Running head: LEARNING TEAM A - REFLECTION SUMMARY 1

Learning Team A - Reflection Summary

Koucia Lee, M. Susana Magana, Maricell White, Vernon Daniels Jr.
ACC/421
May 12, 2014
Walfyette Powell, CPA, MBA, MPM
LEARNING TEAM A - REFLECTION SUMMARY 2


Learning Team A - Reflection Summary
M. Susana Magana
My take on week twos readings are that I would prefer to use the multiple-step income
statement as it provides more detail of the expenses and revenue made by the company for a
particular time frame. Having the expenses separated between operational and administrative is
helpful because then internal management can analyses and decided if maybe cutting some
expenses will help the bottom line. I know that as an investor I would like to see where most of
the revenue is coming from and what it is being used for.
Revenue recognition is a hard subject for me not so much on the sale of a good but more
on the percentage of completion section. It seems difficult because the book gives references as
to how to do but to actually see it is a whole other issue. I would like to see maybe some
YouTube videos that help to see how it will get posted and how it is derived. I personally think
the YouTube video will bring it home and help with recognizing revenue in percentage complete
project.
As for this weeks topics they hit home. I work in the construction industry and I tend to
book the receivables using the percent of completion method to bill the owners. So recognizing
revenue and the work in process accounts as well as the contract accounts are things I do on a
daily basis. I do not derive the work in process schedule or any other schedules but I do the
booking and make sure the collection as well as the closing of the projects. As for the income
statement it would be nice to see how the company I work for comes up with their format.

Maricell White
LEARNING TEAM A - REFLECTION SUMMARY 3


According to the book, single-step income statement is a format that is used to report a
companys revenues, gains, expenses, and losses. There are two groupings of statement under
this step; the revenues and expenses. Net income is calculated by using the single-step income
statement. By finding the net income, you must add revenues and gain together and add all
expenses and losses then subtract each total.
(Revenues + Gains) (Expenses + Losses) = Net Income
Multiple-step income statement format provides more information than a single-step
income statement. The gross profit and the operating profit are the most important figures for
this income statement. This income statement separates the operating and non-operating
transactions and includes other important revenue and expense classifications. The operating
section contains revenues and expenses information while non-operating section contains
revenues and expenses that are labeled as other incomes and expenses.
Vernon Daniels Jr.
Single-step and multiple-step income statements are the two commonly used methods for
income statements. The single-step method only uses one subtraction to reach net income. The
equates to the following: Net Income = (Revenues + Gains) (Expenses + Losses)
The multiple-step profit and loss statement separates operating revenues and expenses
from the gains, losses, and non-operating revenues and expenses. The multiple-step income
statement also displays the gross profit which equates to the following: (Net sales - Cost of
Goods Sold).
Sales assets, services rendered, and revenue from the use of an organizations asset are all
transactions that result in the recognition of revenues. The guidelines are extensive with various
LEARNING TEAM A - REFLECTION SUMMARY 4


industries having additional guidelines. Revenue recognition involves the need for revenue to be
realized, realizable, and earned.
The following transactions recognize revenue; sales inventory recognized usually on the
date of sale, sales of assets with exception of inventory, sales of services recognized at
completion, and revenue for asset used by an organization.
This week I felt comfortable with all topics. In regards to the field I am in; these topics do
not apply directly to my scope of duties but it gives me a better understanding of what the
business team within my organization deals with on a daily basis.
Koucia Lee
As our team have mentioned, a single-step income statement is a format that is used to
report a companys revenues, gains, expenses, and losses at the simplest format. Here is an
example of Single-Step income statement:
Revenues $1,000,000
Total revenue $1,000,000

Expenses
Cost of goods sold 350,000
Advertising 30,000
Depreciation 20,000
Rent 40,000
Payroll taxes 28,000
Salaries and wages 400,000
Supplies 32,000
Travel and
entertainment 50,000
Total Expenses $950,000

Net Income $50,000

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Simple-Step income statement is not usually used because it doesnt have enough
information for readers to sustain information within. Using the simple-step method, you would
have to inform the reader of the precise period of time being covered. Over all, the alternative to
single-step income statement is the multiple-step income statement. Multiple-step income
statement uses multiple subtractions in computing the net income. Multiple-step income
statement includes sales, operating revenues, and operating expenses from the non-operating
revenues and expenses, gains and losses. Basically, the multiple-step method provides more
financial information for readers to grasp on the businesss financial status.
In my workplace, we use the multiple-step income statement. The format provides more
detailed information and makes it much easier to read by showing the gross profit amount as a
result of cost of goods sold being subtracted from net sales on the statement, details of revenue
and expenses, operating expense, interest and other non-operating expenses, and shows income
taxes separately from all other expenses before net income. Here is an example:
BECKY'S RETAIL FOOD STORE, INC.
Income Statement
Year Ended December 31, 2006


Sales

266000
Less: Sales returns and allowances 3000

Sales discounts 1000 4000

262000
Net sales

Cost of goods sold:

Beginning inventory 20000

Purchases 165000

Goods available for sale 185000

Ending inventory 26000


15900
Gross Margin (or Gross Profit) 103,000

103000
Operating expenses:

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Salaries and wages 45000

Advertising 124000

Freight out 4000

Depreciation 5000

Taxes and licenses 3000

Rent 6300

Total operating expenses

75700
Income from operations

273000
Other income:

Interest revenue 1400

Rent revenue 6900 8300
Other expense:

Interest expense -350

Loss on sale of assets -250 -600

Income before taxes

35000
Income taxes

2000

Net Income

33000

In conclusion, as to the single-step and multiple-step method for income statement, our
team has come to an agreement that the multiple-step income statement would be at a companys
best interest to obtain for many purposes.