Statement Of Comprehensive Income Multi Step Approach

As stated earlier in multi step format there are multiple subtotals in the income statement.

Statement of comprehensive income multi step approach. Statement of comprehensive income. The multiple step profit and loss statement segregates the operating revenues and operating expenses from the nonoperating revenues nonoperating expenses gains and losses. While it is arrived at through the income statement the net profit is also used in both the balance sheet and the cash flow statement. Sales php80 000 00 merchandise inventory beg php5 000 00 sales discount 5 000 00 net purchases 10 500 00 sales returns 2 000 00 freight in 8 000 00 merchandise inventory end 3 500 00 general expenses selling expenses 12 000 00 4 000 00.

Multi step income statement is the income statement of the company which segregates the total operating revenue of the company from non operating revenue and total operating expenses of the company from non operating expenses thereby separating the total revenue and expense of a particular period into two different sub categories i e operating and the non operating. A standard ci statement is usually attached to the bottom of the income statement and includes a separate heading. Explanation on the cost of goods sold net purchases category of operating expense and the difference between nature versus function approach of sci. It presents the revenue expenses and profit or loss generated by the business during a particular period but it uses a single equation to calculate profits.

Multi step income statement entities around the world even if they are using different accounting frameworks they use this method to prepare income statement. Whenever ci is listed on the balance sheet the statement of comprehensive income must be included in the general purpose financial statements to give external users details about how ci is computed. This format coupled with functional basis of classification of expenses is the best available format from understandability point. Prepare the statement of comprehensive income using a multi step approach.

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. The net income net income net income is a key line item not only in the income statement but in all three core financial statements. A statement of comprehensive income is the overall income statement that consolidates standard income statement which gives details about the repetitive operations of the company and other comprehensive income which gives details about the non operational transactions such as the sale of assets patents etc.