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 to calculate net income on a single-step income statement?

Add total revenues to total expenses.

Subtract total expenses from total revenues.

Subtract cost of goods sold from net sales only.

Subtract operating expenses from gross profit.

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Verified step by step guidance

Understand the structure of a single-step income statement: It simplifies the calculation of net income by grouping all revenues together and all expenses together, without separating operating and non-operating items.

Identify the total revenues: This includes all income generated by the business, such as sales revenue, service revenue, and any other income sources.

Identify the total expenses: This includes all costs incurred by the business, such as cost of goods sold (COGS), operating expenses, and other expenses.

Apply the formula for net income in a single-step income statement: Net Income = Total Revenues - Total Expenses.

Subtract the total expenses from the total revenues to determine the net income. This approach ensures that all revenues and expenses are accounted for in a straightforward manner.