Expenses which are incurred prior to the

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Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Shares

Question:

Expenses which are incurred prior to the incorporation of the company are called..................

Options:

Share issue expenses

Par issue expenses

Sweat share expenses

Preliminary expenses

Correct Answer:

Preliminary expenses

Explanation:

All expenses incurred before a company is formed i.e. cost incurred before the start of business operations is termed as preliminary expenses.

Examples of such expenses suffered before the incorporation of business are;