{"id":56198,"date":"2024-04-16T00:40:30","date_gmt":"2024-04-16T00:40:30","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=56198"},"modified":"2024-04-16T00:40:30","modified_gmt":"2024-04-16T00:40:30","slug":"assertion-a-increasing-the-value-of-closing-inventory-increases-profit-reason-r-increasing-the-value-of-closing-inventory-reduces-cost-of-goods-sold","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/assertion-a-increasing-the-value-of-closing-inventory-increases-profit-reason-r-increasing-the-value-of-closing-inventory-reduces-cost-of-goods-sold\/","title":{"rendered":"Assertion (A) Increasing the value of closing inventory increases profit. Reason (R) Increasing the value of closing inventory reduces cost of goods sold."},"content":{"rendered":"

[amp_mcq option1=”Both (A) and (R) are true” option2=”(A) is true, but (R) is false” option3=”(A) is false, but (R) is true” option4=”Both (A) and (R) are false” correct=”option2″]<\/p>\n

The correct answer is: B. (A) is true, but (R) is false.<\/strong><\/p>\n

Assertion (A) is true because increasing the value of closing inventory will reduce cost of goods sold, which will increase profit. However, reason (R) is false because increasing the value of closing inventory does not necessarily reduce cost of goods sold. For example, if a company buys goods on credit, the cost of goods sold will not be recorded until the goods are sold, even if the goods are already in the company’s inventory.<\/p>\n

Here is a more detailed explanation of each option:<\/p>\n