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Which One of the Following, is the Correct List of Computations that are shown on the Multiple Step Income Statement? Sales Revenues Gross Profit, Operating Income, Net Income Gross Profit, Operating Income, Other Income, Net Income Sales Revenues, Operating Income, Income Before Taxes, Net Income Gross Profit, Operating Income, Income Before Taxes, Net Income

Ask by Mullins Tucker. in the United States
Mar 12,2025

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The correct list of computations for the multiple-step income statement is: Gross Profit, Operating Income, Income Before Taxes, Net Income

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1. The multiple-step income statement separates operating activities from non-operating activities. 2. It typically computes: - \( \text{Gross Profit} = \text{Sales Revenues} - \text{Cost of Goods Sold} \) - \( \text{Operating Income} \) (after deducting operating expenses from Gross Profit) - \( \text{Income Before Taxes} \) (after adding non-operating items such as Other Income or subtracting expenses) - \( \text{Net Income} \) (after subtracting taxes) 3. Out of the given options, Option D lists the computations in proper order: - Gross Profit - Operating Income - Income Before Taxes - Net Income Thus, the correct answer is: D

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To crack the code of the Multiple Step Income Statement, it’s essential to understand its components! Typically, it organizes financial performance into segments like sales revenues and detailed deductions for expenses, leading down to net income. The correct sequence often highlights sales revenues, followed by gross profit, operating income, income before taxes, and finally, net income! From a practical standpoint, knowing how to structure and analyze a Multiple Step Income Statement can significantly enhance your financial reporting skills. By breaking down the profitability into distinct sections, you allow stakeholders to see exactly where money is being made and where it's slipping through the cracks. It's like taking a magnifying glass to your business's financial health—super handy for making strategic decisions!

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