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 key characteristic of a single-step income statement as compared to a contribution format income statement?

It reports contribution margin before operating income.

It groups all revenues together and all expenses together, without separating operating and non-operating items.

It separates costs into variable and fixed categories.

It highlights gross profit as a separate line item.

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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 all expenses together, without distinguishing between operating and non-operating items.

Compare this to a contribution format income statement: A contribution format income statement separates costs into variable and fixed categories and highlights contribution margin, which is the difference between sales revenue and variable costs.

Analyze the options provided: The single-step income statement does not report contribution margin, separate costs into variable and fixed categories, or highlight gross profit as a separate line item. Instead, it groups all revenues and expenses together.

Identify the correct characteristic: The key feature of a single-step income statement is its simplicity in grouping all revenues and expenses together without separating operating and non-operating items.

Conclude the comparison: The single-step income statement is distinct from other formats like the contribution format income statement due to its straightforward approach to presenting financial data.