Question

Assertion (A): Financial Statements are the end products of accounting process.

Reason (R): Financial Statements of a Company refer to Statement of Profit and Loss and a 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 correct reason of (A).

• Only (R) is correct.

• Both (A) and (R) are wrong.

Answer 1

Both (A) and (R) are correct and (R) is the correct reason of (A).

Explanation:

The assertion (A) states that financial statements are the end products of the accounting process, which is true because financial statements summarize and present the financial information after the entire accounting process. The reason (R) mentions that financial statements of a company refer to the Statement of Profit and Loss and a Balance Sheet, which is also correct as these are key components of financial statements. However, (R) does not fully explain why financial statements are considered the end products of the accounting process, so it is not the correct reason for (A).