Explanation:
Assets increase by ₹60,000 (stock), cash decreases by ₹20,000, net assets increase ₹40,000; liabilities increase by ₹40,000 (creditors). Capital is unchanged. Equation: Assets = Liabilities + Capital, here +40,000 = +40,000 + 0.
A: When a bill is discounted, the bank charges a fee called discounting charges. R: Discounting charges are debited to the Discount Account. Choose the correct option.
A.A is false but R is true
B.Both A and R are true and R is the correct explanation of A
C.A is true but R is false
D.Both A and R are true but R is NOT the correct explanation of A
Explanation:
When a bill is discounted, the bank deducts a fee (discounting charges) for providing early cash. This fee is a financial expense and is debited to the Discount Account. Both are true, but R doesn't explain *why* the bank charges it (which is for providing early funds).
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