Assertion Reason MCQs of Provisions and Reserves Class 11 with Answers
Assertion Reason MCQs of Provisions and Reserves Class 11 with Answers for CBSE, ISC and State Boards
Assertion (A): Reserve is not a charge against profit.
Reason (R): Reserve is an appropriation of profit.
Options:
(a) Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(c) Assertion (A) is correct but Reason (R) is not correct
(d) Assertion (A) is not correct but the Reason (R) is correct.
Ans – (b)
Assertion (A): Creation of provision is necessary and not voluntary.
Reason (R): It is created even if there are no profits. Thus, it is a chrage against profits.
Options:
(a) Both (A) and (R) are true and (R) is the correct explanation of (A)
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A)
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true
Ans – (a)
Assertion (A): Reserve need not necessarily be set aside for a particular purpose.
Reason (R): General Reserve is not for any particular purpose.
Options:
(a) Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(c) Assertion (A) is correct but Reason (R) is not correct
(d) Assertion (A) is not correct but the Reason (R) is correct.
Ans – (a)
Assertion (A): Provision is created to meet a known liability, the amount of which cannot be determined with reasonable accuracy.
Reason (R): Reserve is created to meet any unknown liability or loss in future.
Options:
(a) Both (A) and (R) are true and (R) is the correct explanation of (A)
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A)
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true
Ans – (b)
Assertion (A): General Reserve can be used for distribution as dividends.
Reason (R): Setting aside profit to Reserve is a matter of financial prudence.
Options:
(a) Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(c) Assertion (A) is correct but Reason (R) is not correct
(d) Assertion (A) is not correct but the Reason (R) is correct.
Ans – (a)
Assertion (A): Provisions are necessary to ascertain the true profit or loss and the true financial position of the business.
Reason (R): Provision are also created to strengthen the financial of the business.
Options:
(a) Both (A) and (R) are true and (R) is the correct explanation of (A)
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A)
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true
Ans – (c)
Assertion (A): Setting aside of reserve does not reduce taxable profits of the business.
Reason (R): Capital Reserves can be used for writing off capital losses.
Options:
(a) Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(c) Assertion (A) is correct but Reason (R) is not correct
(d) Assertion (A) is not correct but the Reason (R) is correct.
Ans – (a)
Assertion (A): A reserve is not a charge against profit but it is an appropriation of profit.
Reason (R): A reserve is not a charge against profit because it is not created by debiting P & L A/c. It is appropriation of profit becasue it is created after the calculation of net profit.
Options:
(a) Both (A) and (R) are true and (R) is the correct explanation of (A)
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A)
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true
Ans – (a)
Assertion (A): Capital reserves are set aside out of capital.
Reason (R): capital Reserves are created out of capital profits.
Options:
(a) Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(c) Assertion (A) is correct but Reason (R) is not correct
(d) Assertion (A) is not correct but the Reason (R) is correct.
Ans – (d)
Assertion (A): A provision is created out of a legal necessity whereas a reserve is created as a matter of prudence.
Reason (R): A provision is an appropriation of profit whereas a reserve is a charge against profit.
Options:
(a) Both (A) and (R) are true and (R) is the correct explanation of (A)
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A)
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true
Ans – (c)
Assertion (A): Making excessive provisions for doubtful debts build up Secret Reserve in the business.
Reason (R): Secret Reserves are created under the legal provisions.
Options:
(a) Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(c) Assertion (A) is correct but Reason (R) is not correct
(d) Assertion (A) is not correct but the Reason (R) is correct.
Ans – (c)
Assertion (A): General Reserve are also called ‘Free Reserves’.
Reason (R): General Reserves are not created for any specific purpose and can be freely used for any purpose.
Options:
(a) Both (A) and (R) are true and (R) is the correct explanation of (A)
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A)
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true
Ans – (a)
Assertion (A): Reserves are set aside for strengthening financial position.
Reason (R): It is one of the objectives of setting aside amount to reserve.
Options:
(a) Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(c) Assertion (A) is correct but Reason (R) is not correct
(d) Assertion (A) is not correct but the Reason (R) is correct.
Ans – (b)
Assertion (A): Proifts retained in the business for ‘a rainy day’ are known as ‘General Reserve’.
Reason (R): Such Reserves cannot be utilised for distribution of dividends among shareholders.
Options:
(a) Both (A) and (R) are true and (R) is the correct explanation of (A)
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A)
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true
Ans – (c)
Assertion (A): Provisions are created by crediting Profit & Loss Account.
Reason (R): The amount of provision for expense or loss is a charge against the revenue of the current period.
Options:
(a) Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(c) Assertion (A) is correct but Reason (R) is not correct
(d) Assertion (A) is not correct but the Reason (R) is correct.
Ans – (d)
Assertion (A): Secret Reserves are created by showing profit at a figure much lower than actual.
Reason (R): Writing off excessive depreciation results into creation of Secret Reserve.
Options:
(a) Both (A) and (R) are true and (R) is the correct explanation of (A)
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A)
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true
Ans – (a)
Assertion (A): When Secret Reserve exist, the actual position of the firm is much better than what is disclosed by the Balance Sheet.
Reason (R): Secret Reserves are not shown in the Balance Sheet.
Options:
(a) Both (A) and (R) are true and (R) is the correct explanation of (A)
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A)
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true
Ans – (a)
