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 statements is true regarding a single-step income statement?

It lists gross profit as a separate line item.

It shows only one subtotal for total expenses.

It reports expenses by function, such as selling and administrative.

It separates operating and non-operating expenses with multiple subtotals.

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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 calculates net income by subtracting total expenses from total revenues without categorizing expenses into operating and non-operating sections.

Review the characteristics of a single-step income statement: It does not list gross profit as a separate line item, nor does it separate operating and non-operating expenses with multiple subtotals. Instead, it aggregates all expenses into one subtotal.

Compare the options provided in the problem: Evaluate each statement against the characteristics of a single-step income statement to determine which one aligns with its format.

Focus on the correct statement: The correct answer is the one that states 'It shows only one subtotal for total expenses,' as this is a defining feature of a single-step income statement.

Conclude the analysis: Confirm that the other options do not match the format of a single-step income statement, ensuring clarity on why the correct answer is appropriate.