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WAEC Financial Accounting 2001 Question 10

Question 10

Final Accounts of a Sole Trader

Which of the following is a fictitious asset?

  1. A.Overdraft
  2. B.Cash in hand
  3. C.Reserves
  4. D.Preliminary expenses.
Show the answer and explanation

Answer: D (Preliminary expenses.)

Explanation

Preliminary expenses have no physical value but are shown as a debit balance until written off.