The correct answer is: D. None of the above
Preliminary expenses are expenses incurred before the commencement of business. They are not considered as assets because they do not have future economic benefits. They are also not considered as liabilities because they do not represent a present obligation. Instead, they are treated as an expense in the period in which they are incurred.
In the balance sheet, the preliminary expense of Rs. 10,000 was reduced to Rs. 500. This means that the company has recognized that Rs. 9,500 of the preliminary expenses are not recoverable and should be written off. This write-off will be treated as an expense in the current period.
Option A is incorrect because the preliminary expenses are not sold. They are written off.
Option B is incorrect because the preliminary expenses are not current assets. They are expenses.
Option C is incorrect because the preliminary expenses are not adjustments in profit from operation. They are expenses.