When a magazine sells one-year subscriptions to customers but receives the full amount of cash immediately,it is an example of a(n):
A)Accrued expense.
B)Accrued revenue.
C)Prepaid expense.
D)Deferred revenue.

Question

Quizplus · Accepted Answer

When a magazine sells one-year subscriptions but receives the full amount of cash immediately, it is considered deferred revenue. This is because the revenue has been received, but the services (magazines) have yet to be delivered to the customer. The revenue is therefore deferred until the magazines are provided over the course of the one-year subscription period.

When a Magazine Sells One-Year Subscriptions to Customers but Receives