Final answer:
A multiple-step income statement details various revenue and expense categories to arrive at income from continuing operations, including subtotals such as gross profit and operating income. Taxes are then deducted to calculate after-tax income.
Step-by-step explanation:
A multiple-step income statement includes a number of intermediate steps before arriving at income from continuing operations. This detailed financial report separates operating revenues and operating expenses from non-operating revenues, non-operating expenses, gains, and losses, providing a clear picture of a company's financial activities. The first section typically includes gross profit, which is calculated by subtracting the cost of goods sold from net sales. Subsequent sections detail operating income, which is arrived at by deducting operating expenses from gross profit. Non-operating sections follow, where items like interest income and expenses are listed.
It's important to note that each section has calculated subtotals, such as gross profit and operating income, which are essential for assessing different aspects of a company's performance. After considering all relevant revenues and expenses, the statement arrives at income from continuing operations. Taxes are then accounted for, as the student's question demonstrates, by subtracting the tax amount from national income at each level, leading to after-tax income. This represents the profitability of the core business activities without the effects of discontinued operations and extraordinary items.