Question

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

Assertion (A): Revenue expenses are written off in the year in which they are incurred.

Reason (R): The benefit of revenue expense is consumed for a period of more than 12 months.

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

[0.88 marks]

• A. Both (A) and (R) are correct and (R) is the correct reason for (A).
• B. Both (A) and (R) are correct but (R) is not the correct reason for (A).
• C. Only (A) is correct
• D. Both (A) and (R) are wrong

Answer 1

The correct option is C Only (A) is correct

Revenue expenses are written off in the year in which they are incurred because the benefit of revenue expenses are expected to be consumed within a period of less than or equal to 12 months.