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 what a contribution margin income statement shows?

Revenues, expenses, and net income without distinguishing between variable and fixed costs.

A detailed breakdown of non-operating revenues and expenses.

The separation of variable and fixed costs, highlighting contribution margin before deducting fixed costs.

Only the gross profit and operating income for the period.

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Verified step by step guidance

Understand the concept of a contribution margin income statement: It is a financial statement that separates costs into variable and fixed categories, allowing businesses to analyze how revenues contribute to covering fixed costs and generating profit.

Recognize the structure of the contribution margin income statement: It starts with revenues, subtracts variable costs to calculate the contribution margin, and then deducts fixed costs to arrive at net income.

Identify the purpose of the contribution margin: The contribution margin highlights the amount of revenue available to cover fixed costs and contribute to profit after variable costs are deducted.

Compare the contribution margin income statement to other types of income statements: Unlike traditional income statements, it emphasizes the distinction between variable and fixed costs rather than grouping all expenses together.

Conclude that the correct description of a contribution margin income statement is: 'The separation of variable and fixed costs, highlighting contribution margin before deducting fixed costs.'