Which of the following items are typically listed on a single-step income statement?

• A. Cost of goods sold, selling expenses, and administrative expenses shown separately
• B. Total revenues and total expenses, with net income calculated as the difference
• C. Operating income, gross profit, and income from operations
• D. Earnings per share and retained earnings

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 that calculates net income by subtracting total expenses from total revenues. It does not separate operating and non-operating activities or provide detailed breakdowns of expenses.
2. Review the components typically included in a single-step income statement: Total revenues (e.g., sales revenue, service revenue) and total expenses (e.g., cost of goods sold, operating expenses, administrative expenses) are aggregated into two main categories.
3. Note that detailed breakdowns such as cost of goods sold, selling expenses, and administrative expenses shown separately are not part of a single-step income statement. These are typically found in a multi-step income statement.
4. Understand that operating income, gross profit, and income from operations are specific subtotals that appear in a multi-step income statement, not a single-step income statement.
5. Recognize that earnings per share and retained earnings are not part of the single-step income statement. Earnings per share is disclosed separately, often in the notes or at the bottom of the income statement, while retained earnings are part of the statement of retained earnings.