Question : Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): The limitations of financial statements also form the limitations of the ratio analysis.
Reason (R): Since the ratios are derived from the financial statements, any weakness in the original financial statements will also creep in the derived analysis in the form of Accounting Ratios.
Option 1: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
Option 2: Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
Option 3: Assertion (A) is true but Reason (R) is False
Option 4: Assertion (A) is false but Reason (R) is true
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.
Assertion (A): Interest Coverage Ratio expresses the relationship between profits available for payment of interest and the amount of interest payable.
Reason (R): A higher ratio ensures lesser safety of interest on debts.
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