The adjusting entry for deferred revenues result in
A)an increase to a liability account and a decrease to a revenue account.
B)a decrease to a liability account and an increase to a revenue account.
C)neither an increase or a decrease to a liability account.
D)neither an increase or a decrease to a revenue account.

Question

Quizplus · Accepted Answer

Deferred revenues are initially recorded as liabilities when cash is received before services are performed or goods are delivered. The adjusting entry for recognizing these revenues involves decreasing the liability account (deferred revenue) and increasing the revenue account as the service is performed or goods are delivered, reflecting the earning of the revenue.

The Adjusting Entry for Deferred Revenues Result in