If the business is one in which these classes of property are dealt in, they become active assets. Land, for example, would be one of the _active_ assets of a business organized to buy and sell real estate. =50. Examples of Floating Assets.= The active or floating assets of a mercantile business are: _Merchandise_--meaning the stock in trade or goods dealt in. _Accounts_--the open accounts of customers who owe for goods purchased. _Notes_ or _Bills Receivable_--all outstanding notes payable to the firm. _Cash_--the amount of cash on hand and in the bank. =51. Examples of Passive Assets.= Passive or speculative assets are more frequently found on the books of a manufacturing business, a corporation, or a business a part or whole of which has been sold by the original owners. Examples of these assets are: _Patents_--A manufacturer owns a patent the value of which depends upon future profits resulting from the manufacture and sale of the article which it covers. It is customary to place a value on the patent, and to consider it an asset of the business. _Good-Will_--A man has established a business which has become extremely profitable, and in selling the business he places a certain value on the reputation or goodwill which he has built up. _Speculative_--A firm having a surplus not required in the business sometimes invests it outside of the business with the expectation of realizing a profit by selling at an advanced price. They buy grain or provisions, mining or railway stocks, etc. Or an investment may be made in the stock of some manufacturing business to be established in the town, because such an enterprise, if successful, will naturally result in an increase in their own business. =52. Examples of Fictitious Assets.= Fictitious assets are seldom found on the books of other than corporations where a large initial promotion expense is involved. A good example of a fictitious asset is: _Advertising_--A business house may decide on an average annual expenditure for advertising; but to be effective, the expenditures for the first two or three years may necessarily exceed this amount. The excess is considered as an investment since it is expected that as the business becomes firmly established the annual expenditure can be reduced to an amount even less than that estimated, gradually reducing the amount carried on the books as an asset. To illustrate: Annual advertising appropriation for ten years is $10,000.00. Expended first year $18,000.00 Deduct appropriation 10,000.00 ---------- To advertising inventory 8,000.00 Expended second year 15,000.00 Deduct appropriation 10,000.00 ---------- To advertising inventory 5,000.00