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      Question

      Which of the following is an example of a Preliminary

      Expense? 
      A Discount on issue of shares. Correct Answer Incorrect Answer
      B Salary paid to the CEO in the second year. Correct Answer Incorrect Answer
      C Cost of drafting and printing the Articles of Association. Correct Answer Incorrect Answer
      D Prepaid Insurance. Correct Answer Incorrect Answer
      E Commission paid on the sale of goods. Correct Answer Incorrect Answer

      Solution

      Legal and professional costs involved in the formation of the legal entity are preliminary expenses. Preliminary expenses are costs incurred during the formation and incorporation of a company, such as legal fees, registration fees, and expenses for drafting and printing the Memorandum of Association (MOA) and Articles of Association (AOA).

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