The correct answer is: A. Both A and R are true and R is the correct explanation of A.
A value added statement is a financial statement that shows how much value a company has added to its products or services during a specific period of time. It is calculated by subtracting the cost of materials and services from the revenue generated by the company. The value added statement can be used to track a company’s performance over time, to compare it to other companies in the same industry, and to identify areas where the company can improve its efficiency.
The traditional method of preparing a profit and loss account only shows the profit or loss that a company has made during a specific period of time. It does not show how much value the company has added to its products or services. This can make it difficult to track a company’s performance over time and to compare it to other companies in the same industry.
The value added statement is an improvement over the traditional method of preparing a profit and loss account because it provides a more complete picture of a company’s performance. It shows how much value the company has added to its products or services, which can be used to track its performance over time and to compare it to other companies in the same industry.
The reason (R) is the correct explanation of the assertion (A) because it explains why the value added statement is an improvement over the traditional method of preparing a profit and loss account. The value added statement provides a more complete picture of a company’s performance by showing how much value the company has added to its products or services. This information can be used to track a company’s performance over time and to compare it to other companies in the same industry.