What is a profit and loss statement on multiple steps?

There are two types of income statements in the preparation of the financial statements: one -stage and multiple steps. The purpose of the profit and loss statement is to calculate the net income of the company; In general, net income will be the same regardless of what type of statement and loss is used. The profit and loss statement from multiple steps separates income, costs, profits and losses to help society better understand where it creates income and where the company suffers losses. Revenues from the profit statement and loss of multiple steps include ease, which the informal viewer can decipher revenue and expenditure, and the general fact that investors can quickly analyze. The costs of the goods sold are direct costs associated with the inventory. It is also usually calculated by adding an initial inventory and purchases and then deducting the end inventory. The deduction of the costs of goods sold from the sale is equal to the company 'with gross profit. This part consists of any expenditure related to the operation of the company - it is mainly sales and administrative expenses. By deducting gross profits from the total operating costs, the accounting may calculate the company's operating income.

In general, the last part of the profit statement and the loss of multiple steps not repairing the section. It consists of income and expenditure that is not associated with operations. These expenses include, but are not limited to, interest and profits and losses from the sale of equipment. Operating revenues minus non -dies revenues are equal to the net income of the company for this period.

On the other hand, the profit and loss statement and losses have two parts: revenue and expenditure. Part of the income in the profit and loss statement summarizes all incomes and profits for this period. The section of expenses in the profit and loss statement summarizes all expenses of the year. Accountants deduct expenses from income to the calculation of net income for a given period.

There are two main advantages for using a profit statement and loss on multiple steps as opposed to profit and loss statement per step: DifferentiacE based on where the company generated revenue and easier analysis of the ratio. The statement of multiple steps allows an occasional viewer to assess where revenue and expenditure come during the period. For example, if the company has a high net income to win an action for a certain period of time, this amount would not be included in the company's operational income section. Since the action is not in the operating income section, the occasional viewer can better assess how successful operations in society are; On the other hand, this is not the case with the statement and loss and loss where the action is grouped with all incomes for the period. The advantage is the distribution of accounts into operating, non -correcting, profits and losses, investors can analyze the ratio faster and more efficiently, because the numbers are already divided into categories.