preparing a multiple-step income statement

step 1

prepare a heading that includes the name of the company, the title of the financial statement, and the time period covered

step 2

compute gross profit as the difference between net sales and cost of goods sold

step 4

compute income before income taxes by subtracting nonoperating activities from income from operations

step 3

compute income from operations by subtracting operating expenses from gross profits

step 5

compute net income (or net loss) by subtracting income taxes expense from income before income taxes. double underline net income.