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 the main characteristic of a single-step income statement?

It reports income tax expense before operating income.

It separates operating and non-operating activities and presents multiple subtotals such as gross profit and operating income.

It groups all revenues together and all expenses together, then subtracts total expenses from total revenues to determine net income.

It lists expenses by their function, such as cost of goods sold, selling, and administrative 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 groups all revenues together and all expenses together, without separating operating and non-operating activities.

Recognize the main characteristic: The single-step income statement calculates net income by subtracting total expenses from total revenues, without presenting subtotals like gross profit or operating income.

Compare the options provided: Evaluate each option to determine which one aligns with the definition of a single-step income statement.

Eliminate incorrect options: For example, options mentioning income tax expense before operating income or separating operating and non-operating activities are characteristics of a multi-step income statement, not a single-step income statement.

Select the correct answer: The correct description is the one that states the single-step income statement groups all revenues together and all expenses together, then subtracts total expenses from total revenues to determine net income.