What are the three sections of the income statement in a multi-step format?

• A. Cash flow statement sections
• B. Operating section (sales and COGS, gross profit, operating expenses), non-operating section (other revenues/expenses), and income before tax/net income after tax
• C. Balance sheet assets, liabilities, and equity
• D. Retained earnings and equity sections

Answer: (B)

In a multi-step income statement, the presentation separates operating results from non-operating items, then applies taxes to reach the bottom line. The operating section starts with sales and subtracts cost of goods sold to produce gross profit, then subtracts operating expenses to derive operating income. The non-operating section includes other revenues and expenses not tied to core operations, which adjusts the figure to income before tax. Finally, tax expense is subtracted to arrive at net income after tax. This structure differs from the cash flow statement’s sections (operating, investing, financing) and from the balance sheet’s components (assets, liabilities, equity).