Classified multiple-step income statements

Question

Quizplus · Accepted Answer

Classified multiple-step income statements are generally used for internal reporting purposes to management and investors. They contain multiple sections to provide more detailed information about a company's revenue, expenses, and net income. Choice A is incorrect because the Canada Revenue Agency does not require this type of income statement. Choice C is incorrect because cost of goods sold is typically not considered an operating expense, but rather an expense directly related to the production of goods. Choice D is incorrect because gross profit is typically reported on a multiple-step income statement as a separate line item before operating expenses are deducted. Choice E is incorrect because this type of income statement can be used with both the perpetual and periodic inventory systems.

Classified Multiple-Step Income Statements