If Cash Is Received from Customers in Payment for Products

question 87

Multiple Choice

If cash is received from customers in payment for products or services that have not yet been delivered to the customers,the business would record the cash receipt as:

• A)A debit to an unearned revenue account.
• B)A debit to a prepaid expense account.
• C)A credit to an unearned revenue account.
• D)A credit to a prepaid expense account.
• E)No entry is required at the time of collection.

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Definitions:

Utilitarian Organization

A profit or nonprofit organization that pays its employees salaries or wages.

Division of Labor

The allocation of different tasks and responsibilities to individuals or groups in a society, organization, or among nations to improve efficiency.

Ideal Type

Model rarely seen in reality but that defines the principal characteristics of a social form.

Hierarchy of Authority

An organizational structure where entities are ranked according to levels of power and authority, from highest to lowest.