Which of the following best describes the format of a single-step income statement when preparing it from a list of accounts?

• A. Each revenue and expense is matched to its related activity, and net income is calculated for each section.
• B. All revenues are listed together, all expenses are listed together, and net income is calculated as total revenues minus total expenses.
• C. Only operating revenues and expenses are included, with non-operating items excluded from the statement.
• D. Operating revenues and operating expenses are separated from non-operating items, and gross profit is shown.

Answer: (B)

Verified step by step guidance

1. Understand the concept of a single-step income statement: A single-step income statement is a simplified format where all revenues are grouped together, all expenses are grouped together, and net income is calculated as the difference between total revenues and total expenses.
2. Identify the key components: Revenues include all income-generating activities, such as sales revenue, service revenue, and other income. Expenses include all costs incurred, such as cost of goods sold, operating expenses, and other expenses.
3. Group revenues and expenses: In a single-step income statement, revenues are listed together in one section, and expenses are listed together in another section. There is no separation between operating and non-operating items.
4. Calculate net income: Net income is determined by subtracting total expenses from total revenues. The formula can be expressed as: $\mathrm{Net}\mathrm{Income}=\mathrm{Total}\mathrm{Revenues}-\mathrm{Total}\mathrm{Expenses}$
5. Review the format: The single-step income statement does not show gross profit or separate operating and non-operating items. It provides a straightforward calculation of net income by aggregating all revenues and expenses.