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what is the meaning of preliminary expenses and how you
shown in balance sheet
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Answer / shweta
preliminary expenses are those expenses which are incurred
in connection with formation of a joint stock company. it is
treated as deferred revenue expenses and recovered thru p&l
a/c over a certain period
| Is This Answer Correct ? | 2 Yes | 0 No |
Answer / jishnu surendran
Preliminary expenses are formation expenses of the company such as MOA and AOA filing fees, fee for registering authorized capital etc.
As per section 35D of the Income Tax Act, preliminary expenses should be written of in 5 equal installments in each year after the commencement of business.
As per the Companies Act and Accounting Standards of the ICAI which is in tune with the Companies Act, writing off of preliminary expenses is the discretion of the company.
The Revised Schedule VI ( format of Balance Sheet under the Companies Act ) does not recognize an item named Miscellaneous Expenditure, which was a head present in the former Schedule VI format.
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Answer / k.anantha narayanan
It is nothing but pre-opening expenses.Pre-opening expenses is cost incurred in the formation of a firm and advertising,promotional activities,employee training etc.,before the firm can open doors for business.It is also called start up expenses.
| Is This Answer Correct ? | 3 Yes | 2 No |
Answer / anjali
preliminary expenses are incurred in the formation of a company or before incorporation . some examples are fees to ROC, licence fees , legal charges and other incorporation related charges incurred by the promoters. preliminary expenses are shown on the assets side of the balance sheet and amortised over the first 5 years as per the INCOME TAX ACT,1961.The amortised amount is written off in the P/l a/c on the debit side.
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Answer / shaikh
preliminary expenses are those expenses which are incurred
before the formation of a firm or business eg like
registration fees,promoters fees,etc.
basically to avoid the percentage of tax business man incurr
huge expenditure which is a loss to the government.
so government has imparted that the preliminary expenses
will get written off in various years and not in one year.
it is shown in asset side under the head miscellaneous
expenditure nd is written off yearly.
also it is shown on the debit side of profit and loss when
it has actually written off.
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Answer / quaser hussain syed
before installation of company expenses is called
preliminary expenses.which can be written off in following
years.
journal entry:
1.preliminarily expenses a/c dr
to cash a/c
group: miscellaneous exp (asset) asset side in balance sheet
group: cash in hand
2. preliminary exp written off a/c dr
to preliminary expenses a/c
group: indirect expenses
group: miscellaneous exp (asset)
this is the solution for this operation.
my answer is 100% correct
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Answer / amala albert
Preliminary expense is a pre opening expense. It is a
Fictitious asset.(Fictitious Assets means these assets are
nothing but the unwritten off losses or non-recoupable
expenses)
| Is This Answer Correct ? | 1 Yes | 0 No |
Answer / vanshika jha
Preliminary expense are those which are incurred by promoters of company, before companies incorporation.They are fictitious asset of the co. shown in balance sheet as miscellaneous asset, which are write off from profit and loss a/c or may be from security premium reserve,if any.
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Answer / anil kumar samal
Basically the expenditure which is made at the time of
formation of Company or formation of Business
organisation,it is transfered to profit & loss A/C, and
written off from profit every year. it is showing in the
Balance Sheet under Miscellaneous expenditure in the asset
side.
| Is This Answer Correct ? | 2 Yes | 2 No |
Answer / mark
preliminary expense are those accrueded at the comencement
of the business and is a current asset. they are
appropriations in the profit and loss appropriation account
and are not subtracted from the gross profit to find net
profit in the profit and loss appropriation account.
| Is This Answer Correct ? | 1 Yes | 1 No |
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