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 Nero's for the year ended December 31?

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

Each revenue and expense is matched to its corresponding department, and net income is calculated for each department separately.

Income tax expense is presented before operating income, and discontinued operations are excluded.

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

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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 of the single-step income statement: These include total revenues, total expenses, and net income. Unlike a multi-step income statement, it does not separate operating and non-operating items or show gross profit.

Review the problem statement and eliminate incorrect options: For example, the first option mentions separating operating and non-operating items and showing gross profit, which is characteristic of a multi-step income statement, not a single-step format.

Evaluate the correct answer: The correct description aligns with the single-step income statement format, where all revenues are listed together, all expenses are listed together, and net income is calculated as total revenues minus total expenses.

Summarize the reasoning: The single-step income statement is straightforward and does not involve departmental matching, presentation of income tax expense before operating income, or exclusion of discontinued operations. It focuses solely on grouping revenues and expenses to calculate net income.