Concept explainers
(a)
Multi step income statement: A multiple step income statement refers to the income statement that shows the operating, and non-operating activities of the business, under separate head. In different steps of the multi-step income statement, principal operating activities are reported that starts from the record of sales revenue with all contra sales revenue account like sales returns, allowances and sales discounts.
To Prepare: The income statement of Company L for the month ended January 31, 2017.
(b)
Comprehensive Income Statement: Comprehensive income statement refers to the multi-step income statement that records the gains and losses from operating activities and the non-operating activities of the business.
To Prepare: The comprehensive income statement of Company L for the month ended January 31, 2017.
(c)
Gross profit rate is the financial ratio that evaluates the money left over out of the total revenues after deducting the cost of goods sold. Thus, it shows the relationship between the gross profit and net sales. It is calculated by using the following formula:
Profit margin measures the amount of net income earned from each dollar of sales revenue generated by a company. Thus, it shows the relationship between the net income and net sales. It is calculated by using the following formula:
To Determine: The gross profit rate and profit margin of Company L for 2017.
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FINANCIAL ACCOUNTING: TOOLS WP ACCESS
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