Practicing Success

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 options given below.

Assertion (A):  Internal analysis carried out by management is more detailed, extensive, and correct.
Reason (R):  Management has access to all the information relating to the organisation.

Options:

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

Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

Assertion (A) is false, but Reason (R) is true.

Assertion (A) is true, but Reason (R) is false.

Correct Answer:

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

Explanation:

An Internal Analysis is the process of an organization examining its internal components to assess its resources, assets, characteristics, competencies, capabilities, and competitive advantages. This helps management during the decision-making, strategy formulation, and execution processes by identifying the organization's strengths and weaknesses.