Multiple-step income statements:
A) Are only used in perpetual inventory systems.
B) Are required by the FASB and IASB.
C) Are required for the periodic inventory system.
D) Contain more detail than a simple listing of revenues and expenses.
E) List cost of goods sold as an operating expense.

Question

Quizplus · Accepted Answer

Multiple-step income statements contain more detail than a simple listing of revenues and expenses. They separate operating and non-operating revenues and expenses, as well as calculate gross profit and operating income. They are not specific to perpetual or periodic inventory systems, and the FASB and IASB do not require a specific format for income statements. Cost of goods sold is typically listed as a deduction from revenue to calculate gross profit, not as an operating expense.

Multiple-Step Income Statements