Lesson 5 Essay - There are two main formats for preparing...

This preview shows page 1 - 2 out of 2 pages.

There are two main formats for preparing an income statement: single-step and multi-step. Both will yield the same amount for the net income/loss if prepared correctly. There are clear differences between the two, and smaller companies may choose to use the single-step income statement due to fewer transactions in a period. The first format, the single-step income statement, is the basic format of preparing this statement. This format involves grouping all revenues together and deducting all expenses without calculating subtotals. Taking the example from the book on page 298, a single-step income statement would look like: Smart Touch Learning Income Statement(Single-Step) Year Ended December 31, 2015 Revenues: Net Sales Revenue $280,700 Expenses: Cost of Goods Sold $199,500 Salaries Expense 15,000 Rent Expense 13,000 Utilities Expense 11,300 Insurance Expense 6,500 Depr. Expense-Furniture 1,800 Depr. Expense-Building 1,500 Advertising Expense 2,400 Interest Expense 2,300 Delivery Expense 1,600 Supplies Expense 600 255,500 Net Income/Loss $25,200

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture