In the question given below there are 2 statements marked as Assertion (A) and Reason (R). Choose the correct alternative from the following options.
Assertion (A)- Expenditure on purchasing computers is a capital expenditure.
Reason (R)- Purchasing the computer is a capital expenditure as it increases the liability.
Answer & explanation
Correct answer: option 3
The correct answer is Option 3: (A) Is true but (R) is false.
Expenditure on purchasing computers is indeed a capital expenditure because it is an investment in physical assets that will provide benefits over a long period.
However, the reason (R) is false because purchasing computers does not increase liability; instead, it is considered an investment in assets.