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
Natasha's income is $300 per month. She spends all of it on tickets to concerts and films. A concert ticket costs $15 and a fi lm ticket costs $10. Her marginal rate of substitutio

Carla, Linda, and Terry form a partnership. Carla contributes machinery (that was purchased in 2006 and has an adjusted basis of $45,000 and a fair market value of $70,000) in retu

As an investor, you are considering buying stock in a relatively new company. Medical Horizons, Inc., has been in existence for 10 years and is now about to go public. The first st

The intestate leaves no spouse and no children The net estate devolves as follows: to his Father; or if dead Mother; or if dead Brothers and sisters, and any child o

Question: (a) Describe how cost concepts and behavior can be important to Management. (b) What do you meant by "flexing" the Budget? Describe the importance of flexible bud

1. Calculate the profitability index for a project that has a net present value equal to -$10,000. The project's net investment is $20,000. 2. A project requires a net investmen

economic substance as in recognition of revenue

The comparative financial statement of new World Piano Company for 2003,2002, and 2001 included the following selected data: 2003 2002 2003 In Millions Cash $67 $66 $62 Short T

Q. Estimate the systematic risk of the new investment? The beta of the comparator company will be utilized to estimate the systematic risk of the new investment. No un-gearing

Suppose that the one-period rate is 4%. Explain why a two-period rate of 6% cannot be an equilibrium when individuals expect the one-period rate to remain constant.