DFS Income Statement

pirate Registered Posts: 469 Dedicated contributor 🦉
Hi everyone

Am studying for the DFS and going over some stuff at the beginnng of my study.

I have had a bit of a mental block as I didnt really worry about this when I went through the stuff the first time, apologies if this is a basic thing but maybe my mind is a bit too full today.

So the question is on an income statement expenses should be analysed by function (or nature but for the purposes of the DFS its by function).
So there are examples like Distribution Costs, costs of sales, admin expenses, finance costs and so on.
Obviously we dont want to list out all the function for pulic consumption documents hence we are broadly categorising expenses into functional areas.

Is there a definitive list of the functions or is it a subjective thing

Also what expenses go in each of the function titles. The example in the book is placing certain expenses like advertising into distribution costs. As putting journalling to make the adjustments to the provided TB or ETB in the exam is the first thing I just wanted to make sure that there isnt something I am missing.

I have gone back over my old study materials and it doesnt seem to have as they are more listed out in the financial statements for sole traders and partnerships.

So question is
is there a definitive list of the expenses functions that appear on the income statement?
Are there any examples of what should be in each of these expenses areas anyway

many thanks in advance

having several senior moments in the months up to the exams


  • Steve Collings
    Steve Collings Registered Posts: 997 Epic contributor 🐘

    Expenses by function are specific in IAS 1:

    Cost of sales
    Distribution costs
    Administrative expenses
    Finance costs

    The classification of such costs are subjective depending on the entity.

    Cost of sales would include: opening inventory, purchases, returns out and closing inventories.

    Distribution costs would include: haulage and delivery costs.

    Admin expenses would include: usual admin costs and depreciation (unless you are specifically told to charge depreciation to cost of sales). Some view advertising as administrative costs or cost of sales but it's usually best to go with how the examiners treat it in the past papers, or how tuition material usually charges it to.

Privacy Policy