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.
Question : Assertion (A): The current ratio assesses the firm’s ability to meet its short-term liabilities on time. Reason (R): The current ratios assess the ability of the firm to meet its current liabilities immediately
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.
Question : Assertion: Physical capital is tangible in nature Reason: Physical capital can be seen and touchable.
Question : Assertion (A): Current Liabilities are calculated by subtracting Working Capital from Current Assets. Reason (R): Working Capital = Current Assets – Current Liabilities
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.
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