If the following statements are true, write “True” after the statement. However, most are false. For a false statement, write “False,” and briefly indicate why the statement is false.
1. Full disclosure involves telling financial statement users everything about the company’s transactions.
2. Matching means that revenue is matched to the time period in which the enterprise does the work.
3. The continuity assumption means that a manufacturing company will stay in business long enough to use or sell its inventory.
4. The proprietary approach is the reason that dividends declared are classified on the retained earnings statement rather than on the income statement.
5. An asset is something owned by a company.
6. Relevance suffers when market values are included in the financial statements.
7. To preserve comparability, accounting policies may never be changed.
8. Many intangible assets are not recorded because of the nominal dollar capital assumption.
9. Materiality is based only on the relative size of the item.