Multi Step Income Statement Example Problem

It is a financial report which contains business operations related to sales cost of goods sold both operating and non operating expenses net income.

Multi step income statement example problem. Operating items and non operating items. 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. After discussing single step income statement now we will look in to another income statement format called multi step income statement. It also shows the three equations that calculate net income.

This is a particularly pernicious problem when multi step income statements are being compared across multiple periods and the method of statement compilation is being altered within the presented periods. A multi step income statement is an income statement that segregates total revenue and expenses into operating and non operating heads. Preparing a multi step income statement and a classified balance sheet 30 40 min link back to chapter 4 classified balance sheet. The operating section and the non operating.

Compute income from operations gross profit operating expenses. This sample multi step income statement from accounting coach shows the layout of a multi step income statement with the separation between operating and non operating activities. Multi step income statement involves more than one subtraction to arrive at net income and it provides more information than a single step income statement. As you can see this multi step income statement template computes net income in three steps.

Multi step income statement is divided into two main sections. Let s take a look at a multi step income statement example. A multi step income statement is a statement that shows income expenditures profits and losses. The accounts of smith electronics company are listed along with their balances before closing for the month ended october 31 2012.

A multi step income statement allows for users to quickly and easily locate a specific item as well as allow for business owners to better see how their. Multi step income statement sample problem. 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 incurred while purchasing shipping or conveyance and getting the merchandise ready for sale. The adjusted trial balance of mccoy company included the following selected accounts.

Compute gross profit total sales cost of goods sold step 2. And divides them into two separate categories. Debit credit sales revenue 645 000 sales returns and allowances 50 000 sales discounts 9 500 cost of goods sold 396 000 freight out 2 000 advertising expense 15 000 interest expense 19 000 salaries and wages expense 84 000 utilities expense 23 000 depreciation.