Question

Assertion (A): Comparative statement of profit and loss is the Vertical analysis of revenue and expenses items.

Reason (R): In comparative statement of profit & loss, each item of revenue and expenses is analysed vertically for two or more accounting periods. 

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

Options

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

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

• Both (A) and (R) are false.

• (A) is false, but (R) is true.

Answer 1

Both (A) and (R) are false.

Explanation:

Comparative statement of profit & loss is a horizontal analysis, not vertical. However, it does analyse revenue and expense items over two or more periods, so (R) is true.