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 a single-step income statement as compared to a contribution format income statement?

A single-step income statement separates variable and fixed costs to calculate contribution margin.

A single-step income statement groups all revenues together and subtracts all expenses in one step to arrive at net income.

A single-step income statement reports gross profit before operating expenses.

A single-step income statement distinguishes between operating and non-operating items before calculating 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 where all revenues are grouped together, and all expenses are subtracted in one step to calculate net income. It does not separate variable and fixed costs or distinguish between operating and non-operating items.

Compare the single-step income statement to the contribution format income statement: The contribution format income statement separates costs into variable and fixed categories to calculate the contribution margin, which is revenue minus variable costs.

Analyze the options provided in the problem: Evaluate each statement to determine which one accurately describes the single-step income statement. For example, the single-step income statement does not report gross profit before operating expenses or separate operating and non-operating items.

Identify the correct description: The correct answer is the option that states, 'A single-step income statement groups all revenues together and subtracts all expenses in one step to arrive at net income.' This aligns with the definition of a single-step income statement.

Conclude the comparison: Highlight the key difference between the single-step income statement and other formats, such as the contribution format or multi-step income statement, emphasizing its simplicity and lack of detailed categorization.