If a seller receives cash before the appropriate time to recognize revenue, the seller should treat the consideration as a liability.

Name: If a seller receives cash before the appropriate time to recognize revenue, the seller should treat the consideration as a liability.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

When cash is received before revenue recognition, it is recorded as a liability (unearned revenue) until the goods or services are delivered.

If a Seller Receives Cash Before the Appropriate Time to Recognize