Question

Assertion (A): Increase in the amount of debtors results in a decrease in cash.

Reason (R): Increase in debtors indicates that collections from debtors are less than the amount of credit sales during the year, which is considered a decrease in cash.

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

Options

• Both (A) and (R) are correct, and (R) is the correct reason of (A).

• Both (A) and (R) are correct, but (R) is not the correct reason of (A).

• Only (R) is correct.

• Both (A) and (R) are wrong.

Answer 1

Both (A) and (R) are correct, and (R) is the correct reason of (A).