1. Cougar Corp rents out office space in a commercial building and pays rent in advance at the beginning of each year. When Cougar Corp makes the end-of-period adjusting entry to the "prepaid rent" account:

The prepaid rent account is credited

The prepaid rent account is debited

An expense account is credited

Cougar Corp is following the revenue recognition principle

2)

If a company fails to record an adjusting entry for accrued revenue in a given year, then:

Stockholders' equity is overstated and liabilities are understated

Stockholders equity and assets are both overstated

Stockholders' equity is understated and liabilities are overstated.

Stockholders' equity and assets are both understated

None of the above

3)

If a company fails to record an adjusting entry for accrued interest expense in a given year, then:

		Stockholders' equity is overstated and liabilities are understated.
		Stockholders' equity and assets are both overstated.
		Stockholders' equity is understated and liabilities are overstated.
		Stockholders' equity and assets are both understated.
		None of the above