Question : Assertion-Reason Questions: Chapter - Sources of Business Finance
Questions : Business Finance and Its Meaning
Assertion: Business finance involves making investment decisions that impact the profitability of the company.
Reason: Investment decisions are independent of financial planning.
Option 1: Both assertion and reason are true, and the reason is the correct explanation of the assertion.
Option 2: Both assertion and reason are true, but the reason is not the correct explanation of the assertion.
Option 3: Assertion is true, but the reason is false.
Option 4: Both assertion and reason are false.
Correct Answer: Assertion is true, but the reason is false.
Solution : The correct answer is (c) Assertion is true, but the reason is false.
The assertion is true. Business finance does involve making investment decisions that impact the profitability of the company. Investment decisions, such as where to allocate funds for projects, acquisitions, or expansions, can significantly affect a company's profitability in the short and long term.
The reason is false. Investment decisions are not independent of financial planning. In fact, investment decisions are a crucial part of financial planning. Financial planning involves assessing the financial resources available and determining how to allocate those resources, including making investment decisions, to achieve the company's financial goals and maximize profitability. Investment decisions are a key component of the overall financial planning process.
Assertion: Need for business finance arises due to various uncertainties and risks associated with business activities.
Reason: Financial planning eliminates all forms of business risk and uncertainties.
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