On March 1, a company collects revenue in advance for the next twelve months and credits a liability account. The adjusting entry at year end on the work sheet would
A) increase a liability account
B) decrease an asset account
C) decrease a revenue account
D) decrease a liability account

Question

Quizplus · Accepted Answer

The adjusting entry at year end would decrease a liability account because the company has earned part of the revenue by providing services or goods over the year, thus reducing the liability and recognizing the revenue earned.

On March 1, a Company Collects Revenue in Advance for the Next