Which one of the following statements related to a single-step income statement is correct?

• A. A single-step income statement reports gross profit as a separate line item.
• B. A single-step income statement distinguishes between selling and administrative expenses.
• C. A single-step income statement groups all revenues together and all expenses together, without separating operating and non-operating items.
• D. A single-step income statement requires the calculation of income from operations.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of a single-step income statement. A single-step income statement is a simplified format that groups all revenues together and all expenses together, without distinguishing between operating and non-operating items.
2. Step 2: Analyze the structure of a single-step income statement. Unlike a multi-step income statement, it does not report gross profit as a separate line item or distinguish between selling and administrative expenses.
3. Step 3: Review the calculation process for a single-step income statement. The net income is calculated by subtracting total expenses from total revenues, without requiring intermediate calculations such as income from operations.
4. Step 4: Compare the given statements to the characteristics of a single-step income statement. Identify which statement aligns with the definition and structure of a single-step income statement.
5. Step 5: Conclude that the correct statement is: 'A single-step income statement groups all revenues together and all expenses together, without separating operating and non-operating items.' This matches the simplified format of a single-step income statement.