Which of the following best describes the format of a single-step income statement for a business for the month of December?

• A. Revenues are categorized by type, and expenses are listed by function, with income from operations shown separately.
• B. Operating revenues and operating expenses are separated from non-operating items, and gross profit is shown before operating expenses.
• C. Only cash revenues and cash expenses are included, with no accruals or adjustments.
• D. All revenues are listed together, all expenses are listed together, and net income is calculated as total revenues minus total expenses.

Answer: (D)

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 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. Step 2: Compare the given options to the definition of a single-step income statement. The correct format should align with the principle of grouping all revenues and expenses together without categorizing them further.
3. Step 3: Eliminate options that do not match the single-step income statement format. For example, options that mention categorizing revenues by type or separating operating and non-operating items do not align with the single-step format.
4. Step 4: Focus on the option that states 'All revenues are listed together, all expenses are listed together, and net income is calculated as total revenues minus total expenses.' This matches the definition of a single-step income statement.
5. Step 5: Confirm that the single-step income statement does not include additional details like gross profit or separate categories for operating and non-operating items, as these are features of a multi-step income statement.