What is the correct order of items included in a multiple-step income statement?

The correct order of items included in a multiple-step income statement is significant for understanding the components that contribute to a company's overall profitability. In a multiple-step income statement, the format provides a detailed breakdown of revenues and expenses, allowing for clearer analysis of operating performance.

The appropriate sequence begins with sales revenue, which represents the total income generated from goods sold or services rendered. This is followed by the cost of goods sold (COGS), which accounts for the direct costs attributable to the production of the goods that a company sells. Subtracting COGS from sales yields the gross profit, a key indicator of the company's efficiency in producing and selling its products.

Following gross profit, operating expenses are reported, which include costs related to running the day-to-day operations, such as selling and administrative expenses. After accounting for these expenses, operating income is derived, reflecting the profit generated from primary business activities before interest and taxes are considered.

Interest expense usually comes next, as it reflects the cost of borrowing money. Finally, net income is calculated after all expenses, including any other non-operating expenses or income, are deducted from the total revenue. This systematic approach provides a transparent path from total sales down to the bottom line, net income.

Option C provides the