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. This is why most businesses use the other format of income statement called multi-step income statement.

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