Assertion (A): Comparative balance sheet is the horizontal analysis of balance sheet items. Reason (R): In comparative balance sheet, each item of assets, liabilities and shareholder’s funds is placed side-by-side to facilitate comparison. 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 comparative balance sheet is indeed the horizontal analysis of balance sheet items, where each item of assets, liabilities, and shareholders’ funds is presented side-by-side for two or more periods to facilitate easy comparison and analysis of increases or decreases in absolute and percentage terms.

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