When a company receives cash in advance from a customer,it should debit Cash and credit Accounts Receivable.

Name: When a company receives cash in advance from a customer,it should debit Cash and credit Accounts Receivable.
Brand: Quizplus
Rating: 4.8 (41 reviews)

Question

Quizplus · Accepted Answer

This is false.Accepting cash in advance from a customer creates an obligation to provide future services to the customer.The company will recognize a liability called unearned revenue by increasing that account with a credit.

When a Company Receives Cash in Advance from a Customer,it