Question

Assertion (A): Balance Sheet and Statement of Profit and Loss show the line items only i.e. one amount against each item and details of that item shall be given in Notes to Accounts.

Reason (R): This has been prescribed for easy understanding of the financial statements.

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

Options

• (A) and (R) both are correct and (R) correctly explains (A).

• Both (A) and (R) are correct but (R) does not explain (A).

• Both (A) and (R) are incorrect.

• (A) is correct but (R) is incorrect.

Answer 1

(A) and (R) both are correct and (R) correctly explains (A).

Explanation:

The Balance Sheet and Statement of Profit and Loss present only the summarized line items with a single amount each to keep the statements clear and concise. The detailed disclosure for each item is provided in the Notes to Accounts, which is prescribed for better understanding and transparency of financial statements.