Question

What is the difference between Fictitious Assets and Deferred Revenue Expenditure?

Answer 1

Dear Student


Fictitious assets are those assets which don't have any tangible existence but some expenditure has been incurred on them. These are shown under the assets just to account for expense such as Loss on issue of shares, these are written off as soon as possible against the earnings of firm .

Whereas


Deferred revenue expenditure are the expenses that are of revenue nature but the benefits of such expenses can be availed for a long period of time. In simple words, these expenses are incurred but the effects of such expenses are not so rapid and occurs after a period of time. Another important point that you should note regarding deferred revenue expenses is that such expenses does not create any assets for the organisation.


Therefore from both of the above definitions we can understand that : Deferred revenue expenditure provides benefit to the firm for a period of moere then one accounting year or longer where as Fictitious assets are the assets from which no benefit is going to be received and the are written off as expense.


Regards