If Cash Is Received from Customers in Payment for Products

question 68

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

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Definitions:

Production Possibilities Frontier

A curve that illustrates the maximum viable combination of two products that can be produced with fixed resources and technology.

Efficient

An economic condition where resources are allocated in the most optimal way, maximizing the production of goods and services without wasting any resources.

Production Possibilities Frontier

A graph that illustrates the maximum amounts of two goods that a society can produce with the available resources and technology, given that it is using its resources efficiently.

Representativeness Bias

A cognitive bias where individuals incorrectly assess the probability of an event based on similarities to existing prototypes in their mind, rather than on actual evidence.