Question : Assertion-Reason Questions: Chapter - Sources of Business Finance
Questions : Business Finance and Its Meaning
Assertion: Financial planning is necessary for achieving business objectives effectively.
Reason: Financial planning helps allocate funds optimally and avoids wastage.
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: Both assertion and reason are true, and the reason is the correct explanation of the assertion.
Solution : The correct answer is (a) Both assertion and reason are true, and the reason is the correct explanation of the assertion.
The assertion is true. Financial planning is indeed necessary for achieving business objectives effectively. Financial planning involves setting goals, assessing the financial resources required to achieve those goals, and creating a strategy to allocate and manage those resources effectively to meet the business objectives.
The reason is the correct explanation. Financial planning helps allocate funds optimally and avoids wastage. By planning and managing finances effectively, a business can ensure that funds are allocated where they are needed most, avoiding unnecessary expenditures and optimizing resource utilization. This, in turn, helps the business achieve its objectives in a cost-effective and efficient manner.
Assertion: Financial planning ensures optimal utilization of funds and avoids wastage.
Reason: Financial planning does not consider long-term business goals.
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