2. Preliminary expenses are the nature of fictitious assets. Basis of Difference: Current Assets. These are transferred to the profit and loss accounts and written off every year from the profits of the business. The assets which have no market value are called fictitious assets. Expenses incurred on the formation of a company or the Preliminary Expenses are treated as capital expenses because their benefit will be available over a long period. These expenses are shown on the assets of the balance sheet under the head View Answer . Examples of fictitious assets are deferred revenue expenditure, preliminary expenses… Those assets on which the business will get benefits for a long period of time i.e. Therefore, they are accounted as fictitious assets. Learn more ... C fictitious assets. Fictitious Assets. The examples of Fictitious assets are loss on debentures issue, preliminary expenses, discount on shares, promotional expenses, etc. Fictitious Assets. These expenses are shown . Some Other Types of Assets. Those assets which are used or utilized within the period of one year are known as Current Asset. They consider other items like preliminary Expenses, debts balance of profit and loss account, etc. These are not assets but losses or expenses. as fictitious assets for the reason that they do not represent any value at all to the business. 2. Preliminary expeneses are the nature of fictitious assets. Preliminary expenses are related to creating new company and before starting business operations. Basis of Difference: Fixed Assets. : The Fictitious word, itself says “fake”.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 profit/loss account during the year in which they are incurred. Fictitious Assets. Asset Valuation Understanding the net worth of an investment after a few years or calculation of intangible assets owned by organizations like trademarks or patents is called valuation of assets. Gross profit ratio indicates the difference between sales and direct costs. Meaning. Preliminary expenses cannot be put on normal accounts, but they have to be accounted. Such assets are written off as soon as possible, when the company earns first earnings. But due to some unavoidable circumstances, these losses or expenses couldn’t be written off during the year. Examples: Deferred Cost such as Preliminary Expenses, Loss on issue of shares Discount on issue of shares, Loss on issue of debentures and Discount on issue of debentures. Preliminary expenses is an example of- This objective type question with answer for competitive exams is provided by Gkseries. That means fictitious assets are fake assets. These expenses are of capital nature and include stamp … Contingent Assets These are the formation expenses of the company before any operation of the busies held. Fictitious assets are those assets which are not real but whose benefits are derived by the company over a long period of time. They are a good example of fictitious assets which are written off every year from the profits earned by the business. Formula: The term fictitious assets refer to preliminary expenses, debit balance of Profit and Loss Account and other similar losses shown on Balance Sheet asset side. Preliminary expenses are incurred at the time of formation and commencement of company. Gross Profit Ratio: This ratio is also known as Gross margin or trading margin ratio. Goodwill represents the amount paid by the purchaser for the reputation and connections of … These are transferred to the profit and loss accounts and written off every year from the profits of the business. 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