Question

Assertion (A): In a common-size statement of profit & loss figure of revenue from operations is assumed to be equal to 100.

Reason (R): In a common-size balance sheet share capital is assumed to be equal to 100.

Options

• Both (A) and (R) are true, but (R) is not the 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 true, but (R) is false.

Answer 1

(A) is true, but (R) is false.

Explanation:

In a common-size statement of profit and loss, revenue from operations is set to 100, and all other items are expressed as a percentage. Therefore, the assertion is true, but the reason is false.