Lesson: Example of a Multi-Step Income Statement

In this lesson, Nick Palazzolo, CPA, walks through a detailed example of a multi-step income statement using the fictional Johnson Corporation to illuminate the process. He demonstrates how to segregate operating from non-operating activities, ensuring a clear understanding of how non-operating items like interest expense and revenue are deducted from operating income to arrive at the final net income figure. With a focus on the practical application of income tax expense calculations, which may involve applying a percentage to pre-tax income, Nick provides insight into the real-world utility of multi-step income statements, which offer a more granular look at a company's financial performance than their single-step counterparts.