There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below.
Assertion (A): Debentures being borrowings of the company is shown on the asset side of the balance sheet.
Reason (R): Debentures are always current liability of the company.
Answer & explanation
Correct answer: option 4
The correct answer is option 4- Assertion (A) is false and Reason(R) is also false.
Assertion (A)- Debentures being borrowings of the company is shown on the asset side of the balance sheet. INCORRECT as Debentures are shown in the balance sheet of the company under the subhead of long-term borrowing on the equity and liabilities side.
Reason (R)- Debentures are always current liability of the company. INCORRECT as Debentures are not current liabilities unless the company is going to redeem them in the current operating cycle. It is non current liability because generally, the lifetime of debenture is more than one financial year.