Question

Assertion (A): Expenditure incurred on purchasing

machinery is variable cost.

Reasoning(R): Expenditure incurred on varying factors is

known as variable cost.

1) (A) is true but (R) is false.

2) (A) is false but (R) is true.

3) Both (A) and (R) are true and (R) is not the correct

explanation of (A).

4) Both (A) and (R) are true and (R) is not the correct

explanation of (A).​

Answer 1

Answer:

4) is the correct answer

Answer 2

2) (A) is false but (R) is true

Explanation:

Expenditures incurred on purchasing machinery is not a variable cost as machinery is considered to be a fixed asset for a business or an enterprise so expenditure incurred on purchasing any fixed asset is never a variable cost but is always a capital expenditure.

Capital expenditures are the funds used by a company to maintain physical assets such as property, plants, buildings, technology, or equipment. Making capital expenditures on fixed assets includes:-

5. Repairing a roof

4. Purchasing a piece of equipment

3. Building a new factory

So keeping in mind the above definition the answer to this question is

2) (A) is false but (r) is true.