True False 1) TF Dividends declared reduce a company's retained earnings but are not deducted as an expense in arriving at net income for a period. 2) TF If the net income reported by a company during a year is overstated, then its reported value of net assets at the end of the year is also overstated (assuming the beginning balances of all accounts were correctly stated). 3) TF Assuming an adequate 'allowance for doubtful accounts', the writing off of an uncollectible account has no direct effect on the reported value of total assets. 4) TF The valuation of nonmonetary assets (e.g., inventory, fixed assets) is based on their market values. 5) T F A deferred tax liability reported on a firm's balance sheet represents the amount of money the company owes for income taxes currently payable. 6) T F Cash flows from operating activities summarize the cash effects of reve- nue and expense transactions appearing on the income statement. 7) TF Under the indirect method, depreciation and losses on the sale of fixed assets are deducted from net income (i.e., negative adjustments to net income) in arriving at the net cash provided by operating activities. 8) TF In a period of rising prices and increasing inventory quantities, the LIFO inventory costing method leads to a lower reported profit than the FIFO method (applied to the same inventory). 9) T F When a LIFO liquidation occurs, early and lower costs are reported in the cost of goods sold and thus income before taxes is greater than it would have been had a liquidation (of inventory quantities) not taken place. 10) T F Ordinary and necessary repairs to a machine that do not change any of the machine's basic attributes (i.e., features) should be expensed rather than capitalized