(Learning Objective 4: Reporting by expenses by function and nature) 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.

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?

(Group B)