The Function of Expense Method is also known as the Cost of Sales Method.

• A. Cost of Goods Sold Method
• B. Single Step Method
• C. Cost of Sales Method
• D. Administrative Method

Answer: (C)

Grouping expenses by function means organizing costs according to what they relate to in the business—costs tied to producing and delivering goods (cost of sales), selling costs, and administrative costs. When expenses are presented this way, the method is known as the Cost of Sales Method because it centers on the costs involved in generating sales. That naming fits the concept since “cost of sales” is the primary function around which these expenses are categorized. The other options don’t describe this functional presentation: the Single Step Method is about a flat, one-line presentation of all expenses, not a breakdown by function; a term like Cost of Goods Sold Method isn’t the standard name for this approach, though cost of goods sold is part of cost of sales; Administrative Method isn’t a recognized label for this method.