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 best describes the main characteristic of a single-step income statement?

It lists expenses by function, such as cost of goods sold and selling expenses.

It reports income tax expense before operating income.

It separates operating and non-operating activities, showing gross profit and operating income.

It groups all revenues together and all expenses together, subtracting total expenses from total revenues to determine net income.

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Verified step by step guidance

Understand the purpose of a single-step income statement: It is a simplified format of an income statement that does not separate operating and non-operating activities. Instead, it groups all revenues together and all expenses together.

Recognize the key characteristic: The single-step income statement calculates net income by subtracting total expenses from total revenues in one straightforward calculation.

Compare the options provided: Eliminate options that describe multi-step income statements, such as separating operating and non-operating activities or showing gross profit and operating income.

Focus on the correct description: Identify the option that states the grouping of all revenues and all expenses, which aligns with the single-step income statement's format.

Conclude that the correct answer is the option describing the grouping of all revenues and all expenses, subtracting total expenses from total revenues to determine net income.