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CS Executive · Corporate Accounting and Financial Management · Related Aspects of Company Accounts

While preparing a statement of profit or loss for the periods before and after incorporation, which of the following is charged entirely to the post-incorporation period?

Directors' fees are charged wholly to the post-incorporation period because directors can be appointed and paid only after the company has been incorporated. Rent and depreciation are shared by time, and carriage outwards is shared by sales.

  1. ADirectors' feesCorrect
  2. BRent of the business premises
  3. CCarriage outwards
  4. DDepreciation on machinery

Explanation

Directors' fees can arise only after the company exists, so they are wholly post-incorporation. Rent and depreciation are normally split on a time basis, and carriage outwards is split on a sales basis.

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