How multiple-step income statement provide information

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Reference no: EM13540621

Counting Crows Inc. provided the following information for the year 2012.

2429_multiple-step income statement.PNG

Accounting

Prepare (a) a single step income statement for 2012, (b) a retained earnings statement for 2012, and (c) a statement of comprehensive income using the second income statement format. Shares outstanding during 2012 were 100,000.

Analysis

Explain how a multiple-step income statement format can provide useful information to a financial statement user.

Principles

In a recent meeting with its auditor, Counting Crows' management argued that the company should be able to prepare a pro forma income statement with some one-time administrative expenses reported similar to extraordinary items and discontinued operations. Is such reporting consistent with the qualitative characteristics of accounting information as discussed in the conceptual framework?Explain.

Reference no: EM13540621

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