When Cash Is Received in Advance of a Performance Obligation

question 233

Multiple Choice

When cash is received in advance of a performance obligation being satisfied,a(n) ________ called ________ is recorded.

• A)liability;Deferred Revenue
• B)asset;Deferred Revenue
• C)liability;Accounts Receivable
• D)asset;Accounts Receivable

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Definitions:

Premise Control

The process of managing and regulating the physical environment of a business location to ensure safety, compliance, and comfort.

Liquidity Ratio

A financial measure used to determine a company's ability to cover its short-term obligations with its most liquid assets.

Financial Obligations

Commitments to pay money to another party, including debts, salaries, taxes, and other liabilities.

Acid-Test Ratios

A financial metric that evaluates a company's ability to pay off its short-term liabilities with its quick assets, providing insight into its short-term financial health.