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

Question

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When a deposit is received in advance for services not yet supplied, it represents a liability as the services are yet to be performed. This liability account can be called unearned income, reflecting the fact that the income has not been earned yet. Choice A (sales) does not reflect the fact that the services are not yet supplied, while choices B (accounts payable) and D (expenses payable) represent liabilities related to purchases and expenses, respectively.

A Deposit Received in Advance by Adelaide Co for Services