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 statements is true regarding a single-step income statement?

It reports variable costs separately from fixed costs.

It reports all revenues together and all expenses together, without separating variable and fixed costs.

It presents gross profit as a separate line item.

It distinguishes between operating and non-operating expenses in separate sections.

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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 that aggregates all revenues and all expenses into two main categories, without distinguishing between operating and non-operating expenses or separating variable and fixed costs.

Review the structure of a single-step income statement: It typically includes two sections—revenues and expenses. Revenues are summed up, and expenses are subtracted to calculate net income.

Clarify the difference between single-step and multi-step income statements: Unlike a multi-step income statement, which presents gross profit and separates operating and non-operating expenses, a single-step income statement does not provide these distinctions.

Analyze the options provided in the problem: Evaluate each statement to determine whether it aligns with the characteristics of a single-step income statement. For example, the statement 'It reports all revenues together and all expenses together, without separating variable and fixed costs' is consistent with the single-step format.

Conclude by identifying the correct statement: Based on the analysis, the correct answer is the one that accurately describes the single-step income statement format, which aggregates all revenues and expenses without further categorization.