Categorising expenses as distribution costs and administration expenses is an example of which classification method?
A) Nature of expense method
B) Function of expense method
C) Purpose of expense method
D) None of the above

Question

Quizplus · Accepted Answer

Categorising expenses based on their function/method of operation (in this case, distribution and administration) is an example of the function of expense method. The nature of expense method categorises expenses based on their type (such as rent, salaries, etc.), while the purpose of expense method categorises expenses based on their ultimate objective (such as marketing expenses, research and development costs, etc.). None of these methods are applicable in this scenario.

Categorising Expenses as Distribution Costs and Administration Expenses Is an Example