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
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

Question

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

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

Team Careers360 · Accepted Answer

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 the redemption of preference shares at a premium typically involves an outflow of cash. Reason R is correct because redeeming preference shares reduces the cash and cash equivalents of a company. Therefore, Assertion A and Reason R are both correct, and Reason R is the correct explanation of Assertion A.
Hence, the correct option is 1.

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Related Questions

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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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?

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 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:- unclaimed dividend does not result in flow of cash
Reason: R It does not effect of the company since there is no payment of cash.