Differences between Current Assets and Fictitious Assets

The major difference in both terms is on the basis of the nature of Expenditure and receiving benefits from them. To know more Differences between Current Assets and Fictitious Assets, we have to know the meaning of both terms. So, the meaning of both terms are explained below: -

Meaning of Current Assets: -

Those assets which are used or utilized within the period of one year are known as Current Asset. These are also known as short-term assets.

In other words, Those assets which are very easily convertible into cash or which are already available in the liquid form are known as Current Asset. 

Examples of Current Assets: –

• Cash or Cash Equivalents
  • The Cash in Hand 
  • Cash at Bank 
• Inventories
  • Raw Materials 
  • Work in Progress 
  • Finished Goods 
• Receivables
  • Sundry Debtors 
  • Bills Receivables 
• Pre-Paid Expenses
• Marketable Securities 
• Accrued Incomes
• Short Term Loans and Advances 
  • Advance to Employees 
  • Advance to Vendors
• Other Liquid Assets

To know the details about the Sales Book, Please check out the following link:

https://tutorstips.com/current-asset/

Meaning of Fictitious 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 the profit/loss account during the year in which they are incurred.

These types of expenses or losses are claimed/written off in the next more than one profitable financial year of the business enterprises. So, that is why they are treated as an asset and shown as an asset in the balance sheet. 

In other words, Businesses did not buy Fictitious Assets, they have just created them by accounting treatment. Just posting journal entry to convert the expenses which have huge value or not claimable in the current financial year into the assets accounts. 

Point to be Noted while treating 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 years.

Examples are as follows: –

• Discount on issue of Debenture/Equity or Preference shares.
• Preliminary Expenses.
• Business promotion Expenses. (If it has huge value)
• Any loss on issue of Debenture/Equity or Preference shares.

To know the details about the Sales Book, Please check out the following link:

https://tutorstips.com/fictitious-assets/

Chart of Difference Between Current Assets and Fictitious Assets: -

Basis of Difference	Current Assets	Fictitious Assets
Meaning	Those assets which are used or utilized within the period of one year are known as Current Asset.	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 the profit/loss account during the year in which they are incurred.
Also known as	These are also known as Short Term Assets.	These are also known as a huge amount of unclaimed expenditures.
Write off or Amortization	These types of assets have written off according to the passing of time. like bad debts written off.	These types of assets have amortized according to the passing of time.
Able to Liquidate	These assets are able to liquidate.	These assets are not able to liquidate.
Helping in	These are majorly helpful in Running a business smoothly.	These are majorly helpful in starting of business or raising funds.
Length of Period of usage	The period of getting benefits from these types of assets is less than from one financial year.	These types of assets are used first then after amortize in the next financial year.

Download the chart: -

If you want to download the chart please download the following image and PDF file:-

 

 

The conclusion of Difference: -

The major difference in both terms is on the basis of the nature of Expenditure and receiving benefits from them. From the Current assets, we will receive a benefit for a short period i.e. less than one year but from fictitious assets, we had already received the benefits but we will amortize them from the future profits.

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