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:

Duty on the Seller

The responsibility of the seller to deliver goods that meet the criteria specified in a sales contract, including aspects like quality, quantity, and timelines.

Implied Warranty

A legal concept that guarantees a product or service will meet certain expectations of quality and functionality even if not explicitly stated.

Warranty of Merchantability

An implied guarantee that a product will meet the reasonable expectations of the buyer, including being fit for the purpose for which it was sold.

Business of Selling

The activity or profession of promoting and exchanging goods or services for money.