Under IFRS companies must classify income statement items by
A) function.
B) nature.
C) nature or function
D) date incurred.

Question

Quizplus · Accepted Answer

Under IFRS, companies may classify income statement items either by their nature or function. The nature of an item refers to the type of transactions or events that have given rise to the item, while function refers to the categories of activities that are intended to result in the generation of the revenue or expense. Therefore, a company may choose to present its income statement either by grouping items according to their nature (e.g. sales revenue, cost of sales, salaries and wages, etc.) or by the function they serve (e.g. cost of goods sold, selling and distribution expenses, administrative expenses, etc.).

Under IFRS Companies Must Classify Income Statement Items by