On July 7,Saints Inc.received $10,000 in cash from a customer for services to be provided on October 10.Which of the following describes how the transaction should be recorded on July 7?

Question

Quizplus · Accepted Answer

Since the services are not going to be provided until October 10, the company cannot recognize the $10,000 as revenue on July 7. Instead, they should record it as a liability (Deferred Revenue) until the services are provided. Therefore, the transaction should be recorded by debiting Cash $10,000 and crediting Deferred Revenue $10,000.