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

Where on a single-step income statement is income tax expense reported?

Reported as a footnote and not on the face of the income statement

Included within total expenses, not shown separately

After total revenues and total expenses, as a separate line item before net income

At the top of the income statement, before revenues

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Verified step by step guidance

Understand the structure of a single-step income statement: A single-step income statement groups all revenues together and all expenses together, with a single subtraction to determine net income. It does not categorize expenses into operating and non-operating sections.

Identify where income tax expense is reported: In a single-step income statement, income tax expense is shown as a separate line item after total revenues and total expenses have been calculated.

Clarify why income tax expense is not included within total expenses: Income tax expense is not grouped with other expenses because it is calculated based on taxable income, which is determined after all other revenues and expenses are accounted for.

Note the placement of income tax expense: It is reported just before the calculation of net income, ensuring that the net income figure reflects the deduction of income tax expense.

Reinforce the correct placement: Income tax expense is not reported as a footnote, within total expenses, or at the top of the income statement. It is always shown as a separate line item before net income in a single-step income statement.