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 format of a single-step income statement?

It lists each revenue and expense item in order of liquidity.

Income tax expense is presented before operating income.

All revenues are grouped together, all expenses are grouped together, and net income is calculated as total revenues minus total expenses.

Operating revenues and operating expenses are separated from non-operating items, and gross profit is shown.

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Verified step by step guidance

Step 1: Understand the concept of a single-step income statement. A single-step income statement is a simplified format where all revenues are grouped together, all expenses are grouped together, and net income is calculated as total revenues minus total expenses.

Step 2: Compare the single-step income statement format to other formats, such as the multi-step income statement. Unlike the multi-step format, the single-step income statement does not separate operating revenues and expenses from non-operating items, nor does it show gross profit.

Step 3: Analyze the options provided in the problem. The correct description of a single-step income statement is the one that states all revenues are grouped together, all expenses are grouped together, and net income is calculated as total revenues minus total expenses.

Step 4: Eliminate incorrect options. For example, the single-step income statement does not list items in order of liquidity, nor does it present income tax expense before operating income.

Step 5: Confirm the correct answer by matching the description of the single-step income statement format to the provided options. The correct answer is the one that aligns with the definition of a single-step income statement.