Question

What is the traditional format of an income statement?

1) Single-step income statement
2) Multi-step income statement
3) Contribution margin income statement
4) None of the above

Answer 1

The traditional format of an income statement is the multi-step income statement.

Step-by-step explanation:

The traditional format of an income statement is the multi-step income statement. This format includes multiple sections that provide a detailed breakdown of a company's revenues, expenses, and net income. The sections typically include operating revenues, cost of goods sold, operating expenses, non-operating revenues and expenses, and income tax expenses.

The multi-step income statement is considered more detailed and informative than the single-step income statement, which only presents total revenues and total expenses. The contribution margin income statement is a variation of the traditional format that focuses on the contribution margin, which is the difference between sales revenue and variable expenses.

In summary, the traditional format of an income statement is the multi-step income statement.