A Liability Created When a Business Collects Cash from Customers

question 6

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 revenue
• C)accrued liability
• D)service revenue

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Definitions:

Income Statement

A financial report that outlines a company's revenues, expenses, and profits over a specific period, typically a quarter or year, to show its performance.

Market Value

The amount for which something can be sold on a given market.

Dividends

Payments made by a corporation to its shareholder members, usually derived from the company's profits.

Common Stock

Common stock represents ownership shares in a corporation, giving holders voting rights and the potential to receive dividends.