Question

Assertion (A): Bank Overdraft is shown under ‘Short term borrowings’ in a Company's Balance Sheet.

Reason (R): Current Year's Provision for tax is shown under ‘Other Current Liabilities’ in a Company's Balance Sheet.

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 reason of (A).

• Both (A) and (R) are correct but (R) is not the conect reason of (A).

• Only (A) is correct.

• Both (A) and (R) are wrong.

Answer 1

Only (A) is correct.

Explanation:

Bank Overdraft is rightly shown under Short-term Borrowings, so Assertion (A) is correct. However, Provision for Tax is shown under Short-term Provisions, not under Other Current Liabilities, so Reason (R) is incorrect.