What distinguishes a multiple-step income statement from a single-step income statement?

A multiple-step income statement is distinguished from a single-step income statement primarily through the separation of operating and non-operating revenues and expenses. This format provides a more detailed breakdown of financial performance by allowing users to see how much revenue is generated through core operations compared to incidental activities.

In a multiple-step income statement, revenues are categorized into operating revenues, which stem from the primary business activities, and non-operating revenues, such as investment income or sales of assets. Similarly, expenses are divided into operating expenses related to the core activities and non-operating expenses. This level of detail is beneficial for stakeholders who need to analyze the performance of the company's principal business activities separately from its other financial elements.

This distinction enhances the user's ability to assess not just overall profitability, but also the operational efficiency and effectiveness of the core business functions. In contrast, a single-step income statement presents total revenues and total expenses in a more streamlined manner without these detailed classifications, which may obscure insights into the specific drivers of profit and loss for the business.