Question

What is the correct order to write down a multi-step income statement?

1) Revenue, Cost of Goods Sold, Gross Profit, Operating Expenses, Operating Income, Other Income/Expenses, Net Income
2) Revenue, Gross Profit, Cost of Goods Sold, Operating Expenses, Operating Income, Other Income/Expenses, Net Income
3) Revenue, Cost of Goods Sold, Gross Profit, Operating Income, Operating Expenses, Other Income/Expenses, Net Income
4) Revenue, Gross Profit, Cost of Goods Sold, Operating Income, Operating Expenses, Other Income/Expenses, Net Income

Answer 1

The correct sequence for a multi-step income statement is: Revenue, COGS, Gross Profit, Operating Expenses, Operating Income, Other Income/Expenses, and finally Net Income.

Step-by-step explanation:

The correct order to write down a multi-step income statement is as follows:

1. Revenue
2. Cost of Goods Sold (COGS)
3. Gross Profit (calculated as Revenue - COGS)
4. Operating Expenses
5. Operating Income (calculated as Gross Profit - Operating Expenses)
6. Other Income/Expenses (including interest and non-operating items)
7. Net Income (calculated as Operating Income + Other Income/Expenses)

This means the correct order in the given options is the first one: 1) Revenue, Cost of Goods Sold, Gross Profit, Operating Expenses, Operating Income, Other Income/Expenses, Net Income.