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

In a single-step income statement, which of the following is true regarding gross profit?

Gross profit is calculated and shown before operating expenses.

Gross profit does not appear as a separate line item.

Gross profit is combined with other income to determine net income.

Gross profit is reported after deducting non-operating expenses.

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Verified step by step guidance

Understand the concept of a single-step income statement: In this format, all revenues are grouped together, and all expenses are grouped together. The focus is on calculating net income directly without showing intermediate subtotals like gross profit.

Recognize that gross profit is typically calculated as 'Revenue - Cost of Goods Sold (COGS)' in a multi-step income statement. However, in a single-step income statement, this calculation is not explicitly shown.

Note that in a single-step income statement, gross profit does not appear as a separate line item. Instead, all revenues and gains are combined into one section, and all expenses and losses are combined into another section.

Understand that operating expenses, non-operating expenses, and other income are not separated into distinct categories in a single-step income statement. The focus is on simplicity and directly arriving at net income.

Conclude that gross profit is not calculated or reported separately in a single-step income statement, as the format prioritizes simplicity over detailed breakdowns of financial performance.