The choice between reporting expenses by nature or by function is extremely important,as different net profit figures are derived depending upon the choice made.

Question

Quizplus · Accepted Answer

The choice between reporting expenses by nature or by function does not affect the net profit figure, as it is merely a presentation choice in the income statement. The total expenses remain the same, only the way they are classified and presented changes.

The Choice Between Reporting Expenses by Nature or by Function