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Question
Assertion (A): Cooperative societies may face challenges in raising external capital from non-members.
Reasoning (R): Members’ capital contributions and retained earnings are primary sources of funding for cooperative societies.
Options
A is true, but R is false.
A is false, but R is true.
Both A and R are true, and R explains A.
Both A and R are true, but R does not explain A.
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Solution
Both A and R are true but R does not explain A.
Explanation:
Cooperative societies face difficulty in raising external capital from non-members because their funding mainly depends on members’ capital contributions and retained earnings. However, the reasoning about members’ funding sources doesn’t fully explain the challenge of raising external capital, since the difficulty arises from the restricted ability to attract funds beyond membership. Hence, both statements are true, but R does not explain A.
