Classifying expenses by nature-income statement, Financial Accounting

Assignment Help:

Classifying expenses by nature

Under this format, expenses are not classified by their nature i.e. referred to specifically according to their type and the major categories of expenses are:-

  1. Changes in finished goods and work in progress
  2. Raw materials consumed
  3. Depreciation and amortization
  4. Employee benefits (staff costs)
  5. Other expenses
  6. Finance costs


NOTE: Classification of expenses by function is the most common format used and classification of expenses by nature is more appropriate for manufacturing firms.

There are certain types of incomes and expenses that do not face within the trading activities of the business but are within the ordinary activities of the firm. E.g. disposal of property, plant and equipment and other non-current assets.

The standard requires that if the above incomes and expenses are material, they can either be classified as part of the other expenses or shown separtely on the face of the income statement.

The company should give additional information about such items in the notes to the accounts.


Related Discussions:- Classifying expenses by nature-income statement

Ordinary income, Ordinary Income - One of two classes of income (other bein...

Ordinary Income - One of two classes of income (other being CAPITAL GAINS) taxed under the INTERNAL REVENUE CODE. Factually, ordinary income is taxed at a higher rate than capital

International financial reporting standards and gaap, Alta Velocidad Espera...

Alta Velocidad Esperanza de L'Argentina, Sociedad Anónima (AVE), a high-speed railway operator domiciled in Rio Norte, Argentina, is a Foreign Private Issuer as defined by the U.S.

Calculate the amount of profit or loss, On 1 January 2009, a company, Yeti,...

On 1 January 2009, a company, Yeti, granted an employee the right to choose between (i) 30,000 Yeti shares or (ii) a cash-payment equivalent to the price of 24,000 Yeti shares on 3

Ed Mettway, Should Touring Enterprises consider liabilities as a part of it...

Should Touring Enterprises consider liabilities as a part of its permanent financing? Why or why not?n #Minimum 100 words accepted#

Determine the optimal price for each sub-group, The objective is to assess ...

The objective is to assess the incentive to acquire information on consumer characteristics. We consider a monopoly. The firm incurs no production cost. There are M consumers with

Required return on equity, Q. Required return on equity? Required retu...

Q. Required return on equity? Required return on equity Where D 1 = Next year's dividend g = Dividend growth rate P o = Market price of share r = Percentag

Defunct companies-liquidation of companies, Defunct Companies A company...

Defunct Companies A company may be dissolved under s.338 without winding up if the registrar has reasonable cause to believe it is defunct: The procedure is: a. Registrar writ

Accounting adjustments to account for unpaid wages, James Bell plans to sta...

James Bell plans to stay at the Michaels Motel for one month, and he prepays his room charges. Bell arrives and begins his stay on January 21. To account for Bell's prepayment, at

Schedule of cost of goods, The following information was taken from the led...

The following information was taken from the ledger of Jefferson Industries, Inc.: Direct labor $85,000 Administrative expenses $59,0

Net cash provided by operating activities was?, 50. In preparing a company'...

50. In preparing a company's statement of cash flows for the most recent year on the indirect method, the following information is available: 52,000-Net income for the year 18,00

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd