Which of the following items would be included on a single-step income statement?

• A. Retained earnings
• B. Total revenues and total expenses
• C. Owner's capital contributions
• D. Dividends paid

Answer: (B)

Verified step by step guidance

1. Understand the purpose of a single-step income statement: It is a simplified format that reports total revenues and total expenses to calculate net income or net loss. It does not include detailed breakdowns or non-operational items.
2. Identify the components of a single-step income statement: The key elements are total revenues (e.g., sales revenue, service revenue) and total expenses (e.g., cost of goods sold, operating expenses). These are used to determine the net income or net loss.
3. Exclude items that are not part of the single-step income statement: Retained earnings, owner's capital contributions, and dividends paid are not included because they are part of the equity section of the balance sheet or statement of retained earnings, not the income statement.
4. Focus on the correct answer: Total revenues and total expenses are the only items relevant to a single-step income statement, as they directly contribute to the calculation of net income or net loss.
5. Review the format of the single-step income statement: Ensure that all revenues are summed up as 'Total Revenues' and all expenses are summed up as 'Total Expenses,' with the difference between the two representing net income or net loss.