Question

Assertion (A): A cash flow statement is prepared for past period since it shows how cash was received and spent in the past period.

Reason (R): A cash budget is prepared for future period since it shows how much cash is likely to be received and what will be the disbursements during a future period of time.

In the context of the above two statements, which of the following is correct?

Options

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

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

• Only (R) is correct.

• Both (A) and (R) are wrong.

Answer 1

Both (A) and (R) are correct, but (R) is not the correct explanation of (A).