Accounting › Section E · Merchandising transactions › Topic E.6
Multi-step and simple income statements
A merchandiser's income statement can be laid out in steps that show gross profit and operating income along the way, or in one simple subtraction. Both reach the same net income; they differ in what a reader can see on the way there.
In this topic
- One set of numbers, two layouts
- The steps in a multi-step statement
- Selling versus general and administrative
- Other revenues, gains, expenses and losses
- Worked example: from sales to gross profit
- Worked example: from gross profit to net income
- The simple, single-step format
- Worked example: Lanternfield in one step
- What the subtotals reveal
- Common mistakes to avoid
- Key takeaways
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