INFO SUBMISSIONS Lab 10 Due:Sunday, 05 Jul 2020, 11:59 PM IV. Income Statement Formats - Perpetual Inventory System IFRS requires expenses on an income statement to be shown by either their nature or their function. The nature of an expense is determined by the type of expense (ie. Depreciation, rent, property tax, salaries). The function of an expense describes the grouping of expenses based on their purpose (ie. Selling expenses, general and administrative expenses). ASPE provides flexibility in presenting expenses on the income statement. Common formats of income statements: A. Multiple-Step Income Statement - shows details of net sales and other costs and expenses. There are two general types of multi-step income statements. MCE_ITEM__1. Classified Multiple-Step Format _MCE_ITEM_1. Used for internal reporting because of the level of detail MCE_ITEM_2. Shows detail of net sales (Sales less sales discounts less sales returns and allowances) MCE_ITEM_3. Includes Gross profit from sales (net sales less cost of goods sold) MCE_ITEM_4. Lists operating expenses by function (splits expenses between selling expenses and general and administrative expenses) MCE_ITEM__5. Shows profit from operations (Gross profit from sales less .al Freedom 7:09 PM Lab 10 INFO SUBMISSIONS Lab 10 Due:Sunday, 05 Jul 2020, 11:59 PM Expenses includea arter Proturom operations _MCE_ITEM_7. Ends with Profit or net income (Profit from operations plus/less other revenues and expenses) _MCE ITEM 2. Multiple-Step Format 1. Used for external reporting 2. Similar to a classified multiple-step format except leaves out the detailed calculation of net sales and operating expenses are listed by nature instead of function. B. Single-Step Income Statement is another format for external reporting. It lists all revenues together (and only gives net sales). It also lists all expenses together and includescost of goods sold as another expense, showing only one subtotal for total expenses. To arrive at net income, total expenses are subtracted from total revenues. V. Financial Statement Analysis Tools for Inventory A. Gross Profit Margin (also called gross margin or gross profit ratio) 1. Used to determine the percent of every sales dollar left over after covering cost of goods sold INFO SUBMISSIONS Lab 10 Due:Sunday, 05 Jul 2020, 11:59 PM IV. Income Statement Formats - Perpetual Inventory System IFRS requires expenses on an income statement to be shown by either their nature or their function. The nature of an expense is determined by the type of expense (ie. Depreciation, rent, property tax, salaries). The function of an expense describes the grouping of expenses based on their purpose (ie. Selling expenses, general and administrative expenses). ASPE provides flexibility in presenting expenses on the income statement. Common formats of income statements: A. Multiple-Step Income Statement - shows details of net sales and other costs and expenses. There are two general types of multi-step income statements. MCE_ITEM__1. Classified Multiple-Step Format _MCE_ITEM_1. Used for internal reporting because of the level of detail MCE_ITEM_2. Shows detail of net sales (Sales less sales discounts less sales returns and allowances) MCE_ITEM_3. Includes Gross profit from sales (net sales less cost of goods sold) MCE_ITEM_4. Lists operating expenses by function (splits expenses between selling expenses and general and administrative expenses) MCE_ITEM__5. Shows profit from operations (Gross profit from sales less .al Freedom 7:09 PM Lab 10 INFO SUBMISSIONS Lab 10 Due:Sunday, 05 Jul 2020, 11:59 PM Expenses includea arter Proturom operations _MCE_ITEM_7. Ends with Profit or net income (Profit from operations plus/less other revenues and expenses) _MCE ITEM 2. Multiple-Step Format 1. Used for external reporting 2. Similar to a classified multiple-step format except leaves out the detailed calculation of net sales and operating expenses are listed by nature instead of function. B. Single-Step Income Statement is another format for external reporting. It lists all revenues together (and only gives net sales). It also lists all expenses together and includescost of goods sold as another expense, showing only one subtotal for total expenses. To arrive at net income, total expenses are subtracted from total revenues. V. Financial Statement Analysis Tools for Inventory A. Gross Profit Margin (also called gross margin or gross profit ratio) 1. Used to determine the percent of every sales dollar left over after covering cost of goods sold