How To Prepare Multi Step Income Statement

Let s take a look at a multi step income statement example.

How to prepare multi step income statement. Compute gross profit total sales cost of goods sold step 2. The easiest income statement to prepare the single step income statement provides an at a glance look at revenues and expenses which most smaller businesses will find sufficient. But if it is not prepared correctly then it can be misleading. A multi step income statement also differs from an income statement in the way that it calculates net income.

A single step income statement includes just one calculation to arrive at net income. Multi step income statements on the other hand use multiple equations to calculate net income. Compute income from operations gross profit operating expenses step 3. As you can see this multi step income statement template computes net income in three steps.

Compute net income income from. An alternative to the single step income statement is the multiple step income statement because it uses multiple subtractions in computing the net income shown on the bottom line.