Commercial Applications
What are fictitious assets? Give one example.
Accounting
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Answer
Fictitious Assets — These are not really assets in the true sense but are expenses of a heavy nature whose benefits are expected to extend over several years. They have no realisable value but are shown on the assets side of the Balance Sheet until they are gradually written off against profits over future years.
Example: Share issue expenses, preliminary expenses, heavy advertising expenses, research and development expenses.
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Related Questions
With reference to Receipts & Payments Account which feature(s) is/are correct?
Statement 1: It is a real account.
Statement 2: It reveals the surplus or deficit for the year.
Statement 3: It is a summary of cash receipts.
Statement 4: It contains non-cash items.
- 1 and 3
- 2 and 4
- Only 3
- Only 4
…………… depicts the Capital Fund of the organisation.
- Profit and Loss Account
- Trading Account
- Balance Sheet
- Nominal Account
Give one difference between the Profit and Loss Account and the Balance Sheet.
What are contingent liabilities?