A deposit received in advance by Maharaj Co for services not yet supplied can be initially recorded by Maharaj in a liability account called:

Question

Quizplus · Accepted Answer

The best choice is C) Unearned income since the deposit received in advance is not yet earned by Maharaj Co. Therefore, it is initially recorded as a liability in the form of unearned income until the services are provided, at which point the liability will decrease as the revenue is recognized. The other choices - A) Sales, B) Mortgage, and D) Expenses payable - are not appropriate in this scenario.

A Deposit Received in Advance by Maharaj Co for Services