____________ is/ are the example/ examples of preliminary expenses.

Expenses on issue of prospectus

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Underwriting commission

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Expenses on issue of shares

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All of these

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Solution

The correct option is C All of these
The expenses which are incurred before the incorporation of a company or the start of a business are known as preliminary expenses. These include expenses such as legal or professional fees, logo designing cost, printing, registration fees, stamp duty, etc.

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Similar questions

Q. Answer the question.
State whether the following are revenue or capital transactions.
(a) Carriage paid on goods bought.
(b) Legal expenses paid for illegal use of trade mark.
(c) Capital raised by issue of equity shares.
(d) Allowed discount on issue of shares.
(e) Cost of formation of a new company.
(f) Compensation paid to a discharged employee.

Q. Preliminary expenses are an example of _____________.

PRACTICAL PROBLEMS

(Call in arrears and Balance Sheet)

The Alfo Ltd. made an issue of 10,000 shares of Rs 20 each payable as follows-

Application	:	Rs 5	Allotment	:	Rs 10
First Call	:	Rs 2	Final Call	:	Rs 3

The company received applications for 15,000 shares of which applications for 5,000 shares were rejected and money refunded. The directors made all the calls. One share holders, holding 100 shares failed to pay first and final call. The expenses of issue amounted to Rs 5,000

Pass journal entries and show the Balance Sheet.

Note: Expenses on issue should be shown as asset. Every year certain amount of expenses should be charged to P&L A/c.

How would you disclose the following items in the Balance Sheet of a Company :

(i) Share Issue Expenses (to be written off in next 12 months)

(ii) Share Issue Expenses (to be written off after 12 months)

(iii) Premium on Redemption of Debentures

(iv) Debit balance of Statement of Profit and Loss

(v) Loan from Bank

(vi) Loan repayable on demand

(vii) Shares in S.B.I.

(viii) Investments

(ix) Interest Accrued on Investments

(x) Guarantees given by the Company

Q. Discount on issue of shares is a ___________.

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____________ is/ are the example/ examples of preliminary expenses.

The correct option is C All of theseThe expenses which are incurred before the incorporation of a company or the start of a business are known as preliminary expenses. These include expenses such as legal or professional fees, logo designing cost, printing, registration fees, stamp duty, etc.

The correct option is C All of these
The expenses which are incurred before the incorporation of a company or the start of a business are known as preliminary expenses. These include expenses such as legal or professional fees, logo designing cost, printing, registration fees, stamp duty, etc.