A company received a $6,500 deposit from a customer for goods to be delivered the following month. Under the accrual and cash basis of accounting respectively, the account credited is a Accrual basis Cash basis
A) liability liability
B) liability revenue
C) revenue liability
D) revenue revenue

Question

Quizplus · Accepted Answer

Under the accrual basis, the deposit is recorded as a liability (unearned revenue) because the goods have not yet been delivered. Under the cash basis, the deposit is recorded as revenue because cash has been received.

A Company Received a $6,500 Deposit from a Customer for Goods