Question

Given below are two statements, one labelled as Assertion (A) and the other labelled as Reasons (R).

Assertion (A) - The income statement and the balance sheet are financial statements that show the cash flows in and out of the business unit.

Reason (R) - The general purpose of financial statements is to show the financial position and performance of a business unit.

In the context of the above two statements, which of the following is correct?

[0.88 marks]

• A. Both A and R are true, and R is the correct explanation of A
• B. Both A and R are true, but R is not the correct explanation of A
• C. A is true, but R is false.
• D. A is false, but R is true

Answer 1

The correct option is D A is false, but R is true

Financial statements present an actual view of the financial performance of an organisation at the end of a financial year. It represents a formal record of financial transactions taking place in an organisation. These statements help users of the information in determining the financial position, liquidity, and performance of the organisation.