Question : Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R) :
Assertion (A): In case of shares issued on Pro-rata basis, excess money received at the time of application can be utilised till allotment only.
Reason (R): Company has to pay interest on calls in advance @ 12% p.a. for amounts adjusted towards calls (if any). In the context of the above two statements, which of the following is correct?
Option 1: Both (A) and (R) are true, but (R) is not the explanation of Assertion (A).
Option 2: Both (A) and (R) are true, but (R) is a correct explanation of (A).
Option 3: Both (A) and (R) are false.
Option 4: (A) is false, but (R) is true.
Correct Answer: (A) is false, but (R) is true.
Solution : Answer = (A) is false, but (R) is true.
Assertion (A) is false because, in the case of shares issued on a pro-rata basis, excess money received at the time of application can be utilized until allotment and thereafter refunded. However, Reason (R) is true, as companies may pay interest on calls in advance.
Hence, the correct option is 4.