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

In a common size single-step income statement, how is the gross margin calculated?

Gross margin is calculated as Sales minus Operating Expenses.

Gross margin is calculated as Sales minus Cost of Goods Sold.

Gross margin is not separately calculated in a single-step income statement.

Gross margin is calculated as Net Income divided by Sales.

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Verified step by step guidance

Understand the structure of a single-step income statement: In this format, all revenues are grouped together, and all expenses are grouped together. There is no separate calculation for gross margin.

Recognize that gross margin is typically calculated in a multi-step income statement, where Sales and Cost of Goods Sold (COGS) are presented separately to derive gross margin.

In a single-step income statement, the focus is on calculating net income by subtracting total expenses from total revenues, without isolating gross margin.

Review the options provided in the problem and identify that gross margin is not separately calculated in a single-step income statement, as this format does not distinguish between operating expenses and COGS.

Conclude that the correct answer is: Gross margin is not separately calculated in a single-step income statement, based on the structure and purpose of this format.