Add Expence and Income
One important thing to remember about an income statement is that it represents a period of time like the cash flow statement. This contrasts with the balance sheet, which represents a single moment in time.
The income statement can be prepared in one of two methods. The Single Step income statement takes the simpler approach, totaling revenues and subtracting expenses to find the bottom line. The more complex Multi-Step income statement (as the name implies) takes several steps to find the bottom line, starting with the gross profit. It then calculates operating expenses and, when deducted from the gross profit, yields income from operations. Adding to income from operations is the difference of other revenues and other expenses. When combined with income from operations, this yields income before taxes. The final step is to deduct taxes, which finally produces the net income for the period measured.