Practicing Success
There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below. Assertion (A): Comparative statements help in deriving meaningful conclusions regarding the changes in financial position and operating results. |
Both (A) and (R) are true, and (R) is the correct explanation of (A). Both (A) and (R) are true, but (R) is not the correct explanation of (A). (A) is true, but (R) is false. (A) is false, but (R) is true. |
Both (A) and (R) are true, and (R) is the correct explanation of (A). |
Comparative Statements refer to the statement of profit and loss and the balance sheet prepared by providing columns for the figures for both the current year as well as for the previous year and for the changes during the year, both in absolute and relative terms. As a result, it is possible to find out not only the balances of accounts as on different dates and summaries of different operational activities of different periods, but also the extent of their increase or decrease between these dates. The figures in the comparative statements can be used for identifying the direction of changes and also the trends in different indicators of performance of an organisation. |