Accounting Multi Step Income Statement Example

A multi step income statement allows for users to quickly and easily locate a specific item as well as allow for business owners.

Accounting multi step income statement example. Multi step income statement template a multi step income statement is a statement that shows income expenditures profits and losses. It offers an in depth analysis of the business s financial performance in a specific reporting period reporting period a reporting period also known as the accounting period is a discrete and uniform span of time for which the financial performance and financial position. A multi step income statement is an income statement that segregates total revenue and expenses into operating and non operating heads. Operating items and non operating items.

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. As you can see this multi step income statement template computes net income in three steps. Example let s take a look at a multi step income statement example. As compared to a single step income statement a multi step income statement examples are more complex.

And divides them into two separate categories. Compute gross profit total sales cost of goods. A multi step income statement can better reveal a company s financial health than a single step income statement which does not classify incomes or expenses into the operating and non operating categories. Cost of goods sold is subtracted from net sales to arrive at the gross profit.

For example the multi step income statement of the retailer will have the figure of total sales that includes all the merchandise sales that are made during that period and the cost of goods sold includes all the expenditures. Multi step income statement example although bob and his donut shop are still a small business and would not have otherwise been required to create a multi step statement he wants to take out a bank loan of 25 000. The bank has requested that bob must present the income statement in a multi step format to get a better picture of his business. Example 2 multi step income statement the multi step income statement format comprises a gross profit section where the cost of sales is deducted from sales followed by income and expenses to reach an income before tax.

For example gains losses on sales of investments or fixed assets interest revenue expense etc.