In this lesson, Nick Palazzolo, CPA, dives into the specifics of expense reporting, elucidating the differences between expenses by nature and function. He clearly outlines how functional expenses are categorized by major program services or supporting activities, while natural expenses encompass a broader classification. Nick ensures that after this session, the ability to discern between functional and natural expenses in a question format will be second nature, especially when faced with multiple choices or fictitious examples tailored to test this knowledge. He encourages taking notes and practicing with these question types using the material presented in the slides to fortify understanding.