A Liability Created When a Business Collects Cash from Customers

question 104

Multiple Choice

A liability created when a business collects cash from customers in advance of providing services or delivering goods is called a(n) ________.

• A)notes receivable
• B)unearned revenues
• C)equity
• D)revenues

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Definitions:

External Benefits

Benefits derived from a product or service that affect parties who did not choose to incur that benefit.

Efficient Level

The optimal point of operation where resources are used in such a way that maximizes productivity and minimizes waste.

Negative Externality

A cost that is suffered by a third party due to an economic transaction, where the cost is not reflected in the transaction's final price.

Marginal Social Cost

The total cost society bears for the production of an additional unit of a good, including both direct costs to the producer and external costs to others.