1. True or False F. The process of allocating the cost of a plant set over its useful life is known as cost reduction F 2) All plant assets are depreciated T3) After a machine is installed and is up and running repairs and maintenance are recorded as part of the cost of the machine 4) A lump sum purchase or basket purchase involves paying a single price for several 5) Depreciation means that the business sets aside cash to replace an asset when it is ) Estimated residual value can be zero if the company does not expect to receive anything when disposing of the asset 7) An accelerated depreciation method expenses more of the asset's cost at the end of its useful life 8) Plant assets remain on the business's books until they are disposed of 9) If an asset is discarded when it is fully depreciated and has no residual value, the business does not need to make a journal entry because the book value is zero. 10) The current portion of notes payable is reported on the balance sheet under current liabilities 11) Term bonds all mature at the same specified time. 12) Bonds affect the percentage of ownership of a corporation. 13) Discount on Bonds Payable is additional Interest Expense of the company that issues the bond 14) The face value of a bond payable minus the current balance of the discount account or plus the current balance of the premium account is the bond's carrying amount 15) When a bond is matured, the carrying value always equals the face value. 16) The main reason companies retire bonds prior to their maturity date is to relieve the pressure of paying interest payments 17) A corporation is a business organized under federal law that is a separate legal entity. 18) The par value of a stock has no relation to the market value. 19) Paid-in capital and retained earnings are internally generated equity. 20) Usually, the issue price exceeds par value because par value is normally set as a percentage of the issue price of the stock. 2. Multiple Choice 1) Westin Delivery Service, Inc. owns a delivery truck. Which of the following costs, associated with the truck, will be treated as a revenue expenditure? A) oil change and lubrication B) major engine overhaul C) modification for new use D) addition to storage capacity 2) Which of the following is a characteristic of a plant asset, such as a building