Read the given below two statements and mark the correct answer.

Assertion (A): The left side of the cash book shows the receipts of the cash whereas the right side of the cash book shows all the payments made in cash.
Reason (R) : Overdraft is a situation when cash withdrawn from the bank exceeds the amount of deposit.

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

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

Assertion (A): The left side of the cash book shows the receipts of the cash whereas the right side of the cash book shows all the payments made in cash. THIS IS CORRECT. Cash book is a book in which all transactions relating to cash receipts and cash payments are recorded. It starts with the cash or bank balances at the beginning of the period. The single column cash book records all cash transactions of the business in a chronological order, i.e., it is a complete record of cash receipts and cash payments. When all receipts and payments are made in cash by a business organisation only, the cash book contains only one amount column on each (debit and credit) side. The left side of the cash book shows the receipts of the cash whereas the right side of the cash book shows all the payments made in cash. The accounts appearing on then debit side for the cash book are credited in the respective ledger accounts because cash has been received in respect of them.

Reason (R) : Overdraft is a situation when cash withdrawn from the bank exceeds the amount of deposit. THIS IS CORRECT. The bank column is balanced in the same way as the cash column. However, in the bank column, there can be credit balance also because of overdraft taken from the bank. Overdraft is a situation when cash withdrawn from the bank exceeds the amount of deposit.

Both statements are correct but the reason does not explain assertion, so the correct answer is option 2.