Accounting, Analysis, and Principles Counting Crows Inc. provided the following information for the year 2014.

Retained earnings, January 1, 2014 $600,000

Administrative expenses 240,000

Selling expenses 300,000

Sales revenue 1,900,000

Cash dividends declared 80,000

Cost of goods sold 850,000

Extraordinary gain 95,000

Loss on discontinued operations 75,000

Rent revenue 40,000

Unrealized holding gain on available-for-sale securities 17,000

Income tax applicable to continuing operations 187,000

Income tax benefit applicable to loss on discontinued operations 25,500

Income tax applicable to extraordinary gain 32,300

Income tax applicable to unrealized holding gain on available-for-sale securities 2,000

Accounting Prepare (a) a single-step income statement for 2014,

(b) a retained earnings statement for 2014, and

(c) a statement of comprehensive income using the two statement format.

Shares outstanding during 2014 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