A primary advantage of the multiple-step format of the income statement over the single-step format is that the multiple-step format:
A) classifies expenses by function.
B) results in a higher amount of net income.
C) separately lists income tax expense.
D) lists revenues and expenses in order of their dollar amount.

Question

Quizplus · Accepted Answer

The multiple-step format of the income statement classifies expenses by function, allowing for a better understanding of where expenses are being incurred and how they relate to the operations of the business. This format also breaks down the calculation of net income into various steps, making it easier to identify and analyze revenue and expense trends. While the multiple-step format may not necessarily result in a higher amount of net income or separately list income tax expense (as both formats can include these elements), it is considered more informative and useful for decision-making purposes due to its greater level of detail. The order in which revenues and expenses are listed is not a significant advantage of one format over the other.

A Primary Advantage of the Multiple-Step Format of the Income