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Directions: There are two statements marked as Assertion (A) and Reason (R). Read the statements and choose the appropriate option from the options given below
Assertion (A): Inventories and prepaid expenses are not considered as quick assets.
Reason (R): Inventories take some time before it is converted into cash while prepaid expenses can be converted into cash.
Assertion (A): Inventories and prepaid expenses are not considered as quick assets.
Reason (R): Inventories take some time before it is converted into cash while prepaid expenses can be converted into cash.
- 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, but Reason (R) is not the correct explanation of Assertion (A)
- c)Assertion (A) is false, but Reason (R) is true
- d)Assertion (A) is true, but Reason (R) is false
Correct answer is option 'D'. Can you explain this answer?
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Directions: There are two statements marked as Assertion (A) and Reaso...
Inventories take some time before it is converted into cash and prepaid expenses are the expenses paid in advance and cannot be converted into cash.
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Directions: There are two statements marked as Assertion (A) and Reaso...
Explanation:
The correct answer is option D: Assertion (A) is true, but Reason (R) is false.
Assertion (A): Inventories and prepaid expenses are not considered as quick assets.
Inventories and prepaid expenses are not considered as quick assets because they cannot be easily converted into cash within a short period of time.
Reason (R): Inventories take some time before it is converted into cash while prepaid expenses can be converted into cash.
This reason is incorrect. While it is true that inventories take some time before they are converted into cash, prepaid expenses cannot be directly converted into cash. Prepaid expenses are expenses that have been paid in advance and are recorded as an asset on the balance sheet. They represent future expenses that will be incurred over a period of time. Prepaid expenses are typically converted into expenses over the course of the accounting period and do not directly result in cash inflows.
Quick Assets:
Quick assets, also known as liquid assets, are assets that can be easily and readily converted into cash within a short period of time, typically within 90 days. They are important for assessing a company's liquidity and ability to meet short-term obligations.
Examples of Quick Assets:
Examples of quick assets include cash, cash equivalents, marketable securities, and accounts receivable. Cash and cash equivalents are already in the form of cash and are readily available for use. Marketable securities are investments that can be easily sold on the market and converted into cash. Accounts receivable represent amounts owed to a company by its customers and can be collected within a short period of time.
Importance of Quick Assets:
Quick assets are important because they provide a measure of a company's ability to meet its short-term obligations. They indicate the company's liquidity and ability to generate cash to cover immediate expenses or pay off debts. Quick assets are often compared to current liabilities to calculate the quick ratio or acid-test ratio, which is a measure of a company's short-term liquidity.
In conclusion, inventories and prepaid expenses are not considered as quick assets because they cannot be easily converted into cash within a short period of time. While inventories take some time before they are converted into cash, prepaid expenses cannot be directly converted into cash and are recorded as an asset on the balance sheet. Therefore, Assertion (A) is true, but Reason (R) is false.
The correct answer is option D: Assertion (A) is true, but Reason (R) is false.
Assertion (A): Inventories and prepaid expenses are not considered as quick assets.
Inventories and prepaid expenses are not considered as quick assets because they cannot be easily converted into cash within a short period of time.
Reason (R): Inventories take some time before it is converted into cash while prepaid expenses can be converted into cash.
This reason is incorrect. While it is true that inventories take some time before they are converted into cash, prepaid expenses cannot be directly converted into cash. Prepaid expenses are expenses that have been paid in advance and are recorded as an asset on the balance sheet. They represent future expenses that will be incurred over a period of time. Prepaid expenses are typically converted into expenses over the course of the accounting period and do not directly result in cash inflows.
Quick Assets:
Quick assets, also known as liquid assets, are assets that can be easily and readily converted into cash within a short period of time, typically within 90 days. They are important for assessing a company's liquidity and ability to meet short-term obligations.
Examples of Quick Assets:
Examples of quick assets include cash, cash equivalents, marketable securities, and accounts receivable. Cash and cash equivalents are already in the form of cash and are readily available for use. Marketable securities are investments that can be easily sold on the market and converted into cash. Accounts receivable represent amounts owed to a company by its customers and can be collected within a short period of time.
Importance of Quick Assets:
Quick assets are important because they provide a measure of a company's ability to meet its short-term obligations. They indicate the company's liquidity and ability to generate cash to cover immediate expenses or pay off debts. Quick assets are often compared to current liabilities to calculate the quick ratio or acid-test ratio, which is a measure of a company's short-term liquidity.
