Q1. Which of the following statements is untrue?

1. Recognition requires that revenues be recorded when earned which is not necessarily when cash is received.
2. An annual income statement summarizes revenues earned; less expenses incurred over the year.
3. An annual balance sheet shows changes in a business's assets, liabilities, and equity during the year.
4. Matching requires that financial transactions be reported in the period in which they occurred.
5. The Business Entity Principle requires that each economic entity maintain separate records.