E3-1 Explain the time period assumption. (LO 1) Ian Muse has prepared the following list of statements about the time period assumption. Adjusting entries would not be necessary if a company's life were not divided into artificial time periods. The IRS requires companies to file annual tax returns. Accountants divide the economic life of a business into artificial time periods, but each transaction affects only one of these periods. Accounting time periods are generally a month, a quarter, or a year. A time period lasting one year is called an interim period. 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.