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 format of a single-step income statement for Hawkin for the month of December?

Operating revenues and operating expenses are separated from non-operating items, and gross profit is shown before operating expenses.

Only cash receipts and cash payments are reported, with no accruals or deferrals included.

All revenues are listed together, all expenses are listed together, and net income is calculated as total revenues minus total expenses.

Revenues and expenses are grouped by function (such as cost of goods sold, selling, and administrative expenses), and income from operations is shown.

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Verified step by step guidance

Step 1: Understand the concept of a single-step income statement. A single-step income statement is a simplified format where all revenues are grouped together, all expenses are grouped together, and net income is calculated as total revenues minus total expenses.

Step 2: Compare the single-step income statement format with other formats. Unlike a multi-step income statement, a single-step format does not separate operating revenues and expenses from non-operating items, nor does it show gross profit or income from operations.

Step 3: Analyze the options provided in the problem. Identify which description matches the single-step income statement format. Look for the option that emphasizes grouping all revenues together, all expenses together, and calculating net income as the difference.

Step 4: Eliminate incorrect options. For example, the option describing cash receipts and payments refers to a cash flow statement, not an income statement. Similarly, grouping revenues and expenses by function or showing gross profit are characteristics of a multi-step income statement.

Step 5: Select the correct answer based on the analysis. The correct description of a single-step income statement is: 'All revenues are listed together, all expenses are listed together, and net income is calculated as total revenues minus total expenses.'