Sorting and reporting expenses according to the type of activity for which the expense was incurred. The functional expense classifications for a nonprofit organization would be Program #1, Program #2, Management and General, Fundraising.
Businesses have functions such as manufacturing, selling, and general and administrative.
(Sorting and reporting expenses by the type of expense such as salaries, rent, utilities, etc. is known as natural expense classifications.)
Join PRO or PRO Plus and Get Lifetime Access to Our Premium Materials
Read all 2,866 reviewsFeatures
PRO
PRO Plus
For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.
Read 2,866 Testimonials
