Explain about single step income statement in accounting with example.

Finance ManagementAccountingAcademic 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 revenue150000
Interest revenue25000
Gain on sales of assets13000
Total188000


Expenses and losses
Cost of goods sold80000
Commissions expenses3000
Office supplies expenses2500
Office equipment expenses2000
Advertising expenses2200
Interest expenses800
Loss from lawsuit1700
Total (B)92200
Net income95800

Net income = (revenue and gains) – (expenses and losses)

       = 188000 – 92200

       = 188000 – 92200

raja
Published on 13-Aug-2020 10:41:27
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