Question : Assertion (A): A profit and loss adjustment account is required for the correction of errors or omissions.
Reason (R): This account is prepared to correct any errors or omissions that were missed while preparing final accounts and discovered after profits were distributed to partners.
Option 1: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
Option 2: Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
Option 3: Assertion (A) is true but Reason (R) is False
Option 4: Both Assertion (A) and Reason (R) are not correct
Correct Answer: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
Solution : Profit and loss adjustment accounts are created to record transactions, omissions, and errors that are discovered after the final accounts have been prepared and profits have been distributed among the partners.
Hence the correct answer is option 1.
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