Question : Assertion-Reason Questions: Chapter - Sources of Business Finance
Questions : Business Finance and Its Meaning
Assertion: Financial planning contributes to maximizing the wealth of shareholders and stakeholders.
Reason: Financial planning only considers short-term profitability and ignores long-term growth.
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 that "Financial planning contributes to maximizing the wealth of shareholders and stakeholders" is true. Financial planning involves strategic decisions aimed at optimizing financial resources and investments to achieve long-term growth and ultimately enhance the wealth of shareholders and stakeholders.
The reason that "Financial planning only considers short-term profitability and ignores long-term growth" is false. Financial planning encompasses both short-term and long-term financial goals. It involves planning for the future, considering long-term sustainability, growth, and the creation of shareholder value, not just short-term profitability. Financial planning aims to strike a balance between short-term gains and long-term objectives. It is designed to consider both short-term and long-term financial health and growth of the company.
Assertion: Financial planning helps in managing the company's financial resources effectively.
Reason: Financial planning considers only the short-term goals of a business.
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