Which of the following is true about a single-step income statement?

• A. It requires the calculation of income from operations before other revenues and expenses.
• B. It lists gross profit as a separate line item before operating expenses.
• C. It groups all revenues together and all expenses together, showing only one step to calculate net income.
• D. It separates operating and non-operating activities in different sections.

Answer: (C)

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 groups all revenues together and all expenses together, without separating operating and non-operating activities.
2. Recognize the key feature of a single-step income statement: It calculates net income in one step by subtracting total expenses from total revenues, without requiring intermediate calculations like gross profit or income from operations.
3. Compare the single-step income statement to other formats: Unlike a multi-step income statement, it does not list gross profit as a separate line item or require the calculation of income from operations before other revenues and expenses.
4. Identify the correct statement: The single-step income statement groups all revenues together and all expenses together, showing only one step to calculate net income.
5. Conclude that the single-step income statement does not separate operating and non-operating activities into different sections, as it focuses on simplicity and clarity in presenting financial results.