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 as used by Hudson Company?

It separates operating and non-operating activities before calculating net income.

It groups all revenues together and subtracts all expenses to arrive at net income.

It lists gross profit before deducting operating expenses.

It shows contribution margin by subtracting variable costs from sales.

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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 subtracts all expenses to calculate net income. It does not separate operating and non-operating activities or show gross profit or contribution margin.

Analyze the options provided in the problem: Carefully read each option and compare it to the definition and characteristics of a single-step income statement.

Eliminate incorrect options: For example, the single-step income statement does not separate operating and non-operating activities, so the first option can be eliminated. Similarly, it does not list gross profit or show contribution margin, so the third and fourth options can also be eliminated.

Identify the correct option: The correct description of a single-step income statement is the one that states it groups all revenues together and subtracts all expenses to arrive at net income.

Conclude the reasoning: The single-step income statement is straightforward and focuses on simplicity, making it easier to understand for users who are not looking for detailed breakdowns of operating and non-operating activities or other subtotals like gross profit or contribution margin.