A liability created when a business receives cash from customers in advance of providing services or delivering goods is called a(n)________.
A) notes receivable
B) unearned revenue
C) accrued liability
D) service revenue

Question

Quizplus · Accepted Answer

Unearned revenue refers to money received in advance of goods or services being provided. This creates a liability for the business because they are obligated to provide the goods or services to the customer in the future. Notes receivable are when a business receives a promissory note from a customer, accrued liabilities are expenses that have been incurred but not yet paid, and service revenue is the revenue earned from providing goods or services.

A Liability Created When a Business Receives Cash from Customers