Commercial Applications
Assertion (A): The Balance Sheet provides information about an organization's financial position at a specific point in time.
Reason (R): The Balance Sheet includes assets, liabilities, and equity, which reflect the organization's resources, obligations, and owner's interests.
- A is true but R is false
- A is false but R is true
- Both A and R are true and R explains A.
- Both A and R are true but R does not explain A.
Accounting
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Answer
Both A and R are true and R explains A.
Reason — Both Assertion and Reason are true. The Balance Sheet does provide information about the financial position on a specific date (Assertion). The Reason correctly explains the Assertion because it is precisely by including assets (resources owned), liabilities (obligations to pay) and capital/equity (owner's interest) that the Balance Sheet is able to depict the overall financial position of the organisation.
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Related Questions
It serves as the basis for preparing the Balance Sheet of a non-trading organisation.
- Receipts and Payments Account
- Income and Expenditure Account
- Balance Sheet
- None of these
The main use(s) of a Balance Sheet for a non-trading organisation is/are
- Balance Sheet shows the assets owned by a non-trading organisation.
- It reveals the liabilities of the organisation.
- It shows the financial position of the organisation.
- All of these
The capital fund in the Balance Sheet increases with a surplus shown in the Income and Expenditure Account.
- True
- False
Regarding the components of an Income and Expenditure Account, which statement(s) is (are) accurate?
Statement 1: Income and Expenditure Account is prepared to ascertain the profit or loss of a non-profit organization.
Statement 2: Income and Expenditure Account includes both revenue and capital items.
Statement 3: Income and Expenditure Account is only applicable to businesses and corporations.
Statement 4: Income and Expenditure Account records only cash transactions.
- 1 & 2
- 3 & 4
- Only 1
- 2 & 4