Receipt of a prepayment from a customer is originally recorded as a liability.Later,at the end of the accounting period,an adjustment is recorded causing a(n)________ in the liability account and a(n)________ in the revenue account.
A)increase;increase
B)increase;decrease
C)decrease;decrease
D)decrease,increase

Question

Quizplus · Accepted Answer

This type of deferral adjustment involves increasing a revenue account on the income statement and decreasing a liability on the balance sheet.

Receipt of a Prepayment from a Customer Is Originally Recorded