Cash received in advance of providing goods and service is called ________ aDeferred Revenues bPrepaid Expenses cAccrued Expenses dWarranties

Answer

The correct term for cash received in advance of providing goods and services is a) Deferred Revenues.

Explanation

1. Definition of Deferred Revenues: Deferred revenues refer to payments that a business receives before a service is performed or a product is delivered. This situation creates a liability on the balance sheet until the service or good is provided, at which point it is recognized as revenue.

2. Other Options:

   • b) Prepaid Expenses: These are expenses paid in advance for items or services to be received in the future, not revenues.
   • c) Accrued Expenses: These are expenses that have been incurred but not yet paid, representing a liability.
   • d) Warranties: These are commitments made by a manufacturer or vendor to repair or replace a product if necessary within a specified period, not directly related to cash receipts in advance.

Conclusion

Thus, the best option that represents cash received in advance of providing goods and services is Deferred Revenues (Option a).