A multi-step income statement separates non-operating expenses, gains, losses and revenues from the operating expenses and revenues. Addition and subtraction are used to show how each figure in the statement is calculated.
The multi-step income statement starts with the company's sales. From this figure, the cost of goods sold is subtracted to find the company's gross profit. The next section has a detailed listing of the company's operating expenses. All of the operating expenses are summed and subtracted from the gross profit figure to provide the company's operating income or loss.
The following section lists non-operating losses, gains, expenses and revenues. All of the figures are totaled to yield the non-operating income or loss. This figure is then added to or subtracted from the company's operating income or loss to provide the company's net income.