What Is Pre Operating Expense?

Sophia Al-Mansoor
Sophia Al-Mansoor
• • 6 min read

Defining Pre-Operating Expenses as a General Rule, Purchases That Would Normally Qualify as Operating Expenses but Were Incurred Before the Start of Business...

What Is Pre Operating Expense?

Defining Pre-Operating Expenses
As a general rule, purchases that would normally qualify as operating expenses but were incurred before the start of business (i.e. before charging rent, serving customers, etc.) are considered pre-operating expenses for the purposes of tax and accounting.

How do you account for pre-operating expenses?

Shown in Financial Statements

Also known as pre-operative expenses, preliminary expenses are shown on the asset side of a balance sheet. The portion which is written off from the gross profit in the current year is shown on the income statement and the remaining balance is placed in the balance sheet.

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What are examples of operating expenses?

The following are common examples of operating expenses:
  • Rent and utilities.
  • Wages and salaries.
  • Accounting and legal fees.
  • Overhead costs such as selling, general, and administrative expenses (SG&A)
  • Property taxes.
  • Business travel.
  • Interest paid on debt.
Sophia Al-Mansoor

Sophia Al-Mansoor

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Sophia analyzes international trade, startup ecosystems, retail transformation, and supply chain logistics for modern digital publications.