A Liability Created by the Receipt of Cash from Customers

question 85

Multiple Choice

A liability created by the receipt of cash from customers in payment for products or services that have not yet been delivered to the customers is:

• A) Recorded as a debit to an unearned revenue account.
• B) Recorded as a debit to a prepaid expense account.
• C) Recorded as a credit to an unearned revenue account.
• D) Recorded as a credit to a prepaid expense account.
• E) Not recorded in the accounting records until the earnings process is complete.

---

Definitions:

Bona Fide Occupational Qualification (BFOQ)

A justifiable reason for discrimination based on business reasons of safety or effectiveness.

Canadian Human Rights Commission (CHRC)

A governing body established to administer and enforce human rights legislation, protecting and promoting human rights within Canada.

Sufficient Grounds

Adequate or acceptable reasons or evidence for a particular action, behavior, or legal decision.