why do we take preliminary expenses into asset side?
Answer Posted / h.r. sreepada bhagi
Preliminary Expenditure - is shown under Miscellaneous
Expenditure (To the Extent Not Written off of Adjusted) on
the Assets side or under Application of Funds in the Balance
Sheet. It represents the amounts spent on getting the
company formed & registered & the benefits of this is spread
over the life of the company. If this is charged to the
Profit & loss Account in the year when it's incurred, True
Profit/Loss is not arrived at for that year, as the expenses
are overstated.
In order to even this effect, the expenditure is written of
over a reasonable period of time (Eg. 5 yrs. or 10 years).
Since it is in the nature of an intangible asset, it will
appear as an asset, till it is fully charged off to Profit &
Loss A/c.
Is This Answer Correct ? | 76 Yes | 13 No |
Post New Answer View All Answers
Do you have any professional experience in this field?
What is bond ? What is capital market?
What is the definition of manual accounting?
what are the processes of account reconcillation
How to make privision in SAP. (Please revert on the possibility of making this happen at PO Stage)
what is different between leaser of subsidary book and journal?
Do you know partitioning in accounting?
Tell me what is public accounting?
Differentiate accounting and auditing?
record the following transaction in the various books of accounts F Black loan us $5000 paid by cheque.
Who uses accounting?
Do you know what is the importance of team work in this position?
iam working with tally ERP.9,but iam dont prepared reconciliation,trial balance,profit&loss,balance sheet etc.bcoz all these activicties done in head office.plz give me citeria where iam prepared.
When Tds is applicable to deduct and wht is rate for different work panel?
What are trade bills?