Read the following statements - Assertion (A) and Reason (R)carefully and choose the correct alternative given below:
Assertion (A) :Savings of private corporate sector constitute undistributed profits.
Reason (R):Savings of private corporate sector constitute excess of revenue receipts over revenue expenditure.
Answer & explanation
Correct answer: option 3
The correct answer is Option 3: Assertion (A) is true but Reason (R ) is false
Assertion (A) :Savings of private corporate sector constitute undistributed profits. This is correct. Savings of private corporate sector often include undistributed profits, which are profits retained by the company rather than distributed to shareholders as dividends.
Reason (R):Savings of private corporate sector constitute excess of revenue receipts over revenue expenditure. This is incorrect. This definition applies to the government budget, not to companies. The savings of the private corporate sector are not necessarily the result of revenue receipts exceeding revenue expenditure. Savings can arise from various sources, including retained earnings, asset sales, or financing activities, not just from revenue surplus.