The correct answer is option 'A' - Substance over form.

Explanation:
The concept of substance over form is a fundamental principle in accounting that emphasizes the importance of reporting the economic substance of a transaction rather than just its legal form. It requires accountants to look beyond the legal structure and documentation of a transaction and focus on its underlying economic reality.

In financial accounting, transactions are recorded based on their substance rather than their legal form. This means that the economic impact of a transaction should be recognized in the financial statements, even if the legal documentation does not fully reflect the true nature of the transaction.

Importance of Substance Over Form:
1. Reflects True Financial Position: By considering the substance of a transaction, the financial statements provide a more accurate representation of the entity's financial position and performance. This is important for users of financial statements, such as investors, creditors, and other stakeholders, to make informed decisions.

2. Prevents Manipulation: The principle of substance over form helps prevent entities from structuring transactions in a way that merely complies with the legal formalities to achieve a specific accounting outcome. This prevents manipulation and ensures that financial statements are reliable and trustworthy.

3. Consistency with Accounting Standards: Many accounting standards and frameworks, such as International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP), require accountants to consider the substance of a transaction. This ensures consistency in reporting across different entities and jurisdictions.

Examples:
1. Sale and Leaseback: In a sale and leaseback arrangement, a company may sell an asset to another party and simultaneously lease it back. While the legal form of the transaction is a sale, the substance is that the company retains the right to use the asset. Therefore, the asset should not be derecognized entirely from the balance sheet, and the leaseback arrangement should be recognized accordingly.

2. Operating Lease vs Finance Lease: When a company enters into a lease agreement, it needs to determine whether it should be classified as an operating lease or a finance lease. The substance of the lease, such as the risks and rewards of ownership, should be considered rather than solely relying on the legal terms of the lease agreement.

In conclusion, the principle of substance over form requires accountants to look beyond the legal form of a transaction and consider its economic substance. This ensures that financial statements provide a true and fair view of an entity's financial position and performance.

Substance over form is the right answer because it mean reality over legality . In this type the reality has more importance , for eg. hire purchase contract of goods .
In this substance in superior than form.