Classifying expenses by nature-income statement, Financial Accounting

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.

Posted Date: 12/11/2012 11:58:07 PM | Location : United States

Related Discussions:- Classifying expenses by nature-income statement, Assignment Help, Ask Question on Classifying expenses by nature-income statement, Get Answer, Expert's Help, Classifying expenses by nature-income statement Discussions

Write discussion on Classifying expenses by nature-income statement
Your posts are moderated
Related Questions
please help me on the current lay out of the departmental accounts

A company does not need to record the receipt of a bill for utilities used during this year if they will not pay for it until next year. True or False

1.discuss how the vat system works 2.list and explain the vat supply categories, provide examples in each category write as an essay of 500 words

GROUP STRUCTURES A group structure is the relationship between the holding company and its subsidiaries.  There are normally four main types of group structures (apart from the

in recent years Morten Ltd, a company that manufactures and markets a range of pharmaceutical products.

How do I treat with Expenses Outstanding, for example, Marketing Expenses outstanding at year end is $1250. How do I adjust?. It is a note under the trial balance.

Illustration of maximum possible loss method A, B and C have been partners for several years, sharing profits and losses in the ratio 2:2:1. They decided to dissolve the firm o

Which of the following is not a measurement issue in accouting a. when to record a business transaction b. how to classify the items of a businesss transaction c. when to classify

Cashflows from investing activities Involving activities involve the acquisition and disposal of non-current assets such as; property, plant and equipment, intangible assets, a

Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4