Question

Costs of legal services, state fees, and accounting services that relate to creating a business entity and are incurred before starting the business are referred to as:

a. Pre-operating Costs
b. Start-up Costs
c. Organizational Costs
d. Preliminary Expenses

Answer 1

Pre-operating costs or start-up costs are the costs of legal services, state fees, and accounting services incurred before starting a business.

Step-by-step explanation:

The costs of legal services, state fees, and accounting services that are incurred before starting a business are referred to as pre-operating costs or start-up costs. These costs include expenses related to registering and setting up the business entity, such as legal fees, filing fees, consulting fees, and accounting fees.

For example, if a business hires a lawyer to help with the legal process of setting up the business and pays a fee for their services, this would be considered a pre-operating cost or start-up cost.

Organizational costs and preliminary expenses are not the correct terms to describe these costs.