Question : Assertion (A) : In the case of the Fixed Capital Method, a partner's capital account does not show a debit balance despite regular and consistent losses year after year.
Reason (R): All transactions involving loss or profit, drawings, salaries, and so on are recorded in the current account rather than the capital account in the case of fixed capital.
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: Only Assertion (A) is correct
Option 4: Only Reson (R) is correct
Correct Answer: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
Solution : When using the Fixed Capital Method. In current account, all regular transactions such as interest on capital, drawings, salary, commission, and profit distribution are recorded. As a result, under the Fixed Capital Method, the Capital account always has a credit balance.
Hence the correct answer is option 1.
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 3: Assertion (A) is true but Reason (R) is False
Option 4: Assertion (A) is False but Reason (R) is true.
Question : Assertion (A) : Profit and Loss Appropriation account shows the correct profit earned by the firm.
Reason (R) : The net Profit adjusted after takin into account the interest on capital, Interest on drawings, Salaries/ Commission Paid to the partner in the P/L appropriation account.
Option 3: Assertion (A) is true, But Reason (R) is false
Option 4: Assertion (A) is False, But Reason (R) is True
Question : Assertion (A): Physical capital aids in the development of human capital. Reason (R): Since physical capital is passive by nature, human capital aids in the production of physical capital.
Question : Assertion (A): Current Liabilities are calculated by subtracting Working Capital from Current Assets. Reason (R): Working Capital = Current Assets – Current Liabilities
Option 4: Assertion (A) is False and Reason (R) is correct.
Question : Assertion (A): The effective use of physical capital necessitates the formation of human capital Reason (R): The development of human capital increases people's life expectancies.
Option 2: Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
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