Final answer:
A multi-step income statement includes revenue, cost of goods sold, gross profit, operating expenses, operating income, non-operating items, income before taxes, tax expense, and net income.
Step-by-step explanation:
The major elements of a multi-step income statement include several key sections such as revenue, cost of goods sold (COGS), gross profit, operating expenses, operating income, non-operating items, income before taxes, tax expense, and net income. The multi-step income statement provides a detailed analysis of a company's financial performance over a specific period, separating operating activities from non-operating activities to give a clearer picture of the business's core operations.
Revenue is listed at the top of the income statement, followed by COGS, which when subtracted from revenue, results in gross profit. Operating expenses are then listed and deducted from gross profit to derive operating income. Non-operating items such as interest expense and income are listed next to determine income before taxes. Finally, tax expense is subtracted to arrive at net income.