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Question : Assertion A :- interest received by the company on investment is a Investing activities
Reason R :- interest received on call - in arrears by a company is a financing activities

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


Team Careers360 25th Jan, 2024
Answer (1)
Team Careers360 26th Jan, 2024

Correct Answer: Assertion A and reason R are correct but reason R is not the correct explanation of Assertion A


Solution : Answer = Assertion A and reason R are correct, but reason R is not the correct explanation of Assertion A

Assertion A is correct because interest received on investments is indeed classified as investing activities in the cash flow statement. However, reason R is incorrect because interest received on call-in arrears is typically classified as operating activities, not financing activities. Therefore, assertion A and reason R are correct, but reason R is not the correct explanation of assertion A.

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