ACCT 2101 Lecture 12: Chapter 11: Reporting and Analyzing Stockholder’s Equity
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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:
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