Definition of Reporting Expenses by Function
Reporting expenses by function means to classify and report expenses according to the type of activity for which the expenses were incurred.
Examples of Reporting Expenses by Function
Manufacturers classify and report their expenses on their internal income statements by the following functions:
- Manufacturing (further classified by production departments and factory service departments)
- Selling, general administrative
- Financing
Not-for-profit organizations classify and report expenses on their statement of activities according to the following functions:
- Each of its major programs
- Management and general
- Fund-raising
- Membership development
In addition, not-for-profit organizations report their expenses by their nature (natural classifications such as salaries, electricity, repairs, etc.)
