Question

Prepare a multiple-step income statement for the fiscal year ended March 31, 20Y9. Be sure to complete the statement heading. Refer to the information given in the exercise and to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries.
What is a major advantage of the multiple-step income statement over the single-step income statement?

Accounts Receivable $174,650

Accumulated Depreciation-Building 740,950

Administrative Expenses 544,400

Building 2,512,350

Cash 186,000

Common Stock 308,900

Cost of Goods Sold 3,868,600

Dividends 184,350

Interest Expense 10,000

Inventory 970,850

Notes Payable 240,500

Office Supplies 19,300

Retained Earnings 1,252,400

Salaries Payable 8,100

Sales 6,219,100

Selling Expenses 704,600

Store Supplies 92,100

Answer 1

XYZ company
Income Statement
For the period ended March 31, 201x9
Amount in $
sales		6219100
cost of goods sold		3868600
gross profit		2350500
operating expenses:
selling expenses	704600
administrative expenses	544400
total operating expenses		1249000
operating income		1101500
non-operating income/(expenses)
interest expenses		-10000
total non-operating income/(expenses)		-10000
net income		1091500

using the above example we can see that there are three steps involved to arrive at the net income.

step 1

from sales, cost of sales are deducted to arrive at gross profit

step 2

all the operating expenses are clubbed under the head operating expenses. Then the total operating expenses is deducted from gross proift to arrive at operating income.

step 3

all the other non-operating expenses and income are total under this head. Then the balnce is deducted from operating income to get the net income

From the above explanation it is very clear about the classification of all the income and expenses line item. There is a detailed classification of the items.