The liability created when a business collects cash from its customers before completing a service or delivering a product is called ________.
A) accrued revenue
B) accrued expense
C) deferred revenue
D) deferred expense

Question

Quizplus · Accepted Answer

The situation described in the question is referring to a deferred revenue liability, which occurs when a business receives payment from a customer before providing the goods or services. This liability will be recognized as revenue once the product is delivered or the service is completed. Accrued revenue, on the other hand, refers to revenue that has been earned but not yet received or recorded, while accrued expense refers to an expense that has been incurred but not yet paid or recorded. Deferred expense occurs when a payment is made in advance for an expense that will be incurred in the future.

The Liability Created When a Business Collects Cash from Its