Question

Given below are two statements:
Statement (I): Modern theory of wages is based on demand of labor only.
Statement (II): Magazine is not an accounting book.
In light of the above statements, choose the most appropriate answer from the options given below:

• A. Both Statement (I) and Statement (II) are correct.
• B. Both Statement (I) and Statement (II) are incorrect.
• C. Statement (I) is correct but Statement (II) is incorrect.
• D. Statement (I) is incorrect but Statement (II) is correct.

Hint:

Under modern economic theory, the price of any resource (including wages) is always determined by the intersection of both Demand and Supply, never by demand alone.

Answer 1

The Correct Option is D

Step 1: Understanding the Concept:
This question combines concepts from economics (the theory of wage determination) and accounting (definition of books of account).

Step 2: Detailed Explanation:
Let us evaluate both statements:
Statement (I) is incorrect.
The Modern Theory of Wages (or Demand and Supply Theory) states that the price of labor (wages) is determined by the interaction of both the demand for labor and the supply of labor, similar to any other commodity.
Wages are determined at the equilibrium point where the demand curve for labor intersects the supply curve.
Claiming the theory is based on the "demand of labor only" is incorrect, as it ignores the supply side (marginal disutility of work, labor population, etc.).
Statement (II) is correct.
In business and financial accounting, the primary books of account are journals, ledgers, cash books, and trial balances.
A magazine is a periodic publication containing articles, stories, and advertisements.
It is not an accounting book used to record financial transactions.
Therefore, Statement (I) is false, but Statement (II) is true.

Step 3: Final Answer:
Statement (I) is incorrect but Statement (II) is correct.