Question : Assertion-Reason Questions: Chapter - Sources of Business Finance
Questions : Business Finance and Its Meaning
Assertion: Need for business finance arises due to uncertainties and risks.
Reason: Business operations are always predictable and stable.
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. The need for business finance does indeed arise due to uncertainties and risks that businesses face in their operations. Uncertainties in the market, economic fluctuations, competition, changes in consumer behavior, and various other unpredictable factors necessitate financial planning and resources to mitigate risks and sustain the business.
The reason is the correct explanation. Business operations are not always predictable and stable. The business environment is characterized by uncertainties, and operations can be affected by various factors, leading to fluctuations and risks. Due to this unpredictability, businesses need financial resources to navigate through challenges, ensure stability, and seize opportunities that arise. Finance helps in managing and mitigating the impact of uncertainties and risks on business operations.
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