Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Financial Statements of a Company

Question:

If any balance is left after writing off preliminary expenses from securities premium, then from where the balance is to be written off?

Options:

Debenture Redemption Reserve

Revaluation Reserve

Capital Redemption Reserve

Statement of profit & loss

Correct Answer:

Statement of profit & loss

Explanation:

The correct answer is option 4- Statement of profit & loss.

Preliminary expenses are to be written-off completely in the year in which such expenses are incurred. They should be written-off first from securities premium and the balance if any, from statement of profit & loss.