Question:
Briefly explain the difference between the single-step and multiple-step income statement formats.
Answer:
The single-step format first lists all revenues and gains included in income from continuing operations to
arrive at total revenues and gains. All expenses and losses are then grouped and subtotaled, subtracted
from revenues and gains to arrive at income from continuing operations. The multiple-step format reports
a series (multiple) of intermediate totals such as gross profit, operating income, and income before taxes.
Very often income statements adopt variations of these formats, falling somewhere in between the two
extremes.
Briefly explain the difference between the single-step and multiple-step income statement formats.
Answer:
The single-step format first lists all revenues and gains included in income from continuing operations to
arrive at total revenues and gains. All expenses and losses are then grouped and subtotaled, subtracted
from revenues and gains to arrive at income from continuing operations. The multiple-step format reports
a series (multiple) of intermediate totals such as gross profit, operating income, and income before taxes.
Very often income statements adopt variations of these formats, falling somewhere in between the two
extremes.
