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      Question

      XYZ Ltd. changed the format of its Statement of Profit

      and Loss from ‘nature of expense’ method to ‘function of expense’ method in accordance with Ind AS. The change was made to provide better clarity for management decisions. Which of the following would now be more visible?
      A Depreciation expense as a separate line Correct Answer Incorrect Answer
      B Cost of Goods Sold under operating expenses Correct Answer Incorrect Answer
      C Interest paid to creditors Correct Answer Incorrect Answer
      D Dividend declared Correct Answer Incorrect Answer
      E Cash flows from operations Correct Answer Incorrect Answer

      Solution

      Under the ‘function of expense’ method, expenses are grouped by purpose (e.g., cost of sales, administrative expenses), helping identify departmental profitability and COGS separately.

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