Read the following statements - Assertion (A) and Reason (R): Assertion (A): Recovery of loans from rest of the world is recorded on the credit side of the capital account. Reason (R): Recovery of loans affects the assets of the country. From the given alternatives choose the correct one:

Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A). Assertion (A) is true but Reason (R) is false. Assertion (A) is false but Reason (R) is true.

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

The recovery of loans from abroad results inflow of foreign currency that affects the financial assets of a country. Those foreign transactions that affects the countries financial assets comes in capital account.