Preliminary expeneses are the nature of fictitious assets.
These are the formation expenses of the company before any
operation of the busines held. These are transferred to
the profit and loss accounts and written off every year
from the profits of the business. These expenses are shown
on the assets of the balance sheet under the head
Expenses incurred before the commencement of the business
are prelimary expenses and same will be deferred over the
period will be shown under Assets side of balance sheet as
Miscellaneous Expenses (Asset).
Annual accounts of a limited company are filed with the
registrar of companies and may be inspected by the public.
There "published accounts" must comply with certain
requirements, some of which are statutory and some of which
Thus, Preliminary expenses are revenue for the business and
is recorded in the liabilites of the balance sheet.
Preliminary Expenses is the expenses incurred before the
commencement of the company that beared by the promoters of
the company for its incorporation. As it is considered as
one of the fictitious asset of the company and is treated
as deffered revenue expenditure because it derives benefits
in the long run and thus written off every year on the
asset side of the balance sheet
preliminary expenses are the expenses which accure at the
time of starting of the business as registration fees.
basically it is amortize as per decided time by the company
and at the time when the expense accure it will treate as