Question:
Read the following statements: Assertion (A) and Reason (R). Choose the correct alternative from the options given below:
Assertion (A): Availability of leasing facilities may reduce the funds required to be invested in fixed assets, thereby reducing the fixed capital requirements.
Reason (R): When an asset is taken on lease, the firm pays lease rentals to use it and avoids investing huge sums required for its purchase.
Read the following statements: Assertion (A) and Reason (R). Choose the correct alternative from the options given below:
Assertion (A): Availability of leasing facilities may reduce the funds required to be invested in fixed assets, thereby reducing the fixed capital requirements.
Reason (R): When an asset is taken on lease, the firm pays lease rentals to use it and avoids investing huge sums required for its purchase.
Assertion (A): Availability of leasing facilities may reduce the funds required to be invested in fixed assets, thereby reducing the fixed capital requirements.
Reason (R): When an asset is taken on lease, the firm pays lease rentals to use it and avoids investing huge sums required for its purchase.
Show Hint
Leasing is an effective financial strategy that reduces capital investment risks while ensuring access to required assets.
Updated On: Jan 13, 2026
- 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.
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The Correct Option is A
Solution and Explanation
Step 1: Understanding Leasing and Fixed Capital
Leasing allows businesses to use assets without making large capital investments, reducing fixed capital requirements.
Step 2: Explaining the Relationship
Since leasing involves periodic lease rentals instead of a lump sum payment, it directly reduces the need for upfront funds, supporting Assertion (A) and Reason (R) as correct and interconnected.
Leasing allows businesses to use assets without making large capital investments, reducing fixed capital requirements.
Step 2: Explaining the Relationship
Since leasing involves periodic lease rentals instead of a lump sum payment, it directly reduces the need for upfront funds, supporting Assertion (A) and Reason (R) as correct and interconnected.
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