If the cash is received before the related goods or services are delivered,which of the following will be recorded?
A) Unearned Revenue, a liability
B) Accounts Receivable, an asset
C) Pre-earned Revenue, which increases Retained Earnings
D) Service Revenue, which increases Retained Earnings

Question

Quizplus · Accepted Answer

If cash is received before the related goods or services are delivered, it means the company has not yet earned the revenue. Therefore, the appropriate account to record such prepayment is Unearned Revenue, a liability account, which indicates an obligation to provide product or service later.

If the Cash Is Received Before the Related Goods or Services