There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below.

Assertion (A):  Surplus, i.e., Balance in Statement of Profit and Loss can be positive or negative, and in both cases it is shown in Note to Accounts on Reserves and Surplus.
Reason (R): Schedule lll of the Companies Act, 2013 prescribes that whether the balance in Surplus, i.e. Balance in the Statement of Profit and Loss is positive (Undistributed or Accumulated Profits) or negative (Accumulated Losses), it is to be shown under Reserves and Surplus.

Both, Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).

Significant additions/modifications regarding disclosure of reserve and surplus are as follows:
a) A reserve specifically represented by earmarked investments shall be termed as “Fund”.
b) ‘Debit’ balance of statement of profit and loss shall be shown as a negative figure under ‘Surplus’ head.
c) The balance of “Reserve and Surplus” after adjusting negative balance of Surplus, if any, shall be shown under “Reserve and Surplus” read even if the resulting figure is ‘negative’