Single-Step Income Statement: Uses & Examples

Single-step statements give a simple overview of a company’s costs and earnings using a single equation.

The single step income statement does not segregate revenue and expenses into sub-categories. Rather the information is given under a single column and offers a single report to the users of financial statements. Therefore, it is easy to prepare and understand. The computation of the net income is as follows:

Steps in Computation of Net Income using Single-step Income Statement

  • Step 1: Compute total revenue, including operating and non-operating revenues.

  • Step 2: Compute total expenses, including operating and non-operating expenses.

  • Step 3: Calculate net income with the given formula

    Net income = Total revenue – Total expense

Components of a single-step income statement

Format of Single-step Income Statement 

ParticularsAmount in $Amount in $
Sales revenuesXXX
Interest incomeXXX
Profit on sale of assets XXX
Other incomeXXX
  BTotal revenue XXX
Cost of goods sold XXX
Interest expenseXXX
Loss from a lawsuitXXX
Office expensesXXX
  ATotal expensesXXX
A-BNet income XXX

Numeric Example

Mr. Individual runs a manufacturing business and has generated the following income for Q1 of 2022.

  • Revenue from sales $ 20,000

  • Interest income $ 11,800

  • Gain on sale of asset $ 2,200

  • It has also incurred the following expenses:

  • Cost of goods sold $ 15,500

  • Interest expense $ 5,000

  • Loss from a lawsuit of $1,750

  • Office expenses $ 1,500

Calculate net income based on the given information.


ParticularsAmount in $Amount in $
Interest income11,800
Profit on sale of assets 2,200
  BTotal revenue 34,000
Cost of goods sold 15,500
Interest expense  5,000
Loss from a lawsuit  1,750
Office expenses  1,500
  ATotal expenses23,750
A-BNet income 10,250

Pros of having a Single-step Income Statement

  1. Easy record keeping

    The single-step income statement is beneficial as it reduces the workload of an accountant and does not require a detailed breakdown of the revenue and expenses. It involves fewer calculations. Therefore, computation errors are less likely to occur in a single-step statement.

  2. Simple to understand

    Single-step income statements are well known for their simplicity as it only emphasizes the business’s net income. Its simplicity makes it easy for readers to understand financial reports.

  3. Do not require financial expertise

    The users of the financial statements do not require financial proficiency to understand the basic information about the business.

Cons of having a Single-step Income Statement

  1. No detailed analysis

    The single-step income statement is prepared in a simplified snapshot. Every business involves a fair chance of risk. Too little information can raise problems for investors since greater financial detail is difficult to achieve.

  2. Hindrance in decision making

    Since a single-step income statement does not provide detailed information on the gross margin and operating margin in a reporting period, a lack of reliable data can be a major hindrance in apt decision-making.

  3. No differentiation between operating and non-operating activities

    Single-step income statement does not differentiate between

    a. Operating revenues and non-operating revenues

    b. Operating expenses and non-operating expenses

When to use it?

Small businesses like sole-proprietors or partnership firms may opt to use single step income statement or multi-step income statement. The small businesses that do not have complex business operations can prepare single-step income statements because it is a time-savvy process.

Multi national companies having numerous divisions actively use single-step income statement for their internal reporting to analyze divisional performance.

However, where the business decides to get bank loans or new investment for their expansion multi step income statement is the best option as it provides detailed insights into the entity’s financial stability.

Most of the publicly traded companies create multi step income statement as they are complex business entities.

Investors, analysts and various other stake holders also prefers multi step income statement as they present more information as compared to single step format.

Single-step Vs Multi-step Income Statement

Single-step income statement Multi-Step income statement
It is easy to prepare Take time for preparation 
The single-step format uses a single equation to arrive at the net income.The multi-step format uses a three-step process to arrive at the net income.
Lack of detailed information like information on operating and non-operating items.It provides detailed information on every aspect of the income statement.
It is Ideal for small businesses that do not have complex operations.It is ideal for complex businesses like listed companies, multinational companies, entities that aim to attract new investments, etc.


Single-step income statement offers a simple layout that involves hassle-free preparation. It does not provide a detailed analysis of the operations but is ideal for businesses not having complex operations. The financial reports prepared using the single-step income statement are crisp and clear about the firm’s profitability. Therefore, companies that opt to simplify their accounting process may prepare the single-step income statement.

Akounto simplifies all your accounting processes and assists in preparing useful financial reports. Sign-up with Akounto today to outsource your sensitive accounting tasks to professionals and experts.


Create your account now!

Become 100% fluent with your finances today and tomorrow!

Manage your revenue, expenses, cash flows and taxes easily.

Get Started