What does functional expense mean on the CPA exam?
Functional expense. Expense classified by what it was FOR -- program, management and general, fundraising -- rather than by what it was. Not-for-profits must present both.
Defined against ASC 958-720-45.
Which CPA exam sections use functional expense?
Functional expense appears in the FAR section of the CPA exam.
Related terms
- accretion expense: The increase in an asset retirement obligation from the passage of time, measured by the interest method at the credit-adjusted risk-free rate in effect when the liability was first measured.
- interest expense: The cost of borrowing for the period, accrued as time passes rather than when the payment is made.
- program development: The IT general control area covering how new systems are built, tested and approved before going live.
- technological feasibility: The point at which software to be sold, leased, or otherwise marketed reaches a completed detail program design or, absent one, a working model.