When a company performs a service for which payment was received in advance, a journal entry is recorded that will
A)increase revenue and decrease deferred revenue.
B)decrease revenue and increase deferred revenue.
C)increase cash and increase revenue.
D)increase cash and decrease deferred revenue.

Question

Quizplus · Accepted Answer

When a company performs a service for which it was paid in advance, it recognizes the revenue (increasing revenue) and reduces the liability account (deferred revenue), reflecting that the service obligation has been fulfilled.

When a Company Performs a Service for Which Payment Was