Which of the following is the correct order of subtotals that appear on a multi-step income statement?
A) Operating income, Gross profit, Net income
B) Gross profit, Net sales revenue, Net income
C) Net income, Operating income, Net income
D) Gross profit, Operating income, Net income

Question

Quizplus · Accepted Answer

The correct order of subtotals on a multi-step income statement is Gross profit, Operating income, and Net income. This is because Gross profit is the starting point of the calculation and is followed by Operating income, which is the difference between Gross profit and operating expenses. Finally, Net income is calculated by subtracting all other expenses, including taxes and interest, from Operating income.

Which of the Following Is the Correct Order of Subtotals