What is the order of the subtotals that appear on a multi-step income statement?Gross Profit, Operating Income, Net Income, Total Other Revenues and ExpensesOperating Income, Gross Profit, Net Income, Total Other Revenues and ExpensesTotal Other Revenues and Expenses, Operating Income, Gross Profit, Net IncomeGross Profit, Operating Income, Total Other Revenues, and Expenses, Net Income

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Asked Dec 18, 2019
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What is the order of the subtotals that appear on a multi-step income statement?

  1. Gross Profit, Operating Income, Net Income, Total Other Revenues and Expenses
  2. Operating Income, Gross Profit, Net Income, Total Other Revenues and Expenses
  3. Total Other Revenues and Expenses, Operating Income, Gross Profit, Net Income
  4. Gross Profit, Operating Income, Total Other Revenues, and Expenses, Net Income
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Expert Answer

Step 1

Multi step income statement: A multiple step income statement refers to the income statement that shows the operating and non-operating activities of the business under separate head. In different steps of the multi-step income statement, principal operating activities are reported that starts from the record of sales revenue with all contra sales revenue account like sales returns, allowances and sales discounts.

Step 2

Find: The correct order of the subtotals that appears on a multi-step income statement.

Following is the format of multi-step income statement.

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Company X Income Statement Year Ended December 31, 20XX Sales Revenue $XXX,XXX Less: Sales Returns and Allowances XXX Sales Discounts XXX Net Sales Revenue XXX,XXX Cost of Goods Sold XXX.XXX Gross Profit XXX,XXX Operating Expenses: Selling Expenses: X,XXX X.XXX Total Selling Expenses Administrative Expenses: XX,XXX X,XXX X.XXX Total Administrative Expenses Total Operating Expenses Operating Income Other Revenues and (Expenses): XX,XXX XX.XXX XXX,XXX (X,XXX) X.XXX Total Other Revenues and (Expenses) X.XXX Net Income XXX,XXX

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