Question

Assertion (A): Personal bias can be reflected in ratio analysis.

Reason (R): Different people may interpret the same ratio in different ways, which affects its reliability.

In the context of the above two statements, which option is correct?

विकल्प

• Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).

• Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (А).

• Assertion (A) is correct, and Reason (R) is incorrect.

• Assertion (A) is not correct, but Reason (R) is correct.

Answer 1

Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (А).

Explanation:

Assertion (A) is correct because personal bias can influence how accounting ratios are analysed. Reason (R) is also correct and provides the right explanation because different people often interpret the exact same ratio differently based on their subjective views, which hurts its consistency. This difference in human interpretation is exactly how personal bias enters the analysis.