At times,businesses require advance payments from customers that will be applied to the purchase price when goods are delivered or services provided.These customer advances represent:
A)Liabilities until the product or service is provided.
B)A component of stockholders' equity.
C)Long-term assets until the product or service is provided. d Revenue upon receipt of the advance payment.

Question

Quizplus · Accepted Answer

Customer advances are a liability until the goods are delivered or services are provided. This is because the company has an obligation to deliver or provide the goods or services to the customer, and until that obligation is fulfilled, the advance received from the customer remains a liability on the company's balance sheet. Once the goods or services are delivered or provided, the liability is discharged and the revenue can be recognized.

At Times,businesses Require Advance Payments from Customers That Will Be