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Home Questions 6ZSPUV5K46
Target Exam

CUET

Subject

Accountancy

Chapter

Analysis of Financial Statements

Question:

There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the codes provided below-
Assertion: The bank charges charged by the bank are included in the finance cost.
Reasoning: Bank charges are an expense not incurred in connection with raising finance but for availing the services of the bank.

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:

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

Explanation:

Finance charges are those charges which occur in raising the finance for the firm. But Bank charges are the charges to avail the services of the bank therefore banck charges are not part of Finance cost.

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