If a Company Initially Records a Deferred Revenue as a Liability

question 82

True/False

If a company initially records a deferred revenue as a liability, an adjusting entry must be made at the end of the period to increase the revenue account.

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Definitions:

Diminishing Returns

A principle stating that if one factor of production is increased while others are held constant, the additional output generated will eventually decrease.

Government Subsidies

Financial support provided by the government to businesses, individuals, or other entities, typically to encourage certain activities or reduce costs.

Agriculture

The science, art, and practice of cultivating the soil, growing crops, and raising livestock; including the preparation and marketing of the resulting products.

Rationale

The underlying reasoning or explanation for a particular belief, action, or event.