A Liability Created When a Business Collects Cash from Customers

question 32

Multiple Choice

A liability created when a business collects cash from customers in advance of providing services or delivering goods is called:

• A)notes receivable.
• B)unearned revenues.
• C)capital.
• D)revenues.

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Definitions:

Corporate AMT

The Alternative Minimum Tax for corporations, designed to ensure that profitable companies pay at least a minimum amount of tax.

Average Annual Gross Receipts

The average amount of money received by a business before any deductions over a specified period, typically 3 to 5 years.

Subject

In general terms, this refers to the main topic or entity being discussed or analyzed.

FMV

Fair Market Value; the price an asset would sell for on the open market between a willing buyer and a willing seller.