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.
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.
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