Question

What is the nature of profit prior to incorporation?

Answer 1

Hello Friend..!!

The nature of profit prior to Incorporation is the profit and loss suffered during the period before incorporation it is a capital profit and is not legally available for distribution to the public .

Thank you..!!

Answer 2

The pre-incorporation profits made by the company are called capital profits.

• The nature of profit prior to incorporation is of a capital nature.
• Capital profits are those profits that are made by Nany company before its incorporation or registration.
• These profits are not legally available for the distribution of dividends.
• Company can not earn any kind of profit before its existence so this profit can not be provided as a dividend.
• When a company gets registered and after its incorporation, any kind of profit that is earned by the company is known as revenue profit.
• Revenue profits are used for providing dividends and meeting all the expenses of the company.

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