Question : Assertion (A): The difference between Total Assets and Current liabilities is capital employed.
Reason (R): Capital employed is a measure of a company's complete financial commitment to its operations, including any expansion or acquisition costs.
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.
Correct Answer:
Both A and R are true and R is the correct explanation of A.
Solution :
The total amount of capital utilized by a company or project to acquire profits is known as capital employed, often referred to as funds used.
Total Assets minus Current Liability equals Capital Employed.
Hence option 1 is the correct answer.
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