When a down payment is received, the deposit from purchaser account used under the deposit method is reported on the balance sheet of the seller as a(n)
A)revenue
B)liability
C)asset
D)contra asset

Question

Quizplus · Accepted Answer

When a down payment is received, it is not considered revenue for the seller, as the goods or services have not been delivered or performed yet. Instead, it is recorded as a liability on the balance sheet of the seller until the goods or services are delivered or performed. Therefore, the correct answer is B, liability.

When a Down Payment Is Received, the Deposit from Purchaser