Using the accrual basis of accounting,if payment is received before delivery of a good or service,a liability is recorded at the time the payment is received.

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Under the accrual basis of accounting, when payment is received before a good or service is delivered, the amount received is recorded as a liability (such as unearned revenue or deferred revenue) because the company has an obligation to deliver the good or service in the future.

Using the Accrual Basis of Accounting,if Payment Is Received Before