Question

Assertion (A): Demand deposits are not legal tenders.

Reason (R): They are with the bank, so only can be used as a legal tender when cheques are issued for the transfer.

Options

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

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

• Assertion (A) is true, but Reason (R) is false.

• Assertion (A) is false, but Reason (R) is true

Answer 1

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

Explanation:

The term "legal tender money" refers to money that has been granted legal status by the government. Cheque able demand deposits are not legal tender because a person can legally refuse to accept payment in this manner.