At times,businesses require advance payments from customers that will be applied to the purchase price when goods are delivered or services provided.These customer advances represent:

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Customer advances represent a liability because the company has received payment from a customer but has not yet delivered the goods or services promised. The liability is then recognized as revenue when the goods or services are delivered, and the advance payment is applied to the purchase price.

At Times,businesses Require Advance Payments from Customers That Will Be