Prepare An Income Statement Using The Multi Step Format

A multi step income statement also differs from an income statement in the way that it calculates net income.

Prepare an income statement using the multi step format. Unlike the single step income statement format where all revenues are combined in one main income listing and all expenses are totaled together the multiple step statement lists these activities in separate sections so users can better understand of the core business operations. The multiple step format for the income statement provides more information than the single step method and is the preferred format for the vast majority of publicly traded companies. Multi step income statement format is any day better than a single step statement as it provides proper detailing. To prepare an income statement generate a trial balance report calculate your revenue determine the cost of goods sold calculate the gross margin include operating expenses calculate your income include income taxes calculate net income and lastly finalize your income statement with business details and the reporting period.

Using the above multiple step income statement as an example we see that there are three steps needed to arrive at the bottom line net income. The management of the company might shift the expenses from the cost of goods sold and into the operations to improve their margins artificially. A prepare an income statement for the year 2014 using the multiple step form. But if it is not prepared correctly then it can be misleading.

Multi step income statement is one of the two most commonly used income statement formats the other being the single step income statement 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. Here is a sample income statement in the multiple step format. A single step income statement includes just one calculation to arrive at net income. 14 multi step income statement templates an income statement also referred to as the profit and loss statement is one of the major financial statements used by accountants and businessmen.

Common shares outstanding for 2014 total for the year ended december 31 2014 b prepare an income statement for the year 2014 using the single step form. The multiple step income statement also shows the gross profit net sales minus the cost of goods sold.