It Is Acceptable to Record Cash Received in Advance of Providing

question 201

True/False

It is acceptable to record cash received in advance of providing products or services to revenue accounts if an adjusting entry is made at the end of the period to bring the liability account balance to the correct unearned amount.

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Definitions:

Military Organization

An entity structured to use armed forces for purposes of defense, security, or warfare operations.

S Corporation

A type of corporation in the United States that is taxed under Subchapter S of the Internal Revenue Code, with profits passing through to shareholders to be taxed at individual income tax rates.

Sole Proprietorship

A business owned and operated by a single individual, with no separation between the business and the owner, legally or financially.

Partnership

A partnership is a legal business structure where two or more individuals share ownership, responsibilities, and profits or losses of the business.