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

Assertion (A):  Trade Payables is the amount payable against the purchase of goods and/or services that are taken in the normal course of business.
Reason (R):  Trade Receivables are the amount receivable against the sale of goods and/or services rendered in the normal course of business.

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

The correct answer is option 2- Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A).

Assertion (A):  Trade Payables is the amount payable against the purchase of goods and/or services that are taken in the normal course of business. THIS IS TRUE. Trade payables are a combination of the creditors and the bills payable for goods purchased or services rendered. In accounting, the amount billed by the vendor or supplier is the amount logged under “accounts payable”. However, these are only logged if they are paid on credit. Sundry creditors have been replaced with the term Trade payables and are classified as current and non-current. Trade payables to be settled beyond 12 months from the date of balance sheet or beyond the operating cycle are classified under “other long-term liabilities” with Note to Account.

Reason (R):  Trade Receivables are the amount receivable against the sale of goods and/or services rendered in the normal course of business. THIS IS TRUE. Trade receivables are defined as the amount owed to a business by its customers following the sale of goods or services on credit. Also known as accounts receivable, trade receivables are classified as current assets on the balance sheet. Trade receivables realised beyond twelve months from reporting date/ operating cycle starting from the date of their recognition are classified as “Other non-current assets” under the head non-current assets with Note to Accounts.

Both statements are true but reason is not the explanation of assertion. So, the correct answer is option 2.