Question

Demonstrate how to prepare a multiple-step income statement by ranking the items below in the order they would appear on a multiple-step income statement of a merchandiser?

1) Sales Revenue
2) Cost of Goods Sold
3) Gross Profit
4) Operating Expenses
5) Operating Income
6) Non-Operating Income
7) Net Income

Answer 1

The order of items on a multiple-step income statement for a merchandiser is: Sales Revenue, Cost of Goods Sold, Gross Profit, Operating Expenses, Operating Income, Non-Operating Income, Net Income.

Step-by-step explanation:

1. Sales Revenue
2. Cost of Goods Sold
3. Gross Profit
4. Operating Expenses
5. Operating Income
6. Non-Operating Income
7. Net Income

The order in which the items would appear on a multiple-step income statement of a merchandiser is as follows:

1. Sales Revenue: This is the total revenue generated from the sales of goods or services.
2. Cost of Goods Sold: This is the direct cost incurred in producing the goods or services sold.
3. Gross Profit: This is the difference between the sales revenue and the cost of goods sold.
4. Operating Expenses: These are expenses incurred in the normal course of business operations, such as rent, salaries, and utilities.
5. Operating Income: This is the difference between the gross profit and the operating expenses.
6. Non-Operating Income: This includes income from sources other than the core operations of the business, such as interest income or gains on investments.
7. Net Income: This is the final result after deducting all expenses and taxes from the operating income and adding non-operating income.