True/False

Indicate whether the sentence or statement is true or false.

____ 1. For an interest bearing note payable, the amount borrowed is equal to the face value of the note.

____ 2. Any costs incurred that are necessary to correct mistakes made during the installation of a new piece of equipment should be added to the cost of that asset.

____ 3. The only depreciation method that is acceptable when submitting tax returns to the IRS is the MACRS method.

____ 4. When land is purchased to construct a new building, the cost of removing any structures on the land should be charged to the building account.

____ 5. When a plant asset is traded for another of similar asset, losses on the asset traded are not recognized.

____ 6. Receiving payment prior to delivering goods or services causes a current liability to be incurred.

____ 7. One of the most popular defined benefit plans is the 401K plan.

____ 8. All long-term liabilities eventually become current liabilities.

____ 9. The cost of new equipment is called a revenue expenditure because it will help generate revenues in the future.

____ 10. In a defined benefits retirement plan, the employer bears the investment risks in funding a future retirement income benefit.

____ 11. The cost of replacing an engine in a truck is an example of ordinary maintenance that should be expensed instead of capitalized.

____ 12. For proper matching of revenues and expenses, the estimated cost of fringe benefits must be recognized as an expense of the period during which the employee earns the benefits.

____ 13. Medicare taxes are paid by both the employee and the employer.

____ 14. Costs associated with normal research and development activities should be treated as intangible assets.

____ 15. When selling a piece of equipment for cash, a loss will result when the proceeds of the sale are less than the book value of the asset.