Assertion (A): A Company’s Balance Sheet is prepared on a particular date and not for a particular period. Reason (R): A Balance Sheet is true only for the date on which it is prepared because even a single transaction would cause a change in assets and liabilities. In the context of the above two statements, which of the following is correct?

Question

KollegeApply · Accepted Answer

Both (A) and (R) are correct and (R) is the correct reason of (A). Explanation: A Balance Sheet is prepared as on a particular date because it shows the financial position of a company at that specific point in time. It is true only for that date since even a single transaction after that date changes assets and liabilities, making the Balance Sheet outdated. Hence, the reason explains why the Assertion is correct.

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