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20 October, 20:18

Your company receives advance payment in October for services that are provided during November. Which of the following statements is correct?

(A) An expense is recorded in October and revenue will be recorded in November.

(B) A liability is recorded in October and revenue will be recorded in November.

(C) Revenue and expenses are recorded in October.

(D) Revenue is recorded in October and an expense will be recorded in November.

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Answers (1)
  1. 20 October, 20:55
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    (B) A liability is recorded in October and revenue will be recorded in November

    Explanation:

    When a company receives money in advance of earning it, the accounting entry is a debit to the asset Cash for the amount received and a credit to the liability account such as Customer Advances or Unearned Revenues
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