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First Section Practice Problems

First Section Practice Problems - Practice Problems 1...

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Practice Problems 1. Accounts Payable had a $10,000 balance at the beginning of September 2010 and had a balance of $50,000 at the end of September. There were $240,000 purchases of inventory on account. What were cash payments towards Accounts Payable? a. $250,000 b. $200,000 c. $240,000 d. $40,000 2. A failure to record an adjusting entry for depreciation expense at the end of the period would have the following impact: a. Assets will be understated and revenues will be understated. b. Liabilities will be understated and revenues will be understated. c. Assets will be understated and expenses will be understated. d. Assets will be overstated and expenses will be understated. 3. WTS Inc. purchases a piece of equipment on January 1 , 2010 that cost $105,000 with an estimated useful life of 5 years and a residual value of $5,000. What is the book value of the equipment on December 31, 2010? a. $84,000 b. $105,000 c. $85,000 d. $5,000 4. Mackenzie Inc.’s accounts receivable balance on January 1 st was $100,000 and $25,000 on December 31 st . Cash collections for sales on account during the year were $1,000,000.
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