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

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

It reports income tax expense before 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 concept of a single-step income statement: A single-step income statement is a simplified format that groups all revenues together and all expenses together, without separating operating and non-operating activities.

Recognize the main characteristic: Unlike a multi-step income statement, the single-step format does not show gross profit or operating income separately. Instead, it focuses on the total revenues and total expenses.

Identify the calculation process: To determine net income, subtract total expenses from total revenues. This straightforward approach avoids categorizing expenses by function or reporting income tax expense separately.

Compare with other formats: Note that multi-step income statements provide more detailed information, such as separating operating and non-operating activities, showing gross profit, and listing expenses by function. The single-step format is simpler and less detailed.

Conclude the main characteristic: The single-step income statement is characterized by grouping all revenues together and all expenses together, then subtracting total expenses from total revenues to calculate net income.