Question

Assertion (A): Financial planning means estimating the requirements of a business and determining source of funds.

Reason (R): Capital Structure refers to the mix between owners and borrowed funds.

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 and 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.

Answer 1

Both Assertion (A) and Reason (R) are True and Reason (R) is not the correct explanation of Assertion (A).

Explanation:

• Assertion (A) is true: Financial planning = estimating financial needs + choosing sources of funds.
• Reason (R) is also true: Capital structure = mix of owned and borrowed funds.

But Reason (R) doesn’t explain Assertion (A). They are related, but not directly connected.