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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 to invest huge sums required to purchase it.

(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

(B) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A).

(C) Assertion (A) is true but Reason (R) is false.

(D) Assertion (A) is false but Reason (R) is true.

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Best answer

Correct answer is (A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

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