Financial accounting 16th Edition by Jan Williams,Susan Haka,Mark Bettner ,Joseph Carcello

Exercise 64

When American Airlines sells tickets for future flights, it debits Cash and credits an account entitled Air Traffic Liability (as opposed to crediting Passenger Revenue Earned).his account, reported recently at nearly $4.5 billion, is among the largest liabilities appearing in the company's balance sheet.
a.xplain why this liability is often referred to as a deferred revenue account.
b.hat activity normally reduces this liability Can you think of any other transaction that would also reduce this account
c.ssume that, in a recent flight, passengers of the airline used tickets that they had purchased in advance for $87,500.ecord the entry American Airlines would make upon completion of this flight.