Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 23 - No. 10)
If a company receives cash in advance from a customer for goods to be delivered in the future, what happens to the financial statements?
Assets increase, and liabilities increase.
Assets decrease, and liabilities increase.
Assets increase, and equity increases.
Assets decrease, and equity decreases.
Explanation
When the cash is received, the cash account (an asset) increases. Unearned Revenue (a liability) increases.
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