Income Statement

A single-step income statement is one of two commonly used formats for the income statement or profit and loss statement. The single-step format uses only one subtraction to arrive at net income.

Net Income = (Revenues + Gains) – (Expenses + Losses)

An extremely condensed income statement in the single-step format would look like this:

Sample Products Co. Income Statement For the Five Months Ended May 31, 2007 Revenues & Gains $108,000 Expenses & Losses     90,000 Net Income $  18,000

The heading of the income statement conveys critical information. The name of the company appears first, followed by the title "Income Statement." The third line tells the reader the time interval reported on the profit and loss statement. Since income statements can be prepared for any period of time, you must inform the reader of the precise period of time being covered. (For example, an income statement may cover any one of the following time periods: "Year Ended May 31," "Five Months Ended May 31," "Quarter Ended May 31," "Month Ended May 31, or "Five Weeks Ended May 31".)

A sample income statement in the single-step format would look like this:

Sample Products Co. Income Statement For the Five Months Ended May 31, 2007 Revenues & Gains Sales Revenues $100,000 Interest Revenues 5,000 Gain on Sale of Assets       3,000 Total Revenue & Gains   108,000 Expenses & Losses Cost of Goods Sold 75,000 Commissions Expense 5,000 Office Supplies Expense 3,500 Office Equipment Expense 2,500 Advertising Expense 2,000 Interest Expense 500 Loss from Lawsuit      1,500 Total Expenses & Losses    90,000 Net Income $ 18,000

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