Amounts received in advance from a customer for future products or services are initially recorded as liabilities.

Name: Amounts received in advance from a customer for future products or services are initially recorded as liabilities.
Brand: Quizplus
Rating: 4.8 (36 reviews)

Question

Quizplus · Accepted Answer

This is because the company has not yet earned the revenue from the products or services, so they have an obligation to provide them in the future. Once the products or services are provided, the liability is then converted into revenue.

Amounts Received in Advance from a Customer for Future Products