Revenue received in advance is an example of a liability.

In accounting, a liability is something a company owes. When a company receives payment for goods or services that it has not yet delivered or performed, it creates a liability known as deferred revenue or unearned revenue. This is because the company has an obligation to provide those goods or services in the future.

Accumulated depreciation and allowance for doubtful debts are not liabilities; they are contra accounts that are used to reduce the value of assets (property, plant and equipment, and accounts receivable, respectively). Prepayments are not liabilities either; they are considered current assets because they represent payments for goods or services that the company will receive in the future.

Question

Revenue received in advance is an example of a liability.

In accounting, a liability is something a company owes. When a company receives payment for goods or services that it has not yet delivered or performed, it creates a liability known as deferred revenue or unearned revenue. This is because the company has an obligation to provide those goods or services in the future.

Accumulated depreciation and allowance for doubtful debts are not liabilities; they are contra accounts that are used to reduce the value of assets (property, plant and equipment, and accounts receivable, respectively). Prepayments are not liabilities either; they are considered current assets because they represent payments for goods or services that the company will receive in the future.

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Revenue received in advance is an example of a liability.

In accounting, a liability is something a company owes. When a company receives payment for goods or services that it has not yet delivered or performed, it creates a liability known as deferred revenue or unearned revenue. This is because the company has an obligation to provide those goods or services in the future.

Accumulated depreciation and allowance for doubtful debts are not liabilities; they are contra accounts that are used to reduce the value of assets (property, plant and equipment, and accounts receivable, respectively). Prepayments are not liabilities either; they are considered current assets because they represent payments for goods or services that the company will receive in the future.

Which of the following is an example of a liability?Accumulated depreciationRevenue received in advanceAllowance for doubtful debtsPrepayments

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Which of the following is an example of a liability?

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