**Presentation of a Multiple-Step Income Statement***Objective:* Explain where each of the following items would appear on a multiple-step income statement: gain on disposal of plant assets, cost of goods sold, depreciation expense, and sales returns and allowances.**Key Items:**1. **Gain on Disposal of Plant Assets:** This item is typically recorded under the section for "Other Revenues and Gains," which comes after operating income.2. **Cost of Goods Sold:** This appears directly after the "Sales Revenue" section to calculate the "Gross Profit."3. **Depreciation Expense:** It is found under "Operating Expenses," specifically within selling or administrative expenses.4. **Sales Returns and Allowances:** This item is deducted from "Sales Revenue" to arrive at "Net Sales."**Calculations:**- **Net Sales**: Calculate by subtracting sales returns, allowances, and discounts from total sales revenue. - **Gross Profit**: Determined by subtracting cost of goods sold from net sales.- **Income from Operations**: Calculate by deducting total operating expenses from gross profit.- **Gross Profit Rate**: Computed as gross profit divided by net sales, expressed as a percentage.This structured layout helps in analyzing a company's financial performance comprehensively by separating core business activities from other activities and expenses.

The multi-step income statement is the income statement prepared with the segregation of income and…

Explain the presentation of a multiple-step income statement. BE5.9 (LO.5), C Writing Explain where each of the following items would appear on a multiple-step income statement: gain on disposal of plant assets, cost of goods sold, depreciation expens sales returns and allowances. Compute net sales, gross profit, income from operations, and gross profit rate.

Explain the presentation of a multiple-step income statement. BE5.9 (LO.5), C Writing Explain where each of the following items would appear on a multiple-step income statement: gain on disposal of plant assets, cost of goods sold, depreciation expens sales returns and allowances. Compute net sales, gross profit, income from operations, and gross profit rate.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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