The liability created when a business collects cash from customers in advance of completing a service or delivering a product is called:
A)accrued revenue.
B)accrued expense.
C)deferred revenue.
D)prepaid expense.

Question

Quizplus · Accepted Answer

The liability created when a business collects cash from customers in advance of completing a service or delivering a product is called deferred revenue. This is because the revenue has been deferred until the service or product has been delivered. Accrued revenue refers to revenue that has been earned but not yet received, while accrued expense refers to expenses that have been incurred but not yet paid. Prepaid expense refers to expenses that have been paid in advance, such as insurance or rent.

The Liability Created When a Business Collects Cash from Customers