Question
Brookhaven Services is a service company and prepares a single-step income statement. The following adjusted balances relate to the year ended December 31, 2026. The tax rate is 25%.
| Account | Amount |
|---|
| Service Revenue | $320,000 |
| Interest Revenue | 6,000 |
| Salaries and Wages Expense | 150,000 |
| Rent Expense | 40,000 |
| Utilities Expense | 14,000 |
| Depreciation Expense | 20,000 |
| Interest Expense | 6,000 |
Required: Prepare a single-step income statement — group all revenues, then all expenses (including income tax expense), and present net income. Income tax expense is 25% of pre-tax income.
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
IAS 1 — Presentation of Financial Statements
A single-step statement groups all revenues together and all expenses together, arriving at profit in one subtraction with no gross profit or operating profit subtotal. The classification work is therefore only revenue versus expense.
Common mistakes
- Introducing a gross profit subtotal, which makes the statement multi-step.
- Placing a gain among expenses because it arose on a disposal.
- Omitting income tax expense from the expense grouping.
Further readingIncome statement vs balance sheet