Potomac's accountant has just prepared an analysis of its expenses for the year, by nature and...

 

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Potomac's accountant has just prepared an analysis of its expenses for the year, by nature and by functions. The company earned service revenue totaling $450,000 during the year. Sales and Distribution Administrative Expense by Nature and Function Cost of Sales Marketing and logistics expenses Unallocated Wages and Salaries 43,000 32,000 39,000 25,000 Depreciation Advertising expense Motor vehicle expense 5,000 4,000 8,000 2,000 30,000 12,000 30,000 28,000 Utilities expense 8,000 3,000 12,000 5,900 Interest expense 7,300 Тах expense 3,400 1. Prepare Potomac's income statement using analysis of expenses by nature. 2. Prepare Potomac's income statement using analysis of expenses by function. 3. Looking at your answers to part 1 and 2 above, which one do you prefer as a user of financial statements? Potomac's accountant has just prepared an analysis of its expenses for the year, by nature and by functions. The company earned service revenue totaling $450,000 during the year. Sales and Distribution Administrative Expense by Nature and Function Cost of Sales Marketing and logistics expenses Unallocated Wages and Salaries 43,000 32,000 39,000 25,000 Depreciation Advertising expense Motor vehicle expense 5,000 4,000 8,000 2,000 30,000 12,000 30,000 28,000 Utilities expense 8,000 3,000 12,000 5,900 Interest expense 7,300 Тах expense 3,400 1. Prepare Potomac's income statement using analysis of expenses by nature. 2. Prepare Potomac's income statement using analysis of expenses by function. 3. Looking at your answers to part 1 and 2 above, which one do you prefer as a user of financial statements?

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An income statement by nature method is the one in which exp... View the full answer