Question

Assertion (A): Balance Sheet is a list of assets and liabilities of the company presented in a specified form for the year ended on that date.

Reason (R): Balance Sheet is a statement of revenue and expenses of the company as at that date.

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

Options

• Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation for Assertion (A).

• Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation for Assertion (A).

• Only Assertion (A) is correct.

• Both Assertion (A) and Reason (R) are not correct.

Answer 1

Only Assertion (A) is correct.

Explanation:

The Assertion (A) is correct because a balance sheet is a formal financial statement that lists a company’s assets, liabilities, and equity to show its financial position as of a specific date. However, the Reason (R) is completely false. A balance sheet does not track revenues and expenses; instead, revenues and expenses are presented in the Statement of Profit and Loss (Income Statement). Because the reason statement itself contains factual errors, it cannot explain the assertion.