• 1 Marks

FA – May 2021 – L1 – SA – Q17 – Financial Statements Preparation

Identify an item not disclosed in the statement of comprehensive income using nature of expenses method.

When the statement of comprehensive income is prepared using nature of expenses method, the following information is disclosed, EXCEPT:

A. Gross profit
B. Changes in inventories of finished goods
C. Employee benefit expenses
D. Depreciation and amortisation expenses
E. Raw materials and consumables used

Answer:
A. Gross profit

Explanation:
The nature of expenses method focuses on categorizing expenses by their type rather than their function. Gross profit is not disclosed separately; instead, all expenses like raw materials and depreciation are disclosed.

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