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Income Statement | Single Step Income statement | Multiple Step/ Classified Income Statement
The income statement is a type of financial statements. Used in
Single-step income statement, Multiple step/ classified income statement
Single-step income statement
Company name
For the year end…………..
| Particulars | Amount Rs. |
| Sales revenue Commission Earned Discount received Interest earned, etc. Total revenue (A) Cost of goods sold Salary expenses Advertising expenses & other expenses Total expenses (B) | xxx xxx xxx xxx xxx xxx xxx xxx xxx |
| Net income (A-B) | Rs. xxx |
Multi step/ classified income statement
1. Sales revenue
It is the first step or item of the classified income statement. The revenue earned by selling goods are called sales revenue. The sales revenue includes both cash sales and credit sales. If there is any sales return that should be deducted from sales revenue to calculate the net sales revenue. It also presents as below.
| Cash sales Credit sales | xxx xxx |
| Total sales Less: sales return & discount | xxx xxx |
| Net sales revenue | xxx |
2. Cost of goods sold (COGS)
The cost of goods sold to the buyers or customers should be deducted from net sales revenue. It is the second item of the multiple income
It calculates as:
| Beginning stock (inventory) Add: Purchases Purchase related expenses Such as transportation, wages, Customs duty, etc | xxx xxx |
| Cost of goods available for sale Less: Ending stock | xxx xxx |
| Cost of goods sold | xxx |
3. Gross profit (GP)
The residual amount after deduction cost of goods sold from net sales revenue is called gross profit. It is the third step in multiple income statements. Sometimes result may be negative and it is termed as a gross loss.
4. Operating cost
The expenses incurred during the year for the business operation are called operating expenses or operating cost. The operating cost classifies into two classes:
- General and administrative expenses
- Selling and distribution expenses
General and administrative expenses
The expenses which are related to office management are called general and administrative expenses
Selling and distribution expenses
The expenses which are related to the sale of goods are called selling and distribution expenses. The selling expenses include showroom rent, warehouse rent, advertising expenses, sales discount, salesman commission on salary, sales manager salary, traveling expenses, trade expenses, depreciation of delivery van, light and electricity expenses of the sales department, sales taxes and other sales related expenses.
5. Income from operation
The income from operation is obtained deducting cost from gross profit. If the result is negative is a loss from the operation, otherwise income from operation.
6. Other income/ non-operating income
The incomes which are received from other than the business operation are called other income or non-operating income. In other words, which income is sometimes earned such income is non-operating income. This income includes interest earned, rent received, dividend received, the commission received, gain on sale of fixed assets, bad debt recovered, apprentice (skill) premium, etc.these are added with the income from operation.
7. Other expenses/ non-operating expenses
The expenses which are incurred other than the business operations are called other expenses or non-operating expenses. In other words, which expenses sometimes occurs such expense is the non-operating expense. Non-operating expenses include interest expenses, loss on sale of fixed assets, written off, discount on issue of shares, debentures, underwriting commission, etc. these expenses are deducted from income from operation.
8. Total income before tax/taxableincome
It calculates as income from operation + other income or
9. Tax
It is calculated from total taxable income as per the given tax rate.
10. Net profit/ loss
Net profit before tax – tax, and it provides net profit after tax.
Maybe we can also write it in the table as below:
| Particulars | Amounts |
| Sales revenue Less: sales return/ discount | xxx xxx |
| Net sales Less: Cost of goods sold (COGS) | xxx xxx |
| Gross Profit Less: Operating expenses General &administrative expenses (A) Rent expenses Insurance Utility expenses Supplies expenses Depreciation on fixed assets Administrative expenses Office salary epenses General expenses, etc. Total general & administrative expenses (A) | xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx |
| Selling & distribution expenses (B) Advertisement expenses Sales promotion expenses Salesman salary Selling expenses Rent of warehouse Depreciation on the delivery van Commission of salesman Total selling & distribution expenses (B) Total operating expenses (A + B) | xxx xxx xxx xxx xxx xxx xxx xxx xxx |
| Operating income Add: non-operating income & gains Rent received Dividend received Compensation received Interest on investment Profit on sale of fixed assets Total non-operating income and gains | xxx xxx xxx xxx xxx xxx xxx |
| Less: non-operating expenses & losses Interest on loan Loss on sale of fixed asset Total non-operating expenses | xxx xxx xxx |
| Net income before tax Less: Income tax for the year | xxx xxx |
| Net income after tax / Net income | xxx |