Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Multi-step Income Statement

Financial Accounting

4. Merchandising Operations

Multi-step Income Statement

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Multiple Choice

Which of the following is a key feature that distinguishes a multi-step income statement from a single-step income statement?

It only reports total revenues and total expenses without any subtotals.

It combines all expenses into a single category.

It does not include gross profit as a separate line item.

It separates operating revenues and expenses from non-operating items.

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Verified step by step guidance

Understand the difference between a multi-step income statement and a single-step income statement. A multi-step income statement provides more detailed information by separating operating and non-operating activities, while a single-step income statement aggregates all revenues and expenses without categorization.

Recognize that a multi-step income statement includes subtotals such as gross profit, operating income, and net income, which are not present in a single-step income statement.

Identify that the key feature of a multi-step income statement is its ability to distinguish between operating revenues and expenses (related to the core business activities) and non-operating items (such as interest income or expenses, and gains or losses from asset sales).

Note that the single-step income statement does not separate operating and non-operating items; it simply lists total revenues and total expenses to calculate net income.

Conclude that the correct answer is: 'It separates operating revenues and expenses from non-operating items,' as this is the defining characteristic of a multi-step income statement.