Question

What is the difference between a single-step and a multi-step income statement? What is the same about them?

Answer 1

• Points of Differences

Difference between
Single Step Income Statement	Multi Step Income Statement
All revenues are grouped under "revenues" at one place.	Revenues are grouped under "Revenues" or "other Revenues"
All expenses are grouped together under "Expenses"	Expenses are classified into various heads.
No calculation of Gross Profits	Gross Profit is calculated.
Revenues - Expenses = Net Income	Revenues - Cost of Goods Sold - Operating Expenses - Income tax expenses = Net Income
Less detailed compared to Multi Step	More detailed
No classification of expenses as 'operating/non operating'	Expenses are classified as Operating expense/other expense
Operating Income does not gets disclosed	Discloses Operating Income

• Points of similarity.

Both are used to calculate and disclose Net Income

End results under both are same.

Both are prepared for a specific period of time.

• Format for both, for understanding purpose:

--Single Step

Income Statement
for the month ended 31 Aug 2018
Revenues:
Sales Revenue		$18,400
Expenses:
Cost of Goods Sold	$3,000
Rent Expense	$3,600
Salaries expense	$1,300
Supplies expenses	$750
Miscellaneous expenses	$700
Total expense		$9,350
Net Income		$9,050

--Multi Step

Sales revenue		$18,400
Cost of Goods Sold		$3,000
Gross Profits		$15,400
Operating Expenses:
Salaries expense	$1,300
Rent Expense	$3,600
Supplies expenses	$750
Miscellaneous expenses	$700
Total Operating expense		$6,350
Operating Income		$9,050
Other revenues (expenses)		$0
Net Income		$9,050