Question

If a piece of equipment is dropped and damaged during installation, the cost of repairing the damage should be added to the cost of the equipment.

True

False

One advantage of issuing bonds instead of stock is that:

a	Interest is tax deductible, whereas dividends are not.
b	Bonds have a longer maturity date.
c	Interest rates are lower than dividend rates.
d	The issuance of bonds does not affect earnings per share.

The amount of FICA tax and Medicare tax withheld from an employee is used to pay the employer's percentage of the tax and is mailed to the government quarterly.

True

False

Answer 1

1

FALSE

The cost of repairing the damage should not be added to the cost of the equipment.

The cost of repairing the damage should be expensed.

2

One advantage of issuing bonds instead of stock is that Interest is tax deductible, whereas dividends are not.

Interest paid on bond reduces tax payable.

Option A is correct

3

FALSE

The employer's contribution to FICA tax and Medicare tax is separate from tax withheld from an employee