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 the format of a single-step income statement?

It reports variable costs separately from fixed costs.

It includes a gross profit subtotal before operating expenses.

It does not report variable costs separately from fixed costs.

It lists operating and non-operating expenses in separate sections.

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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 of presenting financial performance. It does not separate costs into categories like variable and fixed costs, nor does it include subtotals like gross profit.

Review the structure of a single-step income statement: It lists all revenues together in one section and all expenses together in another section, without distinguishing between operating and non-operating expenses.

Analyze the first option: 'It reports variable costs separately from fixed costs.' This is incorrect because a single-step income statement does not differentiate between variable and fixed costs.

Analyze the second option: 'It includes a gross profit subtotal before operating expenses.' This is incorrect because a single-step income statement does not calculate or display gross profit; it directly subtracts total expenses from total revenues.

Analyze the correct option: 'It does not report variable costs separately from fixed costs.' This is true because the single-step income statement aggregates all expenses without categorizing them as variable or fixed.