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 calculations is made on a single-step income statement?

Earnings per share by dividing net income by the number of shares outstanding

Total revenues minus total expenses to determine net income

Gross profit by subtracting cost of goods sold from sales

Operating income by subtracting operating expenses from gross profit

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Verified step by step guidance

Understand the structure of a single-step income statement: It simplifies the presentation of financial results by grouping all revenues together and subtracting all expenses to calculate net income.

Identify the calculation relevant to a single-step income statement: The key calculation is 'Total revenues minus total expenses to determine net income.' This is the defining feature of a single-step income statement.

Clarify why other options are not applicable: Earnings per share, gross profit, and operating income are not calculated directly on a single-step income statement. These are typically found in multi-step income statements or other financial analyses.

Focus on the simplicity of the single-step format: Unlike multi-step income statements, which break down revenues and expenses into categories like operating and non-operating, the single-step format aggregates all revenues and expenses into one calculation.

Conclude that the correct calculation for a single-step income statement is 'Total revenues minus total expenses to determine net income,' as it aligns with the purpose and structure of this type of financial statement.