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

Question

Quizplus · Accepted Answer

A deposit received in advance for services not yet supplied represents unearned revenue, which is a liability. This liability is recorded in the balance sheet under the category of current liabilities, until the services are actually supplied and revenue is earned. Therefore, option B - unearned revenue, is the best choice for recording such deposits. Option A - sales provision, is incorrect as it refers to an estimated expense for an obligation, while the deposit represents a liability. Options C and D are also incorrect as they both relate to expenses or payables, while the deposit represents an advance receipt of revenue from customers.

A Deposit Received in Advance by Broncos Ltd for Services