In conclusion, inventories and prepaid expenses are not considered as quick assets because they cannot be easily converted into cash within a short period of time. While inventories take some time before they are converted into cash, prepaid expenses cannot be directly converted into cash and are recorded as an asset on the balance sheet. Therefore, Assertion (A) is true, but Reason (R) is false.
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Directions: There are two statements marked as Assertion (A) and Reason (R). Read the statements and choose the appropriate option from the options given belowAssertion (A): Inventories and prepaid expenses are not considered as quick assets.Reason (R): Inventories take some time before it is converted into cash while prepaid expenses can be converted into cash.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, but Reason (R) is not the correct explanation of Assertion (A)c)Assertion (A) is false, but Reason (R) is trued)Assertion (A) is true, but Reason (R) is falseCorrect answer is option 'D'. Can you explain this answer?
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Directions: There are two statements marked as Assertion (A) and Reason (R). Read the statements and choose the appropriate option from the options given belowAssertion (A): Inventories and prepaid expenses are not considered as quick assets.Reason (R): Inventories take some time before it is converted into cash while prepaid expenses can be converted into cash.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, but Reason (R) is not the correct explanation of Assertion (A)c)Assertion (A) is false, but Reason (R) is trued)Assertion (A) is true, but Reason (R) is falseCorrect answer is option 'D'. Can you explain this answer? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about Directions: There are two statements marked as Assertion (A) and Reason (R). Read the statements and choose the appropriate option from the options given belowAssertion (A): Inventories and prepaid expenses are not considered as quick assets.Reason (R): Inventories take some time before it is converted into cash while prepaid expenses can be converted into cash.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, but Reason (R) is not the correct explanation of Assertion (A)c)Assertion (A) is false, but Reason (R) is trued)Assertion (A) is true, but Reason (R) is falseCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions: There are two statements marked as Assertion (A) and Reason (R). Read the statements and choose the appropriate option from the options given belowAssertion (A): Inventories and prepaid expenses are not considered as quick assets.Reason (R): Inventories take some time before it is converted into cash while prepaid expenses can be converted into cash.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, but Reason (R) is not the correct explanation of Assertion (A)c)Assertion (A) is false, but Reason (R) is trued)Assertion (A) is true, but Reason (R) is falseCorrect answer is option 'D'. Can you explain this answer?.
Directions: There are two statements marked as Assertion (A) and Reason (R). Read the statements and choose the appropriate option from the options given belowAssertion (A): Inventories and prepaid expenses are not considered as quick assets.Reason (R): Inventories take some time before it is converted into cash while prepaid expenses can be converted into cash.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, but Reason (R) is not the correct explanation of Assertion (A)c)Assertion (A) is false, but Reason (R) is trued)Assertion (A) is true, but Reason (R) is falseCorrect answer is option 'D'. Can you explain this answer? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about Directions: There are two statements marked as Assertion (A) and Reason (R). Read the statements and choose the appropriate option from the options given belowAssertion (A): Inventories and prepaid expenses are not considered as quick assets.Reason (R): Inventories take some time before it is converted into cash while prepaid expenses can be converted into cash.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, but Reason (R) is not the correct explanation of Assertion (A)c)Assertion (A) is false, but Reason (R) is trued)Assertion (A) is true, but Reason (R) is falseCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions: There are two statements marked as Assertion (A) and Reason (R). Read the statements and choose the appropriate option from the options given belowAssertion (A): Inventories and prepaid expenses are not considered as quick assets.Reason (R): Inventories take some time before it is converted into cash while prepaid expenses can be converted into cash.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, but Reason (R) is not the correct explanation of Assertion (A)c)Assertion (A) is false, but Reason (R) is trued)Assertion (A) is true, but Reason (R) is falseCorrect answer is option 'D'. Can you explain this answer?.
Solutions for Directions: There are two statements marked as Assertion (A) and Reason (R). Read the statements and choose the appropriate option from the options given belowAssertion (A): Inventories and prepaid expenses are not considered as quick assets.Reason (R): Inventories take some time before it is converted into cash while prepaid expenses can be converted into cash.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, but Reason (R) is not the correct explanation of Assertion (A)c)Assertion (A) is false, but Reason (R) is trued)Assertion (A) is true, but Reason (R) is falseCorrect answer is option 'D'. Can you explain this answer? in English & in Hindi are available as part of our courses for Class 12.
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