The following statements relate to analysis of expenses in the income statement based on either the nature of expenses or their function within the entity. Which statement is incorrect? I. An entity classifying expenses by function shall disclose additional information on the nature if expenses including depreciation, amortization expenses and employee benefit cost. II. PAS 1 requires the use of the cost of sales method because this presentation often provides more relevant information to users than the nature of expense method. a. I only b. II only c. Both I and II d. Neither I nor II

The following statements relate to analysis of expenses in the income statement based on either the nature of expenses or their function within the entity. Which statement is incorrect? I. An entity classifying expenses by function shall disclose additional information on the nature if expenses including depreciation, amortization expenses and employee benefit cost. II. PAS 1 requires the use of the cost of sales method because this presentation often provides more relevant information to users than the nature of expense method. a. I only b. II only c. Both I and II d. Neither I nor II

Name: The following statements relate to analysis of expenses in the income
Uploaded: 2024-03-05T11:47:04.000Z
Channel: Bartleby
Description: The following statements relate to analysis of expenses in the income statement based on either the nature ofexpenses or their function within the entity. Which statement is incorrect?I. An entity classifying expenses by function shall disclose addit

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter3: Analyzing And Recording Transactions

Section: Chapter Questions

Problem 12MC: Which of the following principles matches expenses with associated revenues in the period in which...

See similar textbooks

Similar questions

Which of the following is not a criterion to recognize revenue under GAAP? A. The earnings process must be completed. B. A product or service must be provided. C. Cash must be collected. D. GAAP requires that the accrual basis accounting principle be used in the revenue recognition process.
If a functional expense classification is used for the statement of comprehensive income, what must also be disclosed?
An entity classifying expenses by function shall disclose additional information on the nature of expenses. The minimum disclosure does not includea. Depreciation c. Employee benefits b. Amortization d. Advertising
Under functional presentation of income statement an entitya. Shall not present additional disclosure on the nature of expensesb. Shall present additional disclosure on the nature of expensesc. There is no such thing as functional presentationd. Shall aggregate expenses according to their nature
An analyst must be familiar with the determination of income. Income reported for a business entity depends on proper recognition of revenues and expenses. In certain cases, costs are recog- nized as expenses at the time of product sale; in other situations, guidelines are applied in capi- talizing costs and recognizing them as expenses in future periods. Required: a. Under what circumstances is it appropriate to capitalize a cost as an asset instead of expensing it? Explain. b. Certain expenses are assigned to specific accounting periods on the basis of systematic and rational allocation of asset cost. Explain the rationale for recognizing expenses on such a basis.
Which statement is incorrect? A. The FUNCTIONAL Income Statement classifies expenses into cost of sales, selling expenses and general administrative expenses, among others. B. Income encompasses both revenues and gains. Revenues arise in the ordinary course of business activities while gains are not. C. Expenses encompasses both expenses and losses. Losses usually comprise the majority amount of deductible expenses to arrive at taxable income. D. The statement of comprehensive income encompasses all income and expenses, whether they are recognized in profit or loss determination or recognized directly in equity. E. none of the above
Cost is a pervasive constraint on the information that can be provided by financial reporting. Reporting financial information imposes costs, and it is important that those costs are justified by the benefits of reporting that information. b. Describe any THREE (3) costs each incurred by the providers and users of the information. c. Applying a measurement basis to an asset or liability creates a measure for that asset or liability and for the related income and expenses. List the measurement basis as suggested by the revised Conceptual Framework.
The functional presentation of expenses in the income statement is usually shown by grouping into two separate categories the selling and administrative expenses. True False
Which of the following accounting principles or conventions is contradictory to the GAAP requirement to expense R&D costs immediately? matching principle historical cost principle comparability conservatism
Which statement is incorrect? *A.the FUNCTIONAL Income Statement classifies expenses into cost of sales, selling expenses and general administrative expenses, among others .b.Income encompasses both revenues and gains. Revenues arise in the ordinary course of business activities while gains are not. c.Expenses encompasses both expenses and losses. Losses usually comprise the majority amount of deductible expenses to arrive at taxable income. d.The statement of comprehensive income encompasses all income and expenses, whether they are recognized in profit or loss determination or recognized directly in equity. e.none of the above
Which of the following principles matches expenses with associated revenues in the period in which the revenues were generated? Group of answer choices 1.revenue recognition principle 2.expense recognition (matching) principle 3.cost principle 4.full disclosure principle
How does the revenue-expense approach differ from the asset-liability approach fordefining accounting elements?