What is Nature of Expense and Function of Expense
Answers
Answer:
NATURE.....
Expenses in an income statement are either classified by their nature or by their function. An income statement by nature is the one in which expenses are disclosed according to categories they are spent on, such as raw materials, transport costs, staffing costs, depreciation, employee benefit etc.
FUNCTION..
The function of expense method allocates and combines expense items according to the activity from which the item arises. For example, cost of sales is a functional line item that may combine the following natural line items: raw material costs, labour and other employee benefit costs, depreciation or amortisation.
Explanation:
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