Which Statement Is Correct About Expenses in the Income Statement

question 100

Multiple Choice

Which statement is correct about expenses in the income statement?

• A)Some function of expense categories are depreciation or employee costs.
• B)Expenses can be classified in any manner under IFRS.
• C)The function of expense format classifies expenses based on their use.
• D)Expenses should be classified based on their materiality.

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Definitions:

Jensen's Measure

A performance evaluation measure that calculates the excess return a fund generates over its expected return, given its level of risk.

Risk-Free Return

The theoretical return on an investment with no risk of financial loss, often represented by the yield on government securities such as U.S. Treasury bonds.

Beta

A measure of a security's volatility in relation to the overall market; a beta greater than 1 indicates greater volatility than the market.

Bogey Portfolio

A benchmark portfolio against which the performance of an investment portfolio is measured, often used to assess the skill of portfolio managers.