Question

Assertion (A): Calls-in-Advance is shown as an asset in the Balance Sheet.

Reason (R): Sometimes, shareholders pay a part or the total amount of the calls not yet made which is known as 'Calls-in-Arrears'.

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

Options

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

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

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

• Both Assertion (A) and Reason (R) are false.

Answer 1

Both Assertion (A) and Reason (R) are false.

Explanation:

Calls-in-Advance is not an asset; it is an amount received before being called and is treated as a liability. The Reason is also false because such an amount is called Calls-in-Advance, not Calls-in-Arrears.