Which of the following is included in a multi-step income statement?

• A. Operating income
• B. Gross profit
• C. Retained earnings
• D. Total assets

Answer: (B)

Verified step by step guidance

1. Understand the structure of a multi-step income statement. It is designed to provide detailed information about a company's financial performance by separating operating activities from non-operating activities.
2. Identify the key components of a multi-step income statement. These typically include gross profit, operating income, and net income, among others.
3. Gross profit is calculated as: $\mathrm{Gross} \mathrm{Profit}=\mathrm{Net} \mathrm{Sales} - \mathrm{Cost} \mathrm{of} \mathrm{Goods} \mathrm{Sold}$. This figure is included in the multi-step income statement to show the profitability of core business operations.
4. Operating income is calculated as: $\mathrm{Operating} \mathrm{Income}=\mathrm{Gross} \mathrm{Profit} - \mathrm{Operating} \mathrm{Expenses}$. This figure reflects the income generated from normal business operations and is also included in the multi-step income statement.
5. Retained earnings and total assets are not part of the multi-step income statement. These are reported in other financial statements, such as the statement of retained earnings and the balance sheet, respectively.