Assertion (A): When a company earns profit prior to its incorporation, it is called capital profit.
Reason (R): Capital profit cannot be used for distribution as a dividend to shareholders.
Which of the following is correct?

A. (A) is correct, but (R) is incorrect

B. Both (A) and (R) are correct

C. (A) is incorrect, but (R) is correct

D. Both (A) and (R) are incorrect

Answer: Option B