Question

Most real-world income statements are presented using which format?

1) Single-step format
2) Multi-step format
3) Vertical format
4) Horizontal format

Answer 1

Real-world income statements typically use a multi-step format to provide a detailed financial performance breakdown, distinguishing between operating and non-operating activities.

Step-by-step explanation:

Most real-world income statements are presented using a multi-step format. A multi-step income statement provides a detailed breakdown of revenue and expenses, often dividing operating activities from non-operating activities and showing gross profit, operating income, and net income separately. This formatting choice allows for a better understanding of the different components that contribute to a company's financial performance.