What is an advantage to using a multi-step income statement?
Net Income is shown before income taxes
Direct expenses and indirect expenses are broken out separately
All income items are grouped in one section, and all expenses in another
The fixed costs and variable costs are broken out separately
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Answer: major benefit of a multi-step income statement is the demonstration of gross profit. This allows you to see how much the company is earning on sales before operating income is considered. Seeing detailed gross profit also allows you to calculate gross margin, which is gross profit divided by sales.
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Answer:
Offer Greater Detail: Multi-step income statements offer an itemized breakdown of a business's revenue and expenses, categorized by operating and non-operating revenue for more insight into the financial health of the company.
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