A major difference between functional accounts and natural accounts is that functional accounts
A) are based on the contribution-margin approach and natural accounts are based on the full cost approach.
B) always total to a lower overall expense than the total of the natural accounts.
C) might be used to compare the costs of serving different customers-but natural accounts are not suited to that purpose.
D) are the basis for most accounting systems, but natural accounts are more useful for marketing managers.
E) do not consider fixed costs, but natural accounts do.

Question

Quizplus · Accepted Answer

Functional accounts are categorized by the business functions, such as advertising or production, while natural accounts are based on specific types of expenses, such as rent or salaries. Natural accounts are more suited to analyze specific expenses for decision making, while functional accounts can be used to compare costs across different functions or departments. Therefore, functional accounts might be used to compare the costs of serving different customers, but natural accounts are not suited to that purpose.

A Major Difference Between Functional Accounts and Natural Accounts Is