Readers ask: What Is The Meaning Of Fictitious Assets?

Fictitious assets are the assets which has no tangible existence, but are represented as actual cash expenditure. In other words, fictitious means fake or not real, these are not assets at all but they show in financial statements.

What are fictitious assets in balance sheet?

Fictitious assets can be defined as the assets that cannot be realised in cash or no further benefit can be derived from those assets. These assets include a debit balance of profit and loss A/c and the expenditure not yet written off such as advertising expenses etc.

Is fictitious assets a current assets?

So Fictitious Assets are not an asset in the true sense but this is a huge amount of expenses or losses which are unclaimed in the profit/loss account during the year in which they are incurred. So, that is why they are treated as an asset and shown as an asset in the balance sheet.

Can fictitious assets be sold?

Difference between Fictitious Assets and Fixed Assets In the same manner, fictitious assets have no realizable value. They are only placed on the balance sheet as per the amount that has already been paid. It cannot be depreciated or sold once it is paid for.

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Which is example of fictitious assets Mcq?

A common example of a fictitious asset is business START-UP COSTS. Accountants record these costs as an asset because they do bring some value to the new business. The company may need to write off this fixed asset against earnings, however, to properly report all tangible and intangible assets on the balance sheet.

Is the example of fictitious assets?

Fictitious assets are the deffered revenue expenditure as well as intangible assets i.e advertisement expenses, discount on issue of shares and debentures. But point to be remembered that Goodwill, Patents, Trade Marks are not the part of Fictitious assets.

Is not fictitious asset?

These assets include a debit balance of profit and loss A/c and the expenditure not yet written off such as advertising expenses etc. Among the given options Discount on issues of shares and debentures is not the example of fictitious assets.

Is a fictitious asset?

Fictitious assets are the assets which has no tangible existence, but are represented as actual cash expenditure. Expenses incurred in starting a business, goodwill, patents, trademarks, copy rights comes under expenses which cannot be placed any headings. Fictitious assets have no physical existence.

What is the treatment of fictitious assets?

Fictitious assets have no physical existence or you can say these are intangible assets. These type of assets are just expenses which are treated as assets. They have no realizable value. They are amortized or written off in one then more profitable financial year.

Is goodwill is a fictitious asset?

another important property of fictitious assets us that they HAVE NO SELLABLE OR MARKET VALUE. however, goodwill can be sold and purchased so it is not a fictitious asset. on the other hand it cannot be seen or touched and hence it is an intangible asset. we can used it (Goodwill) so this is not fictitious asset.

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Is Prepaid expenses a fictitious asset?

Prepaid expenses and fictitious assets are both of revenue nature. Prepaid expenses are expenses incurred in advance. These are spread over for more than one reporting period and hence are recorded as a non-current asset but these are not actually an asset and so they are treated as fictitious assets.

Is deferred tax asset a fictitious asset?

A deferred tax asset, however, has no physical form to take. It’s not a pile of money, nor can it be turned into one. It’s essentially a “credit” — an accounting device that lets you lower your future reported expenses. As such, it is an intangible asset.

Which are current liabilities?

Current liabilities are typically settled using current assets, which are assets that are used up within one year. Examples of current liabilities include accounts payable, short-term debt, dividends, and notes payable as well as income taxes owed.

How do you verify a fictitious asset?

The fictitious asset does not have market value but it has legal existence. Auditor’s Duties

  1. Auditor should verify that expenses incurred are properly authorised by a responsible person.
  2. He should ensure that fictitious assets are treated as deferred revenue expenditure.

Which one of the following is an example of fictitious asset?

Example of Fictitious Assets:- Major examples of fictitious asset are: profit and loss (dr. bal), discount on issue of shares and debentures, preliminary expenses, underwriting commission, advertisement suspense a/c etc.

Is advertisement suspense a fictitious asset?

This capitalized Advertisement Expenditure is called Deferred Advertisement Expenditure or ‘Advertisement Suspense Account’. Such Deferred Revenue Expenditure is shown in the Balance Sheet as an asset till it is written off to Profit & Loss A/c.

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