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- Name – Quiz 29 – Preliminary Expenses – (Answers)
- Topic – Preliminary Expenses
- Answers with Explanation
Q1. Preliminary expenses are shown on _____.
Ans. Preliminary expenses are shown on the asset side of a balance sheet.
Q2. Which of the following may not be an example of preliminary expenses?
Ans. Salary is an expense which is incurred after the incorporation of a business therefore it is not a preliminary expense.
Q3. Preliminary expenses are also known as _____.
Ans. Pre-operative means before the start of operations which is another name for preliminary expenses.
Q4. The word ‘Preliminary’ means _____.
Ans. The keyword is ‘before’. Preliminary means ‘an action or event preceding or preparing for something fuller or more important’.
Q5. Professional fees incurred before the start of a business is a preliminary expense.
Ans. The given statement is True. Expenses suffered before the incorporation of a business such as Professional fees (Lawyers, Chartered Accountants, etc.) are preliminary expenses.
Q6. Legal cost incurred after the incorporation of a business is a preliminary expense.
Ans. The given statement is False. Legal cost (Govt. & Court related fees) incurred ‘before’ the incorporation of a business is the preliminary expense.
Q7. Preliminary expenses are written off every year from _____.
Ans. They are a common example of fictitious assets and are written off every year from the profits earned by the business.
Q8. Preliminary expenses are _____ assets.
Ans. Preliminary expense is an example of fictitious assets.
Q9. Preliminary expenses are incurred _____ incorporation.
Ans. Preliminary expenses are the expenses that are incurred before the incorporation of a business.
Q10. Preliminary expenses are preferably written off within _____.
Ans. They are preferably written off within the same year (depending on the amount & local accounting standards).
Q11. Money spent to create a company logo may be treated as a preliminary expense.
Ans. The given statement is True. Logo expense is usually incurred before the start of business therefore it can be treated as a preliminary expense.