Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Multi-step Income Statement

Financial Accounting

4. Merchandising Operations

Multi-step Income Statement

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Multiple Choice

A multiple-step income statement reports multiple levels of which of the following?

assets, such as current and non-current assets

liabilities, such as short-term and long-term liabilities

cash flows, such as operating and investing cash flows

profit, such as gross profit and operating income

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Verified step by step guidance

Understand the concept of a multiple-step income statement: It is a detailed financial statement that separates operating revenues and expenses from non-operating ones, providing multiple levels of profitability such as gross profit, operating income, and net income.

Identify the key components of a multiple-step income statement: These include revenues, cost of goods sold (COGS), operating expenses, non-operating items, and income tax expenses.

Recognize the levels of profit reported: The statement typically includes gross profit (calculated as revenues minus COGS), operating income (gross profit minus operating expenses), and net income (operating income adjusted for non-operating items and taxes).

Differentiate the multiple-step income statement from other financial statements: Unlike a single-step income statement, which aggregates all revenues and expenses into one calculation, the multiple-step format provides a clearer breakdown of profitability at various stages.

Apply this understanding to the problem: The correct answer is 'profit, such as gross profit and operating income,' because a multiple-step income statement focuses on reporting different levels of profitability rather than assets, liabilities, or cash flows.