Which of the following liabilities is created when a company receives cash for services to be provided in the future?
A)unearned revenue
B)accrued liability
C)accounts payable
D)estimated warranty payable

Question

Quizplus · Accepted Answer

When a company receives cash for services to be provided in the future, it creates a liability called unearned revenue. This is because the company has not yet provided the services and therefore has not earned the revenue received. Once the services are provided, the liability is reduced and revenue is recognized. Accrued liabilities refer to expenses that have been incurred but not yet paid, accounts payable refer to amounts owed to suppliers for goods or services that have been received and accepted, and estimated warranty payable is a liability created when a company estimates the amount of product warranties it will have to honor in the future.

Which of the Following Liabilities Is Created When a Company