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Question
Assertion (A): Depreciation is added to the net profit before tax.
Reason (R): Depreciation is a non-cash item that is an expense.
Options
Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
Assertion (A) is true, but Reason (R) is false.
Assertion (A) is false, but Reason (R) is true.
MCQ
Solution
Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
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Preparation of Cash Flow Statement
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