Preliminary expenses

The expenses incurred when a company is formed and before the start of any business operations are termed as preliminary expenses, they are a good example of fictitious assets which are written off every year from the profits earned by the business.

Preliminary expenses include Legal cost, Professional fees, Stamp duty, Printing fees, etc.

Preliminary expenses are shown on the Assets side of the balance sheet.

 

image showing preliminary expenses

 

>Read Deferred Revenue Expenditure