What are the advantages and disadvantages of the single-step income statement?
Short Answer
Expert verified
Simplicity, understandability by a layperson, focuses primarily on revenues, and expenses are the various advantages. The absence of showing relationships between the cost of goods sold and sales is considered a disadvantage of a single-step income statement.
Step by step solution
01
Meaning of Single-Step Income statement
The single-step income statement is aformat used to report the revenues and expenses of a company. It includes only two major groups, i.e., revenues and expenses.
02
Advantages and disadvantages of a single-step income statement
The advantages of a single-step income statement are this statement format is very simple to present and can be easily understood even by the layperson. This income statement only focuses on the net income calculated by deducting all the expenses from the revenues. The major disadvantage of the single-step income statement is the absence of showing the important relationship between sales revenue and the cost of goods sold. It also excludes the potential classifications such as income from operations, income after and before taxes, etc.
All the tools & learning materials you need for study success - in one app.
Get started for free
Most popular questions from this chapter
Perlman Land Development, Inc. purchased land for \(70,000 and spent \)30,000 developing it. It then sold the land for \(160,000. Sheehan Manufacturing purchased land for a future plant site for \)100,000. Due to a change in plans, Sheehan later sold the land for \(160,000. Should these two companies report the land sales, both at gains of \)60,000, in a similar manner?Finley Corporation had income from continuing operations of \(10,600,000 in 2017. During 2017, it disposed of its restaurant division at an after-tax loss of \)189,000. Prior to disposal, the division operated at a loss of $315,000 (net of tax) in 2017 (assume that the disposal of the restaurant division meets the criteria for recognition as a discontinued operation). Finley had 10,000,000 shares of common stock outstanding during 2017. Prepare a partial income statement for Finley beginning with income from continuing operations. How can information based on past transactions be used to predict future cash flows?During 2017, Williamson Company changed from FIFO to weighted-average inventory pricing. Pretax income in 2016 and 2015 (Williamson’s first year of operations) under FIFO was \(160,000 and \)180,000, respectively. Pretax income using weighted-average pricing in the prior years would have been \(145,000 in 2016 and \)170,000 in 2015. In 2017, Williamson reported a pretax income (using weighted-average pricing) of $180,000. Show comparative income statements for Williamson, beginning with “Income before income tax,” as presented on the 2017 income statement. (The tax rate in all years is 30%.) Question: What is the major distinction (a) between revenues and gains and (b) between expenses and losses?
See all solutions
Recommended explanations on Business Studies Textbooks
Managers
Read Explanation
Change Management
Read Explanation
Intermediate Accounting
Read Explanation
Organizational Behavior
Read Explanation
Strategic Analysis
Read Explanation
Managerial Economics
Read Explanation
View all explanations
What do you think about this solution?
We value your feedback to improve our textbook solutions.
Study anywhere. Anytime. Across all devices.
Sign-up for free
This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept
Privacy & Cookies Policy
Privacy Overview
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
Researchers investigating the psychological effects of choice have provided extensive empirical evidence that having choice comes with many advantages, including better performance, more motivation, and greater life satisfaction and disadvantages, such as avoidance of decisions and regret.
Freedom brings with it a multitude of personal advantages.
These include freedom of expression, free speech, free choice, freedom to peaceful protest, freedom to earn and freedom of location. All of these advantages give more power and rights to the individual and to ensure the individual feels valued.
In conclusion, pride, when balanced, can be a powerful force for good, driving motivation and fostering positive self-esteem. However, its darker side, manifesting as arrogance and isolation, highlights the importance of cultivating humility and self-awareness.
Perhaps the advantage is hearing other people's opinions and Sharing of knowledge and information. The cons however is that sometimes misunderstanding can't be helped and people start to become toxic of not accepting other people's opinion and start degrading people that doesn't approve of yours.
Having the possibility to choose, indeed, enhances individuals' feeling of self-determination, motivation, performance, well-being, and satisfaction with life (e.g., Zuckerman et al., 1978; Cordova and Lepper, 1996).
Pros and cons means “advantages and disadvantages.” This phrase is used when carefully considering the good and bad points of something. For example, regarding solar energy, the pros are that it produces less pollution and doesn't contribute to a rise in CO2 in the atmosphere.
Negative freedom is simply a matter of the number and kind of options that lie open for you and their relevance for your life; it is a matter of what you aren't prevented from doing; the doors that lie unlocked. Positive freedom, in contrast, is a matter of what you can actually do.
Pros : It allows people to express their opinion openly and without fear. Cons : It allows people to express their opinion openly and without fear even if it means transgressing certain boundaries, offending sentimentalities, being blasphemous, etc without expecting the offended to feel offended.
Freedom, being a continuum, has both pros and cons. On one hand, it allows individuals to make their own destiny, free from interference, as long as they don't infringe on others' freedom or safety. On the other hand, it can lead to conflicts when one person's freedom becomes burdensome to another.
You feel spiritually superior to others. You sometimes consider yourself more righteous or holy than others. It's important to remember that you are not immune to experiencing moments of pride.
Authentic pride is a positive emotion that occurs after a specific accomplishment. During authentic pride, people experience accurate feelings of self-worth and a boost in self-esteem.
Socializing can reduce symptoms of depression by decreasing feelings of loneliness, isolation and anxiety. Research shows your body releases endorphins during positive social contact, similar to the physical response after a hard workout, which gives a boost of happiness, while reducing stress.
Having too few can leave you alone in a time of need. Get one to three hours of social interaction per day. That's between seven and 21 hours of social time per week—far more than the average of 34 minutes of socializing most of us get each day.
But freedom of choice represents something more fundamental than power; it represents the right of the individual person to be a free agent in his interhuman relationships, to make his own decisions, to be free from the arbitrary authority of others, and to be able to choose how he wishes to use his services or ...
Introduction: My name is Kerri Lueilwitz, I am a courageous, gentle, quaint, thankful, outstanding, brave, vast person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.