Single step income statement

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A single-step income statement is the easiest to create because it uses a single calculation to determine a business's profit or loss. The equation used with a single-step income statement is Net income = (revenues + earnings) - (expenses + losses)


This type of income statement is easy to understand and prepare, so it is commonly used by small businesses and sole proprietors that do not have several different sales lines. Companies that sell goods and services may prefer to use the multi-step income statement.


Single step income statement



Multi-step income statement

Used by businesses with multiple lines of business, the multiple-step income statement uses multiple steps instead of just one, as the name suggests. With this type of income statement, operating income and maldives b2b leads operating expenses are separated from non-operating income and non-operating costs, losses and gains. By separating operating income from non-operating income, a business owner can gain a deeper understanding of their operations. Calculations used to determine profit or loss with a multiple-step income statement include:


Gross profit = net sales - cost of goods sold
Operating income = gross profit - operating expenses
Net income = operating income + non-operating income

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