D. One-statement format one of the two commonly used forms for the income statement or profit and loss statement. The one statement uses only one subtraction to arrive at the net income i.e. Net income= (Revenue+Gains)-(Expenses+Losses). The heading of the income statement conveys critical information (Fridson & Alvarez, 2002). The name of the company appears first, followed by the title ‘income statement. Income statement prepared anytime; you must inform the reader of the precise period.
The two-statement format involves above a single substation to come up with the net income, and it provides additional information than one statement format income statement. Among them, the most significant of which are the operating profit and gross profit figures (Lehmann, 2007). The two-statement income statement is separated into two main sections: the non-operating section and the operating section. The operating section entails the information about expenses and revenues of the principle business. The operating profit and the gross profit figures calculated by the driving part of the two-statement income. All the operating funds categorized at the top of the income statement. Additionally, the operating expenses are then sub-classified into selling expenses, the cost of goods sold, and administrative expenses. The section of non-operating usually called ‘other benefits and costs’ contain those expenses and revenues which are not gained directly through principle business activities but are incidental to them.
References
Fridson, M. & Alvarez, F. (2002). Financial statement analysis. New York: John Wiley & Sons.
Lehmann, R. (2007). Income investing today. Hoboken, N.J.: John Wiley & Sons.
