Question

Assertion (A): Trade Receivables are shown below the Inventories in a Company's Balance Sheet.

Reason (R): Assets and Liabilities are shown in the order of permanence in a Company's Balance Sheet.

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

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:

Trade Receivables are shown below Inventories under Current Assets, so Assertion (A) is correct. But company Balance Sheets are prepared in order of liquidity, not permanence, making Reason (R) incorrect in context.