Accounting · Cost Accounting
Given below are two statements: one is labelled as Assertion A and the other is labelled as Reason R. Assertion A: A firm currently experiencing a net loss should continue its production operations in the short run if the total contribution generated from sales is positive. Reason R: The generation of a positive contribution ensures that the firm recovers all of its fixed costs and eliminates the net loss for the accounting period. In the light of the above statements, choose the most appropriate answer from the options given below:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1A is not correct but R is correct
- 2A is correct but R is not correct✓
- 3Both A and R are correct but R is NOT the correct explanation of A
- 4Both A and R are correct and R is the correct explanation of A
Correct answer
A is correct but R is not correct
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