Question

Assertion (A): In case of shares issued on Pro-rata basis, excess money received at the time of application can be utilised till allotment only.

Reason (R): Company has to pay interest on calls in advance @12% p.a. for amount adjusted towards calls (if any). In the context of the above two statements, which of the following is correct?

Options

• Both (A) and (R) are true, but (R) is not the explanation of working capital management

• Both(A) and (R) are true and (R) is a correct explanation of (A)

• Both (A) and (R) are false

• (A) is false, but (R) is true

Answer 1

(A) is false, but (R) is true