The single-step income statement

The single-step income statement format uses a single subtotal for all revenue line items and a single subtotal for all expense line items, with a net gain or loss appearing at the bottom of the report. This format is most commonly used by businesses that have relatively simple operations, with few line items reported. Here is a sample format for a single-step income statement:

Revenues $1,000,000
     Total revenue $1,000,000
     Cost of goods sold 350,000
     Advertising 30,000
     Depreciation 20,000
     Rent 40,000
     Payroll taxes 28,000
     Salaries and wages 400,000
     Supplies 32,000
     Travel and entertainment 50,000
Total Expenses $950,000
Net Income $50,000

The single-step format is not heavily used, because it forces the readers of an income statement to separately summarize information for subsets of information within the income statement. For example, there is no gross margin calculation, nor any expense breakdowns by department. For a more readable format, try the multi-step format, which is the format of choice for multi-department organizations. It is relatively common for smaller businesses to start reporting their financial results with a single-step income statement and then switch to the multi-step format once their operations become larger and more complex.