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 correctly fills in the blanks: 'The two general approaches for preparing an income statement are the _-step and _-step approaches'?

cash; accrual

direct; indirect

classified; unclassified

single; multiple

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Understand the context of the question: The problem is asking about the two general approaches for preparing an income statement. This relates to how financial information is organized and presented in accounting.

Recall the two main formats for income statements: The single-step approach and the multiple-step approach. These are standard methods used in financial accounting.

Define the single-step approach: In this format, all revenues are grouped together, and all expenses are grouped together. The net income is calculated by subtracting total expenses from total revenues. This approach is straightforward and does not separate operating and non-operating activities.

Define the multiple-step approach: This format provides more detail by separating operating revenues and expenses from non-operating revenues and expenses. It includes subtotals such as gross profit (calculated as net sales minus cost of goods sold) and operating income (calculated as gross profit minus operating expenses).

Recognize that the correct answer is 'single; multiple' because these are the two general approaches for preparing an income statement, as opposed to the other options provided in the question.