Assertion (A): The 'Going Concern' assumption implies that the enterprise will continue in operation for the foreseeable future. Reason (R): This assumption justifies the preparation of financial statements on a historical cost basis rather than a liquidation value basis. Choose the correct option.
A. Both A and R are true and R is the correct explanation of A
B. Both A and R are true but R is NOT the correct explanation of A
C. A is false but R is true
D. A is true but R is false
Answer: Option A
Solution (By JKSSB Mock Tests)
The Going Concern assumption means the business will not liquidate. This justifies using historical cost and depreciating assets over their useful lives, rather than valuing them at immediate break-up or liquidation values. R correctly explains A.
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