1. All expenses of an entity are classified as either distribution costs (selling expenses) or administrative expenses under the function of expense method. 2. The only difference between the function of expense and the nature of expense methods is the presentation of "cost of goods sold" under the function of expense method. 3. The main difference between the function and the nature of expense methods is the segregation of operating and non- operating items under the function of expense method.

Which is incorrect concerning the presentation of Income Statement? A. When items of income and expense are material, their nature and amount shall be disclosed separately.   B. An entity shall present extraordinary items separately on the face of the income statement or in the notes to F/S.   C. Natural presentation means that expenses are aggregated according to their nature like depreciation and employee benefits.   D. Cost of sales method classifies expenses according to their function such as cost of sales, cost of distribution and cost of administrative activities.   E. Both the natural presentation and functional presentation has their own merits for different types of entities, so the standard allows management to choose which they think is more relevant and reliable presentation.

Which of the following is not an example of an operating expense? Select one: a. Salaries Expense b. Insurance Expense c. Rent Expense d. Cost of Goods Sold

Which of the following statements correctly relate to the provisions of PAS 1?