A liability created when a business collects 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 is a liability created when a business receives cash from customers before delivering goods or services. This liability arises because the business has an obligation to provide the goods or services for which the customer has paid. Notes receivable are a type of asset, accrued liabilities are expenses that have been incurred but not yet paid, and service revenue is income earned from providing services to customers.

A Liability Created When a Business Collects Cash from Customers