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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following statements is correct regarding the single-step and multi-step income statement formats?

The multi-step income statement does not distinguish between operating and non-operating activities.

Both formats require the calculation of gross profit as a separate line item.

The single-step income statement separates gross profit from operating income.

The single-step income statement groups all revenues together and all expenses together, without separating operating from non-operating items.

Previous problemNext problem

Verified step by step guidance

Understand the difference between single-step and multi-step income statement formats. The single-step format groups all revenues together and all expenses together, without distinguishing between operating and non-operating activities. The multi-step format separates operating and non-operating activities and includes subtotals such as gross profit and operating income.

Analyze the statement: 'The multi-step income statement does not distinguish between operating and non-operating activities.' This is incorrect because the multi-step format specifically separates operating and non-operating activities.

Evaluate the statement: 'Both formats require the calculation of gross profit as a separate line item.' This is incorrect because the single-step format does not calculate gross profit as a separate line item; it simply groups all revenues and expenses together.

Assess the statement: 'The single-step income statement separates gross profit from operating income.' This is incorrect because the single-step format does not separate gross profit or operating income; it combines all revenues and expenses without distinction.

Confirm the correct statement: 'The single-step income statement groups all revenues together and all expenses together, without separating operating from non-operating items.' This is correct because the single-step format does not differentiate between operating and non-operating activities, making it simpler but less detailed than the multi-step format.