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 when preparing it from a list of accounts?

Each revenue and expense is matched to its related activity, and net income is calculated for each section.

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

Only operating revenues and expenses are included, with non-operating items excluded from the statement.

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

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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, all expenses are grouped together, and net income is calculated as the difference between total revenues and total expenses.

Identify the key components: Revenues include all income-generating activities, such as sales revenue, service revenue, and other income. Expenses include all costs incurred, such as cost of goods sold, operating expenses, and other expenses.

Group revenues and expenses: In a single-step income statement, revenues are listed together in one section, and expenses are listed together in another section. There is no separation between operating and non-operating items.

Calculate net income: Net income is determined by subtracting total expenses from total revenues. The formula can be expressed as:

Net Income = Total Revenues - Total Expenses

Review the format: The single-step income statement does not show gross profit or separate operating and non-operating items. It provides a straightforward calculation of net income by aggregating all revenues and expenses.