Test II. True or False 1. Owner's equity will increase if there is profit and additional investment by the owner. 2. The elements that are directly related to measurement of financial condition in the balance sheet are revenues and expenses. 3. Balance sheet is a statement that shows the results of operations of the business for a given period of time. 4. If there are no claims from outside creditors, then the owner has the sole right of the assets of business. 5. Assets are the things of value or rights that are owned and used by the business in the conduct of its operations. 6. Under the cost principle, assets acquired should be recorded at fair market value in the balance sheet. 7. Accounts receivable is a promissory note that is received by the business from the customer arising from rendering of services, sale of merchandise, etc. 8. Prepaid expenses are non-current assets. 9. Revenues denote money or proceeds from services rendered by a servicing company or income from use by other entities of the resources of the enterprise. 10. The length of accounting period chosen depends on the need of the owner for financial information about his business