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Question
Assertion (A): The Balance Sheet provides information about an organization’s financial position at a specific point in time.
Reasoning (R): The Balance Sheet includes assets, liabilities, and equity, which reflect the organization’s resources, obligations, and owner’s interests.
Options
A is true but R is false.
A is false but R is true.
Both A and R are true and R explains A.
Both A and R are true but R does not explain A.
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Solution
Both A and R are true and R explains A.
Explanation:
The Balance Sheet provides an organization’s financial picture at a certain point in time by listing everything the company owns and owes on that specific date. The Reasoning perfectly explains the Assertion by stating that this picture is made up of assets, liabilities, and equity, which directly represent the firm’s complete resources, responsibilities, and owner’s net interests.
