Explanation

Goodwill is an example of a fictitious asset. Fictitious assets are intangible items that appear on the balance sheet but have no physical existence and cannot be sold separately from the business. They represent expenses or losses that provide benefits over future periods.

Goodwill arises when a business is purchased for more than the fair value of its net assets. This premium is paid because of the business’s reputation, customer loyalty, brand name, or skilled workforce. While valuable, goodwill has no physical form.

Other examples of fictitious assets include preliminary expenses (costs of forming a company), discount on issue of shares, and accumulated losses. These are called fictitious because they represent past expenses, not resources the business can use.

Overdraft is a liability (money owed to the bank). Profit is income, not an asset. Stock (inventory) is a tangible current asset with physical form that can be sold. None of these are fictitious assets.