When cash is debited for rents that are collected but are not yet earned, the amount credited should be
A) recognized as revenue when collected.
B) presented as a liability until earned.
C) recorded as an asset until earned.
D) presented as a separate item in shareholders' equity.

Question

Quizplus · Accepted Answer

When cash is debited for rents that are collected but are not yet earned, the amount credited is presented as a liability until earned. This is because the company has an obligation to provide services or return the funds until the rent is actually earned.

When Cash Is Debited for Rents That Are Collected but Are