Using the accrual basis of accounting,if payment is received before delivery of a good or service,a liability is recorded at the time the payment is received.
BT: Comprehension

Question

Quizplus · Accepted Answer

In accrual accounting, when payment is received before a good or service is delivered, it is recorded as a liability (unearned revenue) because the company has an obligation to deliver the good or service in the future.

Using the Accrual Basis of Accounting,if Payment Is Received Before