Q1. [1] § INVESTMENT BASICS § What is Investment? § Why should one invest?
Assertion (A) : All fixed assets, except for land, have a defined lifespan.
Reason (R) : Each year, it is assumed that the value of an asset decreases due to usage. The decrease in value is referred to as 'Depreciation'.
- (A) Both (A) and (R) are true and (R) is the correct explanation of (A).
- (B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
- (C) (A) is true, but (R) is false.
- (D) (A) is false, but (R) is true.
Previously asked in CBSE board exam
2026 92 Q5 (vi)
Generated by claude-sonnet-4-6 · 2026-06-15 07:08 · grounding rag
Model Answer
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
Assertion is true as all fixed assets except land have a fixed life. Reason is also true — annual decrease in asset value due to usage is Depreciation — but depreciation does not explain why land is excluded from having a defined lifespan.
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Explanation
- The source passage states: "all fixed assets except land have a fixed life" (A is true) and "every year the worth of an asset falls due to usage — this reduction is called Depreciation" (R is true).
- However, R explains what depreciation is, not why land has no defined lifespan. Hence R is not the correct explanation of A → Option (B).
- A common mistake is choosing (A), but that would require R to directly justify the exemption of land, which it does not.
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