Explain about single step income statement in accounting with example.

Finance Management Accounting Academic Content

Single step income statements represent company’s revenues, expenses and income in simple way. It is easy to calculate as not many steps are involved. Small companies, sole proprietorships uses this kind of statements often.

Formula

Net income = revenues – expenses

Advantages are given below −

Firm prepares sing step income statement to analyse departmental performance in a period.
Easy to prepare.
Easy to analyse.
Use for internal purpose.

Limitations are explained below −

Chances of deviation of net income.
Actual expenses are not known.
Doesn’t calculate gross profit.

Example

The example is given below −

Income statement of XYZ company As on 31st March xxxx
Revenue and gains (A)	Rs.
Sales revenue	150000
Interest revenue	25000
Gain on sales of assets	13000
Total	188000

Expenses and losses
Cost of goods sold	80000
Commissions expenses	3000
Office supplies expenses	2500
Office equipment expenses	2000
Advertising expenses	2200
Interest expenses	800
Loss from lawsuit	1700
Total (B)	92200
Net income	95800