Exercises Explain the time period assumption. E3.1 (LO 1), C Ian Muse has prepared the following list of statements about the time period assumption. 1. Adjusting entries would not be necessary if a company's life were not divided into artificial time periods. 2. The IRS requires companies to file annual tax returns. 3. Accountants divide the economic life of a business into artificial time periods, but all transactions affect only one of these periods. 4. Accounting time periods are generally a month, a quarter, or a year. 5. A time period lasting one year is called an interim period. 6. All fiscal years are calendar years, but not all calendar years are fiscal years. Instructions Identify each statement as true or false. If false, indicate how to correct the statement. Distinguish between cash and accrual basis of accounting. Prepare adjusting entries from selected data. E3.6 (LO 2, 3), AN Verne Cova Company has the following balances in selected accounts on December 31, 2022. counts Receivable cumulated Depreciation-Equipment quipment terest Payable otes Payable repaid Insurance ilaries and Wages Payable ipplies nearned Service Revenue All the accounts have normal balances. The following information has been gathered at December 31, 2022. 1. Verne Cova Company borrowed $10,000 by signing a 12%, 1-year note on September 1, 2022. Interest will be paid when the note is repaid. 2. A count of supplies on December 31, 2022, indicates that supplies of $900 are on hand. 3. Depreciation on the equipment for 2022 is $1,000. 4. Verne Cova paid $2,100 for 12 months of insurance coverage on June 1, 2022