Question : Assertion A :- Bonus shares are not shown in the Cash Flow Statement because cash is not transacted.
Reason R :- Issue of bonus shares will not involve cash.
Option 1: Assertion A and reason R are correct and reason R is the correct explanation of assertion A
Option 2: Assertion A and reason R are correct but reason R is not the correct explanation of Assertion A
Option 3: Both assertion A and reason R are not correct
Option 4: Assertion A is correct but the reason R is not correct
Correct Answer: Assertion A and reason R are correct and reason R is the correct explanation of assertion A
Solution : Answer = Assertion A and reason R are correct, and reason R is the correct explanation of assertion A
Assertion A is correct because bonus shares do not involve cash transactions and therefore, are not shown in the cash flow statement. Reason R is correct, as issuing bonus shares does not require cash outflow. Thus, assertion A and reason R are both correct and reason R is the correct explanation of assertion A.
Hence, the correct option is 1.
