On October 31, 2016, the balances of the accounts appearing in the ledger of Prestige Furnishings Company, a furniture wholesaler, are as follows:
|Accumulated Depreciation - Building||5,750,000|
|Cost of Merchandise Sold||3,800,000|
(a) Prepare a multiple-step income statement for the year ended October 31, 2016. (b) Compare the major advantages and disadvantages of the multiple-step and single-step forms of income statements.
Preparing Multiple-Step Income Statement from the Ledger:
A multiple-step income statement consists of various intermediate profits or income such as gross profit, operating profit, profit before tax etc. while a single-step income statement does not contain intermediate profits or income but consists the net income or profit after tax.
Answer and Explanation:
The answers to both the given sub-questions are explained below:
(a) Multiple-step income statement for the year ended October 31, 2016
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from Accounting 101: Financial AccountingChapter 2 / Lesson 2
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