An item that represents the advance payment received by the firm for services to be rendered in the future is *a. unearned revenueb. accrued revenuec. accrued revenued. prepaid expense
Question
An item that represents the advance payment received by the firm for services to be rendered in the future is *a. unearned revenueb. accrued revenuec. accrued revenued. prepaid expense
Solution
The correct answer is a. unearned revenue. This is because unearned revenue refers to the money received by a company for a product or service that it has yet to deliver or perform. In other words, the company has an obligation to the customer in the future, which is why it is considered a liability. Once the product or service is delivered, the unearned revenue becomes earned revenue.
Similar Questions
When a business that receives cash in advance of performing a service, it is:a.Accrued expenseb.Prepaid revenuec.Prepaid expensed.Accrued revenue
Define what is Prepaid expenses, Accrued expenses, Unearned revenue and Accrued revenue
An accrued expense is an example of a:(5 Points)Prepaid expenseUnearned revenueAccrued liabilityDeferred revenue
Cash received in advance of providing goods and service is called ________ aDeferred Revenues bPrepaid Expenses cAccrued Expenses dWarranties
Expenses paid in advance.Select one:a.Accrued Incomeb.Prepaid Expensesc.Insurance Expensesd.Closing entries
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.