Asked by Diana Muñoz on Jun 24, 2024
Verified
When a company receives cash before products or services are provided the following results:
A) Assets and stockholders' equity increase.
B) Assets and revenue increase.
C) Liabilities and revenues increase.
D) Liabilities and assets increase.
Liabilities
Financial obligations or debts that a company owes to external parties.
Assets
Assets that a company possesses or has rights to, which are anticipated to bring in economic gains or advantages in the future.
- Determine the impact of various transactions on current assets and liabilities.
Verified Answer
PP
PRALABH PRASHARJun 25, 2024
Final Answer :
D
Explanation :
When a company receives cash before products or services are provided, it records the cash as an asset (increasing assets) and a liability (such as unearned revenue) because it owes a service or product in the future, thus increasing liabilities.
Learning Objectives
- Determine the impact of various transactions on current assets and liabilities.