I.
ASSERTION (A) AND REASON (R) 5X1=5
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct
alternatives given below:
1. Assertion (A): Adjustment is to be made to comply with the matching principle.
Reason (R): While preparing trading and profit and loss A/C and balance sheet; the adjustments
given outside the trial balance are to be shown in final accounts at two places, if treated directly.
a) Both (A) and (R) are true and (R) is the correct explanation of (A)
b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
2.Assertion (A): The income statement and the balance sheet are financial statements that show the
cash flows in and out of the business unit.
Reason (R): The general purpose of financial statements is to show the financial position and
performance of a business unit.
a) Both (A) and (R) are true and (R) is the correct explanation of (A)
b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
3.Assertion (A): Goodwill is the good name or reputation of the business which bringsbenefit to
the business
Reason (R): It is an intangible asset as it has no physical existence.
a) Both (A) and (R) are true and (R) is the correct explanation of (A)
b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
4. Assertion (A): A Profit and Loss adjustment account is required for the rectification of errors
or omissions.
Reason (R): Profit and Loss adjustment a/c is prepared to rectify those errors or omissions
which are left while preparing final accounts and found after distribution of profits among
partners.
a) Both (A) and (R) are true and (R) is the correct explanation of (A)
b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
5.Assertion (A): Capital Expenditure are recurring in nature
Reason (R): Capital Expenditure are incurred to increase the earning capacity
a) Both (A) and (R) are true and (R) is the correct explanation of (A)
b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
6.Assertion (A): Depreciation is fall in the value of a fixed tangible asset because of usage
passage of time and accident etc.
Reason (R): Depreciation can be changed on all fixed assets whether they are tangible or
intangible.
a) Both (A) and (R) are true and (R) is the correct explanation of (A)
b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
7. Assertion (A): Depreciation is fall in the value of a fixed tangible asset because of usage
passage of time and accident etc.
Reason (R): Depreciation can be changed on all fixed assets whether they are tangible or
intangible.
a) Both (A) and (R) are true and (R) is the correct explanation of (A)
b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
8.Assertion (A):Board of Directors report provides the performance of the company
Reason (R): Report by Board of Directors provides information about past performance
and future business prospects
a) Both (A) and (R) are true and (R) is the correct explanation of (A)
b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
9.Assertion (A):Financial obligations of a company is shown on the liabilities side of the
Balance sheet
Reason (R): Liabilities side of the Balance side consists of the capital structure of the
company
a) Both (A) and (R) are true and (R) is the correct explanation of (A)
b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
10.Assertion (A): Salvage value is the estimated book value of an asset after depreciation is
complete
Reason (R): Scrap value is the carrying value of the asset on a book value after
depreciation has been fully expensed
a) Both (A) and (R) are true and (R) is the correct explanation of (A)
b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
II.MATCH THE FOLLOWING 10X1/2=5
SET A SET B ANSWER
1.Final accounts are called A. Outstanding salaries G
2.Gross profit is transferred to B. Straight line method E
3.Two fold effect C. Written Down Value I
4.Depreciation is the same every year D. Carriage inwards B
5.Scrap value is also called E. Profit &loss A/C H
6.WDV F. Depreciation C
7.Reduce in the value of the asset G. Financial statements F
8.Patents and copyrights is H. Salvage value J
9.Carriage on purchase I. Double entry system D
10.Unpaid salaries J. Capital expenditure A
