Question : Assertion (A): Debentures and long-term loans from banks and other financial institutions are included in the total long-term debt. Reason (R): Equity share capital, Preference share capital, Reserves, and Surplus are all included in the shareholders' money.
Option 1: Both (A) and (R) are true and (R) is the correct explanation of (A)
Option 2: Both (A) and (R) are true and (R) is not the correct explanation of A
Option 3: (A) is true, but (R) is false
Option 4: (A) is false, but (R) is true
Correct Answer: Both (A) and (R) are true and (R) is not the correct explanation of A
Solution : Long-term debt is defined as debt that a firm incurs that becomes due or is payable more than a year from the balance sheet date and is displayed as a non-current liability on the liabilities side of the balance sheet of the company. Debentures and long-term loans from banks and other financial institutions are included in the total long-term debt. Equity share capital, Preference share capital, Reserves, and Surplus are all included in the shareholders' money. Hence option 2 is the correct answer.
Question : Assertion (A): The fixed asset turnover ratio aids in evaluating the stability of the company's long-term financial condition. Reason (R): It displays the ratio of shareholders' funds to total long-term debt.
Option 2: Both (A) and (R) are true and (R) is not the correct explanation of (A)
Question : Assertion (A): The debt-equity ratio expresses the relationship between short-term debt and equity share capital of an enterprise. Reason (R): It does not measure of the relative contribution of the creditors and shareholders.
Option 1: Both A and R are true and R is the correct explanation of A.
Option 2: Both A and R are true, but R is not the correct explanation of A.
Option 3: A is true, but R is false.
Option 4: A is false, but R is true.
Question : Assertion: A surplus in the capital account can offset a deficit in the current account.
Reason: Surplus in the capital account implies higher capital inflows, which can finance the current account deficit.
Option 1: Both Assertion and Reason are true and correct explanation
Option 2: Both Assertion and Reason are true and incorrect explanation
Option 3: Assertion is true but Reason is false
Option 4: Assertion is false but Reason is true
Question : Assertion: Physical capital is tangible in nature Reason: Physical capital can be seen and touchable.
Option 1: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
Option 2: Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
Option 3: Assertion (A) is true but Reason (R) is False
Option 4: Assertion (A) is False but Reason (R) is true.
Question :
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