A single-step income statement can be identified by which of the following formats?

• A. All revenues are grouped together and all expenses are grouped together, with net income calculated as total revenues minus total expenses.
• B. Operating and non-operating items are separated, and gross profit is shown before operating expenses.
• C. Income from continuing operations is reported separately from discontinued operations.
• D. Expenses are classified by function, such as cost of goods sold, selling, and administrative expenses.

Answer: (A)

Verified step by step guidance

1. Understand the concept of a single-step income statement: A single-step income statement simplifies the presentation of financial performance by grouping all revenues together and all expenses together, without separating operating and non-operating items or showing gross profit.
2. Recognize the key feature: The net income is calculated as total revenues minus total expenses, without additional classifications or subtotals such as gross profit or income from continuing operations.
3. Compare the single-step format to other formats: Unlike multi-step income statements, single-step statements do not separate operating and non-operating items or classify expenses by function (e.g., cost of goods sold, selling, administrative).
4. Identify the correct format: The single-step income statement groups all revenues together and all expenses together, with net income calculated as the difference between the two.
5. Eliminate incorrect options: The other formats mentioned in the problem (e.g., separating operating and non-operating items, showing gross profit, or classifying expenses by function) are characteristics of multi-step income statements, not single-step income statements.