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

Single-step Income Statement

Financial Accounting

4. Merchandising Operations

Single-step Income Statement

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following inventory items is most appropriate for the use of a single-period inventory model in preparing a single-step income statement?

Fresh newspapers sold daily

Canned food products

Office furniture

Automobile spare parts

Previous problemNext problem

Verified step by step guidance

Understand the single-period inventory model: This model is used for items that have a limited selling period or perish quickly, making it ideal for products that cannot be stored for long durations.

Analyze the characteristics of each inventory item: Fresh newspapers are perishable and lose their value quickly after the day they are published, making them suitable for the single-period inventory model. Canned food products, office furniture, and automobile spare parts are durable and can be stored for extended periods, making them unsuitable for this model.

Relate the inventory model to the single-step income statement: A single-step income statement simplifies reporting by grouping all revenues and expenses together. For items like fresh newspapers, the single-period inventory model aligns well with this approach because the inventory turnover is rapid and straightforward.

Consider the implications of inventory management: Fresh newspapers require precise inventory control to avoid overstocking (leading to waste) or understocking (leading to lost sales). This aligns with the single-period inventory model's focus on managing short-lived inventory effectively.

Conclude that fresh newspapers sold daily are the most appropriate inventory item for the single-period inventory model in preparing a single-step income statement, as they meet the criteria of perishability and rapid turnover.