Question : Assertion (A): Cash Flow statement is a substitute for income statement.
Reason (R): Cash Flow Statement does not show Profit and Loss.
In the context of above two statements, which of the following is correct?
Option 1: Assertion (A) and Reson (R) are correct but the reason (R) is not the correct explanation of Assertion (A).
Option 2: Both, Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
Option 3: Only Assertion (A) is correct
Option 4: Assertion (A) is not correct but the Reason (R) is correct
Correct Answer: Assertion (A) is not correct but the Reason (R) is correct
Solution : Assertion (A) is not correct but the Reason (R) is correct. Because Profit is the revenue that is left over after business expenses have been deducted, whereas cash flow is the volume of money coming into and going out of a business at any one time. Profit is a better indicator of how well your company is doing, but cash flow is more crucial to the day-to-day operations of the company Hence Cash flow is not a substitute for income statement.
Hence the correct answer is option 4.
Question : Assertion A:- The cash flow statement and income statement are the same. Reason R:- The cash flow statement does not show the profit and loss account.
Option 1: Assertion A and reason R are correct and reason R is correct explanation of assertion A
Option 2: Assertion A and reason R are correct but reason R is not the correct explanation of Assertion A
Option 3: Both assertion A and reason R are not correct
Option 4: Assertion A is correct but the reason R is not correct
Question : Assertion (A): Non-cash transactions are not considered in preparing Cash Flow Statement.
Reason (R): Non-Cash transactions do not affect Cash and Cash Equivalents.
Option 3: Assertion (A) is correct but the Reason (R) is not correct
Option 4: Both, Assertion (A) and Reason (R) are not correct
Question : Assertion (A): Purchase of Stock in Trade on credit will not result in Flow of Cash or Cash Equivalents.
Reason (R): Purchase of Stock in Trade on credit does not involve cash.
in the context of the above two statements, which of the following is correct?
Option 4: Both, Assertion (A) and Reason (R) are correct
Question : Assertion A :- Bonus shares are not shown in the Cash Flow Statement because cash is not transacted. Reason R :- Issue of bonus shares will not involve cash.
Option 1: Assertion A and reason R are correct and reason R is the correct explanation of assertion A
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