In order to comply with accounting standards,reporting entities are required to classify expenses:
A) without aggregation.
B) by nature or function.
C) by function only.
D) in no particular way.

Question

Quizplus · Accepted Answer

Reporting entities are required to classify expenses by either their nature or function to give a clear understanding of the expenses incurred during the financial period. The nature of expenses refers to the type of expense, such as salary, rent, or supplies. The function of expenses refers to their purpose, such as administrative or production-related expenses. Classifying expenses by function allows for more useful analysis of the entity's cost structure and provides insight into the activities that drive expenses.

In Order to Comply with Accounting Standards,reporting Entities Are Required