The receipt of cash in advance from a customer
A)increases assets and stockholders' equity.
B)increases assets and decreases stockholders' equity.
C)increases assets and liabilities.
D)None of these answer choices are correct.

Question

Quizplus · Accepted Answer

Receiving cash in advance increases assets (cash) and creates a liability (unearned revenue) because the company has an obligation to deliver goods or services in the future.

The Receipt of Cash in Advance from a Customer