Answer Posted / shaikh

preliminary expenses are those expenses which are incurred
before the formation of a firm or business eg like
registration fees,promoters fees,etc.
basically to avoid the percentage of tax business man incurr
huge expenditure which is a loss to the government.
so government has imparted that the preliminary expenses
will get written off in various years and not in one year.
it is shown in asset side under the head miscellaneous
expenditure nd is written off yearly.
also it is shown on the debit side of profit and loss when
it has actually written off.

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