Single-Step Income Statement Review The single-step income statement emphasizes a. the gross profit figure. total revenues and total expenses. c. extraordinary items more than it is emphasized in the multiple-step income statement. d.the various components of income from continuing operations. Chapter 4-11 LO 2 Prepare a single-step income statement
Chapter 4-11
Multiple-Step Income Statement Background Separates operating transactions from nonoperating transactions. Matches costs and expenses with related revenues. o Highlights certain intermediate components of income that analysts use. Chapter 4-12 LO 3 Prepare a multiple-step income statement
Chapter 4-12 Separates operating transactions from nonoperating transactions. Matches costs and expenses with related revenues. Highlights certain intermediate components of income that analysts use. Background
Multiple-Step Income Statement Income Statement (in thousands) The presentation Sales $285,000 divides information Cost of goods sold 149,000 Gross profit 136,000 into major sections. Operating expenses: Advertising expense 10,000 1.Operating Section Depreciation expense 43,000 Total operating expense 53,000 Income from operations 83,000 2.Nonoperating Other revenue (expense): Section Interest revenue 17,000 Interest expense （(21,000) Total other (4,000) Income before taxes 79000 3.Income tax Income tax expense 24,000 Net income $ 55,000 Earnings per share $ 0.75 Chapter 4-13 LO 3 Prepare a multiple-step income statement
Chapter 4-13 I n c o m e S t a t e m e n t (in t h o u s a n d s ) S ale s $ 2 8 5 , 0 0 0 C o s t o f g o o d s s old 1 4 9 , 0 0 0 G r o s s p r o fit 1 3 6 , 0 0 0 O p e r a t i n g e x p e n s e s : A d v e r tisin g e x p e n s e 1 0 , 0 0 0 D e p r e cia tio n e x p e n s e 4 3 , 0 0 0 T o t al o p e r a tin g e x p e n s e 5 3 , 0 0 0 I n c o m e f r o m o p e r a t i o n s 8 3 , 0 0 0 O t h e r r e v e n u e ( e x p e n s e ) : I n t e r e s t r e v e n u e 1 7 , 0 0 0 I n t e r e s t e x p e n s e ( 2 1 , 0 0 0 ) T o t al o t h e r ( 4 , 0 0 0 ) I n c o m e b e f o r e t a x e s 7 9 , 0 0 0 I n c o m e t a x e x p e n s e 2 4 , 0 0 0 N e t i n c o m e $ 5 5 , 0 0 0 E a r n i n g s p e r s h a r e $ 0.7 5
Components of the Income Statement Revenue Revenue reports the total sales to customers for the period less any sales returns and allowances or Chapter discounts. 4-14
Chapter 4-14 Revenue Revenue reports the total sales to customers for the period less any sales returns and allowances or discounts
Components of the Income Statement Cost of Goods Sold Beginning inventorv N Cost of goods sold is a significant +F item on merchandising and + manufacturing companies' income statement. Ending inventory Chapter Cost of goods sold 4-15
Chapter 4-15 Beginning inventory + Net purchases + Freight-in + Other inventory acquisition costs = Cost of goods available for sale – Ending inventory = Cost of goods sold Cost of Goods Sold Cost of goods sold is a significant item on merchandising and manufacturing companies’ income statement