Question

Which of the following are acceptable methods of presenting the income statement?

a) Direct format
b) Indirect format
c) Multi-step format
d) Single-step format

Answer 1

Acceptable methods for presenting the income statement include the single-step and multi-step formats. The terms 'direct' and 'indirect' apply to the statement of cash flows, not the income statement.

Step-by-step explanation:

The methods for presenting the income statement include the single-step format and the multi-step format. The direct and indirect methods are related to the statement of cash flows, not the income statement. The single-step income statement is a simpler format that totals revenues and subtracts expenses to find the net income in one step. By contrast, the multi-step income statement provides a more detailed breakdown of revenues and expenses, typically separating operating revenues and expenses from non-operating ones and distinguishing between gross profit and operating income.