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what is the difference in preparation of mutistep incomestatement and single step income statement?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter6: Merchandising Transactions

Section: Chapter Questions

Problem 20Q: What is the difference between a multi-step and simple income statement?

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Question

what is the difference in preparation of mutistep incomestatement and single step income statement?

Expert Solution

Step 1

Multi step income statement refers to the report that showcases the company's revenues, expenses, costs and overall profit or loss for a particular period of time. It uses multiple equations to compute the net income of a business.

Whereas, single step income statement refers to the simplified form of reports of a company that showcases its revenue's and expenses. It is more of a straight forward method which computes the net income of a business.

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