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

The difference between single-step and multiple-step income statements is primarily an issue of:

the use of accrual versus cash accounting

the method of calculating net income

the classification of assets and liabilities

the level of detail in reporting revenues and expenses

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Verified step by step guidance

Understand the purpose of an income statement: It is a financial report that shows a company's revenues, expenses, and net income over a specific period.

Recognize the difference between single-step and multiple-step income statements: A single-step income statement groups all revenues together and subtracts all expenses to calculate net income, while a multiple-step income statement provides more detailed classifications of revenues and expenses.

Focus on the key distinction: The single-step format is simpler and does not separate operating and non-operating activities, whereas the multiple-step format includes subtotals such as gross profit and operating income, offering more detailed insights.

Identify the correct answer: The difference between single-step and multiple-step income statements is primarily about the level of detail in reporting revenues and expenses, not accrual versus cash accounting, net income calculation methods, or asset/liability classification.

Conclude that the level of detail in reporting revenues and expenses is the defining characteristic of single-step versus multiple-step income statements, as the multiple-step format provides a clearer breakdown of financial performance.