Question

Statement I: A particular year’s Balance Sheet is more useful as compared to Comparative Balance Sheet.

Statement II: Comparative Balance Sheet acts as a connecting link between Statement of Profit & Loss and the Balance Sheet.

Options

• Both statements are correct.

• Both statements are incorrect.

• Statement I is correct, and Statement II is incorrect.

• Statement I is incorrect, and Statement II is correct.

Answer 1

Both statements are incorrect.

Explanation:

Both statements are incorrect because a Comparative Balance Sheet is more useful than a single year’s balance sheet as it reveals financial trends over time, and it does not connect the Profit & Loss statement to the Balance Sheet, a role typically performed by Retained Earnings.