 In this discussion we will discuss the discussion question of discuss the differences between a single-step income statement and a multi-step income statement. So here we're comparing two types of terms again. These are related terms, those terms related to an income statement. Now if we had no clue of what these two things were, we could start off of course with what an income statement is. We could say well both the single step and the multi or step income statement or the multiple step income statement are income statements and income statements we can start to define the income statement and that of course is going to be the timing account. It's going to have revenues and expenses on it. It measures things over time. It needs a beginning date. It needs an ending date in order to make sense as opposed to a point in time as are the as is the balance sheet account. We know that net income, the bottom line number can be calculated as simply revenue minus expenses. So we could say we could start our discussion with just the similarities even if we have no idea what these two statements are by just saying it's a single state it's an income statement. Then we can we can get into the differences between the two and we're gonna we can say well one has multiple steps and one has a single step. Clearly a difference which we can get just from the terminology here. Then we can get into of course what are going to be the main steps we can talk about some of the main steps that are going to be the difference. Now the single step is going to be just a just the most simplified type of income statement meaning we're just basically breaking it down to the net income equation. We're only going to have two components. All revenue is going to be included in the revenue section. All expenses included in the expense section. Subcategory for total revenue and total expenses. Subtracting the two out giving us net income. With the multi step income statement we're gonna have more steps meaning we're still gonna arrive at the bottom line net income but we're gonna have some more steps some more stops along the way. And the first thing we're gonna have usually is gonna have net sales calculation not net income but net sales meaning we're gonna break out the contra sales account. We're gonna have sales minus sales returns and allowances and that will give us the net sales. Sales returns and allowances really just being sales that kind of didn't happen. Sales that we're basically reversing. That will give us the net sales. And then we're gonna have these next subcategory which will be cost of goods sold. So we'll have the cost of goods sold which is going to be the cost of the inventory we're selling because and the reason we have that is it's a very important relationship for merchandising companies. So then the net sales minus the cost of goods sold would give us the gross profit which is a huge subcategory that is gives us a lot more detail when we're talking about a merchandising company. And then we're gonna have the operating expenses which we could break out to selling and administrative expenses. And so we could break out expenses related to selling related to the selling of the goods and services and expenses that are administrative expenses, the office expenses including the accounting expenses. And that will typically give us the net income would be the bottom line number that we're gonna have in the multiple step income statement. We could get into into more detail than that. We could say that we have non-operating expenses at the bottom of this and we could break out taxes as well as have income before taxes and then see the tax calculation and ultimately get to the bottom line number net income after taxes.