Statement (A): It is necessary to tally current costs with current income in order to find out the correct profit.
Reason (R): LIFO ensures matching of current costs with current income.

A) Both A and R are correct and R is the correct explanation of A B) Both A and R are correct but R is not the correct explanation of A C) A is correct but R is incorrect D) A is incorrect but R is correct

Answer & Solution

Correct Answer: Option B

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Statement (A) It is necessary to tally current costs with current...

Statement (A): It is necessary to tally current costs with current income in order to find out the correct profit. Reason (R): LIFO ensures matching of current costs with current income.

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Statement (A): It is necessary to tally current costs with current income in order to find out the correct profit.
Reason (R): LIFO ensures matching of current costs with current income.