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

Based on the contribution format income statement, which of the following best describes the main difference between a single-step income statement and a contribution format income statement?

A single-step income statement separates operating and non-operating items, while a contribution format income statement does not.

A single-step income statement calculates gross profit, while a contribution format income statement does not.

A single-step income statement groups all revenues together and all expenses together, while a contribution format income statement separates variable and fixed costs.

A single-step income statement is only used for internal reporting, while a contribution format income statement is used for external reporting.

Previous problemNext problem

Verified step by step guidance

Understand the purpose of a single-step income statement: It groups all revenues together and all expenses together without distinguishing between operating and non-operating items or variable and fixed costs.

Understand the purpose of a contribution format income statement: It separates costs into variable and fixed categories, which is useful for internal decision-making and analyzing the impact of changes in sales volume on profitability.

Compare the two formats: A single-step income statement is simpler and focuses on total revenues and total expenses, while a contribution format income statement provides more detailed insights into cost behavior and contribution margin.

Recognize the key difference: The single-step income statement does not separate costs based on their behavior (variable vs. fixed), whereas the contribution format income statement does.

Conclude that the correct answer is: A single-step income statement groups all revenues together and all expenses together, while a contribution format income statement separates variable and fixed costs.