Assertion Reason MCQs of Financial Management Chapter with answers
Are you looking for the Assertion Reason MCQs of Financial Management chapter with answers for CUET and Class 12 CBSE?
Important Multiple choice question of Financial Management chapter with answers
Below is the list
Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:
Assertion (A): Capital Budgeting decisions are very crucial and must be taken with utmost care.
Reason (R): Investment decisions affect the earning capacity of firm over the long run and are irreversible except at a huge cost.
Alternatives:-
a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A).
b) Both Assertion (A) and Reason (R) are True and Reason (R) is not the correct explanation of Assertion (A).
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
Ans – a)
Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:
Assertion (A): A company having easy access to the capital market follows a strict dividend policy.
Reason (R): Such company can raise capital by approaching capital market.
Alternatives:
a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A).
b) Both Assertion (A) and Reason (R) are True and Reason (R) is not the correct explanation of Assertion (A).
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
Ans – d)
Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:
Assertion (A): Debt is more risky as compared to Equity.
Reason (R): Payment of dividend and return of principal amount is obligatory for the business in case of equity.
Alternatives:-
a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A).
b) Both Assertion (A) and Reason (R) are True and Reason (R) is not the correct explanation of Assertion (A).
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
Ans – c)
Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:
Assertion (A): Trading on Equity raises the return of equity shareholders.
Reason (R): The cost of Debt is lower than the cost of equity and interest paid on debt is a deductible expense.
Alternatives:-
a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A).
b) Both Assertion (A) and Reason (R) are True and Reason (R) is not the correct explanation of Assertion (A).
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
Ans – a)
Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:
Assertion (A): The primary objective of financial management is to maximise wealth of equity shareholders.
Reason (R): Investment Decision is concerned with the investment of firm’s funds in different assets.
Alternatives
a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A).
b) Both Assertion (A) and Reason (R) are True and Reason (R) is not the correct explanation of Assertion (A).
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
Ans – b)
Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:
Assertion (A): Higher the lead time, the lower is the amount of working capital requirement.
Reason (R): If the raw material is available freely and continuously, then less working capital is needed as less inventory has to be maintained.
Alternatives
a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A).
b) Both Assertion (A) and Reason (R) are True and Reason (R) is not the correct explanation of Assertion (A).
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
Ans – d)
Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:
Assertion (A): A transport service provider needs less working capital.
Reason (R): A service firm sells more on cash basis and do not have to maintain inventory.
Alternatives
a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A).
b) Both Assertion (A) and Reason (R) are True and Reason (R) is not the correct explanation of Assertion (A).
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
Ans – a)
Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:
Assertion (A): More working capital is required in highly competitive market.
Reason (R): Competition forces a firm to adopt strict credit terms.
Alternatives
a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A).
b) Both Assertion (A) and Reason (R) are True and Reason (R) is not the correct explanation of Assertion (A).
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
Ans – c)
Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:
Assertion (A): collaboration of an organization with another organization reduces the need for fixed capital.
Reason (R): The availability of leasing facilities reduces the fixed capital requirement of a company.
Alternatives
a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A).
b) Both Assertion (A) and Reason (R) are True and Reason (R) is not the correct explanation of Assertion (A).
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
Ans – b)
