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

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Multiple Choice

Which of the following accounts would normally be found on a single-step income statement?

Retained Earnings

Prepaid Insurance

Accounts Receivable

Sales Revenue

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Verified step by step guidance

Understand the purpose of a single-step income statement: It is a simplified format that lists all revenues together and subtracts all expenses to calculate net income. It does not include detailed classifications like operating and non-operating items.

Identify the type of accounts typically included in a single-step income statement: Only revenue and expense accounts are included, as the focus is on calculating net income. Balance sheet accounts like assets, liabilities, and equity are excluded.

Analyze the given accounts: Retained Earnings, Prepaid Insurance, and Accounts Receivable are balance sheet accounts. Retained Earnings is part of equity, Prepaid Insurance is an asset, and Accounts Receivable is also an asset. These do not appear on the income statement.

Recognize that Sales Revenue is a revenue account: Revenue accounts are included in the single-step income statement because they contribute to the calculation of net income.

Conclude that Sales Revenue is the correct account to be found on a single-step income statement, as it directly relates to the income-generating activities of the business.