The amount of net income shown on a multi-step income statement will differ.....

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TRUE OR FALSE

The amount of net income shown on a multi-step income statement will differ from the amount of net income shown on a single-step income statement.

Sep 13th, 2015

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NO, the net income shown on a multi-step income statement will NOT differ from the amount shown on a single-step income statement.

Both types of income statement will result to the SAME amount of net income. Their difference lies on how they presented or arrived at that net income. In a multi-step income statement, gross profit is presented separately, then the selling, administrative, and general expenses are grouped under operating expenses, then non-operating items such as interest income and expenses are also presented separately from operating items, then the income taxes are presented, and finally, the net income. On the other hand, in a single-step income statement, everything is grouped together. The gross profit is not presented, the operating and non-operating items are grouped together. The statement doesn’t distinguished from operating expenses to non-operating expenses. Everything is deducted or added to sales revenue to arrive at net income.


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Sep 13th, 2015

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Sep 13th, 2015
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