6.    Countries have had problems with the stability of their money.

Briefly describe the

problem caused for financial statements when money does not hold a stable value.
- The financial statements can be lose much of their significance when money doesn’t hold a
stable value. To the extent that money does not remain stable, it loses usefulness as the
standard for measuring financial transactions.

9. Many important events that influence the prospect for the entity are not recorded in the
financial records. Comment and give an example.
- Events that happen outside of the financial transaction of the entity are not recorded. For
instance, the loss of a major customer.

12. Explain the matching principle. How is the matching principle related to the realization
concept?
- The matching principle deals with the costs to be matched against revenue.
The realization concept has to do with the determination of revenue. Income is
determined by the combination of revenue and costs.