why preliminary expenses are added to net profit in cash flow statement?

Open in App

Solution

Preliminary Expenses are the expenses incurred by the company prior to its incorporation. Such expenses cannot increase during the life of the company but decrease as and when they are proportionately written off. It is added back to Net Profit before Tax and Extraordinary items in Operating Activities, being non-operating expenses of the business.

Suggest Corrections

Similar questions

Depreciation expenses are _________ to net profit while calculating cash flow from operating activities.

Non-cash expenses like depreciation, depletion & amortization expense are _______ to net profit before tax under indirect method.

Join BYJU'S Learning Program