Which of the following correctly describes the effects of initially recording deferred revenue when cash is received from a customer?
A)Revenue is increased.
B)Liabilities are not affected.
C)Retained earnings increases.
D)Net income is not affecteD.Deferred revenue recorded when cash is received from a customer increases the unearned revenue account and increases cash.These are balance sheet accounts that do not impact net income.

Question

Quizplus · Accepted Answer

Deferred revenue is recorded as a liability when cash is received, which does not affect net income until the revenue is earned.

Which of the Following Correctly Describes the Effects of Initially