Which of the following is an example of a deferred revenue?
A)A university receives cash from students prior to the start of classes.
B)A convenience store sells newspapers to its customers.
C)Both A and B
D)Neither A nor B

Question

Quizplus · Accepted Answer

A university receiving cash from students prior to the start of classes represents a deferred revenue because the university has yet to provide the services (education) that the students have paid for. Until those services have been rendered, the cash received should be classified as a liability on the university's balance sheet. On the other hand, selling newspapers to customers at a convenience store is not a deferred revenue because the transaction is completed at the time of sale.

Which of the Following Is an Example of a Deferred