Which statement is not correct about expenses on the statement of income?
A)Classifying expenses by function means that expenses are reported according to the activity for which they are incurred.
B)Examples of expenses classified by nature are salaries and depreciation.
C)Companies following ASPE do not have to list their expenses in any particular order.
D)Expenses must be classified in decreasing order of magnitude.

Question

Quizplus · Accepted Answer

Expenses on the income statement can be presented either by function (e.g., cost of goods sold, selling, general and administrative expenses) or by nature (e.g., salaries, rent, depreciation). There is no requirement under Accounting Standards for Private Enterprises (ASPE) or International Financial Reporting Standards (IFRS) that expenses must be listed in decreasing order of magnitude. This choice is up to the company's discretion, provided the presentation is consistent and informative for users of the financial statements.

Which Statement Is Not Correct About Expenses on the Statement