Mutli-Step Income Statement Sheets

Question 1

What is a multi-step income statement?

Answer 1

An income statement that separates operating income and non-operating income.

Question 2

True or False: A multi-step income statement provides more detailed information compared to a single-step income statement.

Answer 2

True

Question 3

Fill in the blank: A multi-step income statement includes _________ sections.

Answer 3

multiple

Question 4

What are the main sections typically found in a multi-step income statement?

Answer 4

Operating revenues, cost of goods sold, operating expenses, non-operating revenues and gains, non-operating expenses and losses, income tax expense, and net income.

Question 5

What is the purpose of the operating revenues section in a multi-step income statement?

Answer 5

To show the income generated from the primary activities of the business.

Question 6

What does the cost of goods sold section represent in a multi-step income statement?

Answer 6

The direct costs associated with producing goods sold by the company.

Question 7

True or False: Non-operating revenues and gains are typically related to the main activities of the business.

Answer 7

False

Question 8

What is the significance of the non-operating expenses and losses section in a multi-step income statement?

Answer 8

To show any expenses or losses that are not directly related to the core operations of the business.

Question 9

What does the income tax expense section represent in a multi-step income statement?

Answer 9

The taxes owed by the company on its taxable income.

Question 10

What is the final figure calculated in a multi-step income statement?

Answer 10

Net income, which represents the company’s profit after all expenses have been deducted from revenues.

Question 11

Fill in the blank: A multi-step income statement helps users analyze the _________ of a company.

Answer 11

profitability

Question 12

True or False: A multi-step income statement is required by generally accepted accounting principles (GAAP) for all businesses.

Answer 12

False

Question 13

What is the benefit of using a multi-step income statement over a single-step income statement?

Answer 13

It provides a more detailed breakdown of revenues, expenses, and profits, making it easier to analyze the financial performance of a company.

Question 14

In a multi-step income statement, where are non-operating revenues and gains typically reported?

Answer 14

In a separate section from operating revenues.

Question 15

What is the formula for calculating net income in a multi-step income statement?

Answer 15

Net Income = Operating Revenues - Cost of Goods Sold - Operating Expenses + Non-Operating Revenues and Gains - Non-Operating Expenses and Losses - Income Tax Expense

Question 16

True or False: The net income figure in a multi-step income statement is the final line item before the total is calculated.

Answer 16

True

Question 17

What does the operating expenses section include in a multi-step income statement?

Answer 17

Expenses directly related to the core operations of the business, such as salaries, rent, and utilities.

Question 18

Fill in the blank: The main purpose of a multi-step income statement is to provide a more detailed view of a company’s _________.

Answer 18

financial performance

Question 19

What is the main difference between operating and non-operating income in a multi-step income statement?

Answer 19

Operating income is generated from the primary activities of the business, while non-operating income is from secondary activities.

Question 20

True or False: A multi-step income statement is more complex to prepare compared to a single-step income statement.

Answer 20

True

Question 21

What is the key advantage of presenting a multi-step income statement to stakeholders?

Answer 21

It provides a clearer picture of the company’s financial health and performance by breaking down revenues and expenses into different categories.

Question 22

What does the net income figure represent in a multi-step income statement?

Answer 22

The company’s profit after all expenses have been deducted from revenues.

Question 23

Fill in the blank: A multi-step income statement allows for a more detailed analysis of a company’s _________.

Answer 23

financial results

Question 24

True or False: Net income is the same as profit in a multi-step income statement.

Answer 24

True

Question 25

What is the main advantage of using a multi-step income statement for financial analysis?

Answer 25

It provides a more comprehensive view of a company’s financial performance by breaking down revenues and expenses into specific categories.