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
Option 1: Assertion A and reason R are correct and reason R is 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 but reason R is not the correct explanation of Assertion A
Solution : Answer = Assertion A and reason R are correct, but reason R is not the correct explanation of Assertion A
Assertion A is correct because the purchase of furniture on credit does not involve the immediate outflow of cash or cash equivalents. However, reason R is incorrect as it oversimplifies the transaction, failing to acknowledge that credit transactions still involve future cash outflows to settle the debt. Hence, the correct option is 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 :- 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.
Question : Assertion A :- Redemption of preference share at a premium will result in outflow of cash Reason: - Redemption of preference share decrease cash and cash equivalents
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