Question : Assertion:- For analysis, it is necessary to reclassify the complex data contained in the financial statements into purposive classes so that the maximum desired information from every data for Analysis can be extracted or obtained.
Reason: - Reclassification and rearrangement of different data depends upon the purpose of analysis.
Option 1: Both Assertion A and reason 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 but the reason R is the correct explanation of Assertion A
Option 3: Both Assertion A is correct but the reason R is not correct
Option 4: Both Assertion A is and reason R are not correct
Correct Answer: Both Assertion A and reason R are correct but the reason R is the correct explanation of Assertion A
Solution : Answer = Both Assertion A and reason R are correct but reason R is the correct explanation of Assertion A
For analysis, it is necessary to reclassify the complex data contained in the financial statements into purposive classes so that the maximum desired information from every data for Analysis can be extracted or obtained. Reclassification and rearrangement of different data depend upon the purpose of the analysis. Hence, the correct option is 2.
Question : Assertion A:- The term; Financial Analysis includes both; Analysis; and Interpretation, Analysis is concerned with the simplification of financial data given in the financial statements by proper classification. Interpretation is concerned with explaining the meaning
Question : Assertion A: - Financial analysis identifies symptoms of the problems but does not offer its diagnosis. The management has to look for remedies to rectify the problems.
Reason R: - Analysis of financial statements is based on the information given in the financial
Question : Assertion A:- Long-term and short-term solvency of an enterprise can be assessed on the basis of financial statement analysis.
Reason R:- Such analysis is done by a securities analyst who is interested in cash-generating ability, dividend payout policy and the
Question : Assertion A :- Price level changes and the purchasing power of money are inversely related. A change in the price level makes analysis of financial statements of different accounting years invalid.
Reason R :- Accounting records ignore changes in the value of
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