If a Business Has Received Cash in Advance of Services

question 113

Multiple Choice

If a business has received cash in advance of services being performed and credits a liability account, the adjusting entry needed after the services are performed will be

• A)debit Deferred Revenue and credit Cash.
• B)debit Deferred Revenue and credit Sales.
• C)credit Deferred Revenue and debit Sales.
• D)debit Deferred Revenue and credit Accounts Receivable.

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Definitions:

Free Cash Flow

The amount of cash generated by a company after accounting for operational expenses and capital expenditures, indicating the company's ability to generate surplus cash.

Capital Expenditures

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment, aimed at improving future operations.

Income Taxes

Taxes levied by governments on individuals or entities based on their income or profits.

Operating Activities

Transactions related to the core business functions of a company, such as sales and purchase of goods and services.