What Is a Single-Step Income Statement?

Malcolm Tatum

A single-step income statement is a simplified format for an income statement that provides a quick and easy snapshot of the net income generated for the accounting period under consideration. Unlike the multiple-step income statement, this simpler format focuses on using only a single subtraction step to determine the amount of net income. This format is ideal for use in presenting basics without the need to get too involved with the details that back up the figures used.

Woman with hand on her hip
Woman with hand on her hip

The most basic example of a single-step income statement will include three sections of financial data. The first has to do with all forms of income and gains that were realized during the accounting period under consideration. This will include all revenue generated from sales, returns received from investments, and interest payments received on interest-bearing accounts. A second section will focus on all expenses related to the period, including operational costs and any losses that may have occurred involving different assets. The third section will contain the amount the figure that results by subtracting all types of losses from all types of gains, resulting in the net income realized for the period.

Some examples of the single-step income statement will simply provide the totals of all gains followed by the totals of all losses, then the net income figure. Others will provide a header for each section that provides a breakdown of relevant line items along with a total. With the latter format, the gains section may include line items such as the income generated from sales, income generated from investments, and interest income. In like manner, the losses section may include a line item tallying operational costs along with any losses on investments. In any event the totals for each of those two sections will be used to determine the net income for the period under consideration.

The single-step income statement may be used as an attachment to financial reports that are supplied to company officers or as a simple insert in a mailing to stockholders. While the statement does not go into a great deal of detail, it does have the benefit of quickly identifying the net income for the period, making it easy to compare with the net income realized in other periods. It is not unusual for a company to prepare a single-step income statement for general distribution after preparing a multiple-step income statement for distribution to owners and others who are charged with increasing the bottom line for the business operation.

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