S1: The Business Entity Concept assumes the business and its owners are the same. S2: The Money Measurement Concept ignores qualitative factors. Which statement(s) is/are correct? MCQ with Answer and Explanation
S1: The Business Entity Concept assumes the business and its owners are the same. S2: The Money Measurement Concept ignores qualitative factors. Which statement(s) is/are correct?
A. S1 only
B. S2 only
C. Neither S1 nor S2
D. Both S1 and S2
Answer: Option B
Solution (By JKSSB Mock Tests)
S1 is incorrect because the Business Entity Concept treats the business and its owners as separate and distinct. S2 is correct as the Money Measurement Concept only records transactions expressible in monetary terms, ignoring qualitative aspects.
Assertion (A): Under Ind AS 32, a preference share that mandates redemption by the issuer is classified as a financial liability. Reason (R): The issuer has a contractual obligation to deliver cash or another financial asset to the holder. 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.Both A and R are true but R is NOT the correct explanation of A
Explanation:
Ind AS 32 requires classifying an instrument based on its substance. If a preference share is mandatorily redeemable, the issuer has an unavoidable contractual obligation to pay cash, making it a financial liability, not equity. R correctly explains A.
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