When the balance of the Deferred Revenue account decreases during an accounting period:
A)Accrual-basis revenues exceed cash collections from customers.
B)Accrual-basis expenses exceed cash collections from customers.
C)Accrual-basis revenues are less than cash collections from customers.

Question

Quizplus · Accepted Answer

Deferred Revenue represents cash received from customers for goods or services that have not yet been provided. As the balance decreases, it means that some of the revenue has been recognized as earned on the income statement (accrual-basis revenue) even though the cash has not yet been collected. This happens when accrual-basis revenues exceed cash collections from customers.

When the Balance of the Deferred Revenue Account Decreases During