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 a single-step income statement?

It presents total revenues and total expenses, showing only one subtotal for expenses.

It reports gross profit as a separate line item before deducting operating expenses.

It separates operating and non-operating activities, showing multiple subtotals for expenses.

It lists expenses by function, such as cost of goods sold and selling 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 that presents total revenues and total expenses without separating operating and non-operating activities or listing expenses by function.

Recognize the key feature of a single-step income statement: It shows only one subtotal for expenses, combining all expenses into a single line item rather than breaking them down into categories or functions.

Compare the single-step income statement to other formats: Unlike a multi-step income statement, it does not report gross profit as a separate line item or provide multiple subtotals for expenses.

Analyze the options provided in the question: Identify the description that matches the characteristics of a single-step income statement, focusing on the presentation of total revenues and total expenses with one subtotal for expenses.

Select the correct answer based on the analysis: The correct description is the one that states the single-step income statement presents total revenues and total expenses, showing only one subtotal for expenses.