If Cash Is Received from Customers in Payment for Products

question 145

Multiple Choice

If cash is received from customers in payment for products or services that have not yet been delivered to the customers, the business would record the cash receipt as:

• A) A debit to a prepaid expense account.
• B) A debit to an unearned revenue account.
• C) No entry is required at the time of collection.
• D) A credit to a prepaid expense account.
• E) A credit to an unearned revenue account.

---

Definitions:

Human Capital

The collective skills, knowledge, and other intangible assets of individuals that can be used to create economic value.

Surplus Labor

This term refers to the portion of the labor force which is not currently being employed to its full potential, often leading to unemployment or underemployment in an economy.

Agriculture

The science or practice of farming, including cultivation of the soil for the growing of crops and the rearing of animals to provide food, wool, and other products.

Capital-Using Technological Advance

A capital-using technological advance refers to innovations that increase the amount of capital per worker used in the production process, potentially enhancing productivity but also increasing capital costs.