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Preliminary Expenses are an example of :
- a)Revenue Expenditure
- b)Capital Expenditure
- c)Deferred Revenue Expenditure
- d)All of these
Correct answer is 'C'. Can you explain this answer?
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Preliminary Expenses are an example of :a)Revenue Expenditureb)Capital...
Preliminary expenses are an example of deferred revenue expenditure. Deferred revenue expenses are those expenses, the benefit of which can be extended to a number of years say, 3 to 5 years. These are to be charged to profit and loss account, over a period of 3 to 5 years depending upon the benefit accrued. These are of revenue nature but are deferred or postponed. "It is of quasi capital nature".
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Preliminary Expenses are an example of :a)Revenue Expenditureb)Capital...
Explanation:
Preliminary expenses refer to the expenses incurred in the formation of a company, such as legal expenses, registration fees, printing and stamping charges, and fees paid to promoters, etc. These expenses are not related to the actual operations of the company and are incurred before the start of the business.
Preliminary expenses are an example of Deferred Revenue Expenditure because:
1. Definition: Deferred Revenue Expenditure refers to the expenses that are incurred in the current year but are written off over a period of subsequent years.
2. Nature of Preliminary Expenses: The nature of preliminary expenses is such that they are not related to the actual operations of the company, and their benefits are expected to accrue over a period of time, usually more than one accounting period.
3. Treatment: Preliminary expenses are treated as an asset and are written off over a period of time, usually not exceeding five years. As such, they are an example of Deferred Revenue Expenditure.
Therefore, option C, Deferred Revenue Expenditure, is the correct answer.
Preliminary expenses refer to the expenses incurred in the formation of a company, such as legal expenses, registration fees, printing and stamping charges, and fees paid to promoters, etc. These expenses are not related to the actual operations of the company and are incurred before the start of the business.
Preliminary expenses are an example of Deferred Revenue Expenditure because:
1. Definition: Deferred Revenue Expenditure refers to the expenses that are incurred in the current year but are written off over a period of subsequent years.
2. Nature of Preliminary Expenses: The nature of preliminary expenses is such that they are not related to the actual operations of the company, and their benefits are expected to accrue over a period of time, usually more than one accounting period.
3. Treatment: Preliminary expenses are treated as an asset and are written off over a period of time, usually not exceeding five years. As such, they are an example of Deferred Revenue Expenditure.
Therefore, option C, Deferred Revenue Expenditure, is the correct answer.
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Preliminary Expenses are an example of :a)Revenue Expenditureb)Capital...
As per accounting standard 26 preliminary expenses are revenue expenditure.
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Preliminary Expenses are an example of :a)Revenue Expenditureb)Capital Expenditurec)Deferred Revenue Expenditured)All of theseCorrect answer is 'C'. Can you explain this answer?
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