There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below.
Assertion (A): Cash and Cash Equivalents are always shown as Current Assets.
Reason (R): Cash and Cash Equivalents are Current Assets because they are the most liquid asset.
Answer & explanation
Correct answer: option 1
If a company has cash or cash equivalents, the aggregate of these assets is always shown on the top line of the balance sheet. This is because cash and cash equivalents are current assets, meaning they’re the most liquid of short-term assets.