S1: GST is a comprehensive indirect tax. S2: GST is levied on the manufacture of goods. Which statement(s) is/are correct? MCQ with Answer and Explanation
S1: GST is a comprehensive indirect tax. S2: GST is levied on the manufacture of goods. Which statement(s) is/are correct?
A. S1 only
B. S2 only
C. Neither S1 nor S2
D. Both S1 and S2
Answer: Option A
Solution (By JKSSB Mock Tests)
GST is a comprehensive indirect tax levied on the *supply* of goods and services. It replaced the tax on manufacture (Excise Duty) and tax on sale (VAT). S1 is correct, S2 is incorrect.
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.A is true but R is false
B.Both A and R are true but R is NOT the correct explanation of A
C.Both A and R are true and R is the correct explanation of A
Explanation:
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.
Explanation:
The Accounting Period Concept artificially breaks the continuous life of a business into standard intervals (usually 12 months) for reporting purposes.
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