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Home Questions 4QTN5WK5M8
Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Shares

Question:

There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the codes provided below-
Assertion: A company is created through the process of incorporation under the Companies Act, 2013.
Reasoning: A company is an artificial person which is a separate legal entity from its members (Shareholders).

Options:

Both Assertion (A) and reasoning (R) are correct and R is the correct explanation of A.

Both Assertion (A) and reasoning (R) are correct and but R is not the correct explanation of A.

Assertion (A) is true but Reasoning (R) is not correct.

Assertion (A) is not true but Reasoning (R) is correct.

Correct Answer:

Both Assertion (A) and reasoning (R) are correct and but R is not the correct explanation of A.

Explanation:

The incorporation of a company is an artificial entity recognized by the law as a legal person that exists independently with rights and liability. This means that a company is treated as a separate person from its participants.
Both the statements are true but not relatable to each other.

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