Which Statement Is Correct About Expenses on the Statement of Income

question 24

Multiple Choice

Which statement is correct about expenses on the statement of income?

• A)Classifying expenses by nature means that expenses are reported according to the activity for which they are incurred.
• B)Examples of expenses classified by function are cost of goods sold and administrative expenses.
• C)Expenses must be classified by their function.
• D)Expenses must be classified in decreasing order of magnitude.

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Definitions:

Organization And Layout

The way in which the parts of something are arranged or laid out to form a cohesive and functional whole.

Logic

The study of reasoning, or the system of principles and rules that guide rational thought and argumentation.

Goodwill

The favorable reputation of a business seen as an intangible asset in the context of its value.

Style And Tone

The distinct manner of expression and the attitude or mood conveyed through writing or speech.