Question

From following which are fictitious assets?

• A. Preliminary expence
• B. Deferred revenue expence
• C. Debtors
• D. All of the above

Answer 1

The correct option is A Preliminary expence

Fictitious assets are those assets which are not represented by anything concrete or tangible. There are no tangible properties behind such assets.

Preliminary expenses are those expenses which are incurred by the business for incorporation of the company. Since these are incurred to get the company in to existence, hence considered as assets for writing off in next few years proportionately.

Deferred revenue expenditure are those expense which are incurred for development of the business like advertisement campaign. The benefits of these expenses are accrued in the coming years too. Hence a proportionate amount should be debited every year.

Both the above items are fictitious assets.