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 how a single-step income statement presents gross profit?

A single-step income statement shows gross profit as a subtotal before other income and expenses.

A single-step income statement reports gross profit after deducting both operating and non-operating expenses from revenues.

A single-step income statement lists gross profit as the difference between sales and cost of goods sold before deducting operating expenses.

A single-step income statement does not separately report gross profit; it subtracts total expenses from total revenues to determine net income.

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Verified step by step guidance

Understand the concept of a single-step income statement: A single-step income statement simplifies the presentation of financial performance by combining all revenues and gains into one category and all expenses and losses into another category. It does not separately report gross profit.

Recognize the difference between single-step and multi-step income statements: A multi-step income statement provides subtotals such as gross profit (sales minus cost of goods sold) and operating income, while a single-step income statement does not include these subtotals.

Analyze the structure of a single-step income statement: Total revenues are listed first, followed by total expenses. Net income is calculated by subtracting total expenses from total revenues.

Evaluate the options provided in the problem: The correct answer must align with the structure of a single-step income statement, which does not separately report gross profit.

Select the correct answer: Based on the explanation, the correct answer is that a single-step income statement does not separately report gross profit; it subtracts total expenses from total revenues to determine net income.