A: Closing stock is valued at cost or net realizable value, whichever is lower. R: This is based on the Conservatism (Prudence) Concept. Choose the correct option.
A. Both A and R are true but R is NOT the correct explanation of A
B. A is true but R is false
C. A is false but R is true
D. Both A and R are true and R is the correct explanation of A
Answer: Option D
Solution (By JKSSB Mock Tests)
AS 2 mandates inventory valuation at cost or NRV, whichever is lower. This prevents overstating assets and profits, directly applying the Prudence (Conservatism) Concept. R correctly explains A.
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