The correct statement is that Abu Dhabi is the UAE's capital, while Dubai stands as its most populous and commercially prominent city, since these two facts are entirely compatible and together capture the real division of roles within the federation. Abu Dhabi holds constitutional capital status, houses the Federal Supreme Council and the presidency, and directs federal governmental functions, whereas Dubai has grown into the country's largest city by population and its leading hub for tourism, real estate, aviation and international business, home to landmarks such as the Burj Khalifa and Dubai International Airport. This statement is correct because it accurately reflects both facts simultaneously without contradiction, unlike the other options, which each contain a factual error. Dubai is the official capital of the UAE is incorrect because, despite its global prominence, Dubai has never held constitutional capital status; that designation belongs exclusively to Abu Dhabi. The UAE has no single federal capital is incorrect because the UAE's federal constitution and institutional practice clearly designate Abu Dhabi as the seat of the federal government, meaning the country does, in fact, have one fixed capital rather than a rotating or absent designation. Sharjah is the UAE's largest city by population is incorrect because, although Sharjah is a significant and populous emirate bordering Dubai, Dubai itself remains larger in population and far more internationally prominent, making this claim about Sharjah factually wrong. The recurring exam confusion in statement-based questions like this one is that a plausible-sounding but false claim, such as denying a single capital exists, can trick candidates who have only memorised the word 'Abu Dhabi' without understanding why it is correct. The revision takeaway is to understand the underlying reasoning, not just the answer, so that any rephrased statement about the same fact can still be correctly evaluated.