Question : Assertion (A): Non-cash transactions are not considered in preparing Cash Flow Statement.
Reason (R): Non-Cash transactions do not affect Cash and Cash Equivalents.
In the context of above two statements, which of the following is correct?
Option 1: Assertion (A) and Reson (R) are correct but the reason (R) is not the correct explanation of Assertion (A).
Option 2: Both, Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
Option 3: Assertion (A) is correct but the Reason (R) is not correct
Option 4: Both, Assertion (A) and Reason (R) are not correct
Correct Answer: Both, Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
Solution : Both, Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A). Non-Cash transactions do not affect Cash and Cash Equivalents.Cash exchange processes will be impacted by cash transactions like withdrawals and investments. While non-cash transactions like the purchase or sale of a long-term asset have no impact on the cash flow.
Hence the correct answer is option 2.
Question : Assertion (A): Purchase of Stock in Trade on credit will not result in Flow of Cash or Cash Equivalents.
Reason (R): Purchase of Stock in Trade on credit does not involve cash.
in the context of the above two statements, which of the following is correct?
Question : Assertion: A purchase of furniture on credit will not result in flow of cash or cash equivalents Reason R: - purchased of furniture on credit will not involve cash. In the context of above two statements, which of the following is correct
Question : Assertion (A): Cash Flow statement is a substitute for income statement.
Reason (R): Cash Flow Statement does not show Profit and Loss.
Question : Assertion A:- The cash flow statement and income statement are the same. Reason R:- The cash flow statement does not show the profit and loss account.
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