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Definition

Single-step income statement

Single-step income statement is an income statement that shows only one step in determining net income.

The statement is so named because only one step- subtracting total expense from total revenues- is required in determining net income.

A single-step statement classifies all data under two categories: revenues and expenses. Revenues include both operating revenues and other revenues and gains. Expenses include cost of goods sold, operating expenses, and other expenses and losses.

There are two primary reasons for using the single-step format: (1) a company does not realize any type of profit or income until total revenues exceed total expenses, so it makes sense to divide the statement into these two categories. (2) The format is simpler and easier to read. For homework problems, however, you should use the single-step format only when specifically instructed to do so.

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