Single step income statement provides a straightforward view of the company’s profit or loss. All the items of revenue are added together at the top, and items of expenses are totaled below them. The difference between revenues and expenses is either profit or loss. On the other hand, a multi-step income statement provides the detailed view of gross profit and operating profit of the company. The income statement of Wal-Mart’s stores Inc. is a multi-step income statement.
The income statement of Wal-Mart includes the income from discontinued operations, net of income taxes. It represents the revenues earned by the company from the operations that are now being discontinued and will not be carried on any further. Other extra ordinary items in the income statement include interest income from debts and capital leases and, the portion of net income that was attributed to non-controlling interest of the company.
Multi-step income statement provides the separate calculation of gross profit that is used by the investors to compare with the past year’s gross profit or with the gross income of the competitors. It helps in determining the performance of the company related to the cost of goods sold. Furthermore, multi-step income statement also provides the separate details of operating general and administrative expenses that help the investors in deciding on the operating efficiency of the company.
FASB Accounting Standard codification topic 225, Income Statement, provides general guidance on the preparation of income statements and for the classification of revenue and expenses items (Flood, 2014).
The following notes to the consolidated financial statements of Wal-Mart are related to the income statements (Annual Report 2014: Wal-Mart, 2014).
Revenue recognition
Cost of sales
Operating, selling, general and administrative expenses
Net income per common share
Accumulated other comprehensive income.
References
Annual Report 2014: Wal-Mart. (2014). Arkansas: Wal-Mart.
Flood, J. M. (2014). Wiley GAAP 2015: Interpretation and Application of Generally Accepted Accounting Principles 2015. Hoboken: John Wiley & Sons.
