Assertion (A): The financial statements prepared on a historical cost basis, results in an erosion of capital in the long run.
Reason (R): Maintaining the books of accounts as per the current purchasing power technique only may contain the inflationary pressure.
Which is the correct statement?

A) Both (A) and (R) are true, and (R) is the correct explanation of (A) B) Both (A) and (R) are true, but (R) is not the correct explanation of (A) C) (A) is true, but (R) is false D) (A) is false, but (R) is true

Answer & Solution

Correct Answer: Option B

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List-I	List-II
a. Modigliani Miller approach	1. Commercial papers
b. Net operating income approach	2. Working capital management
c. Short-term money market instrument	3. Capital structure
d. Factoring	4. Arbitrage

Assertion (A) The financial statements prepared on a historical cost basis...

Assertion (A): The financial statements prepared on a historical cost basis, results in an erosion of capital in the long run. Reason (R): Maintaining the books of accounts as per the current purchasing power technique only may contain the inflationary pressure. Which is the correct statement?

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Related Questions on Business Finance

Assertion (A): The financial statements prepared on a historical cost basis, results in an erosion of capital in the long run.
Reason (R): Maintaining the books of accounts as per the current purchasing power technique only may contain the inflationary pressure.
Which is the correct statement?