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The receipt of cash in advance from a customer _________.a. increases assets and stockholders' equity. b. increases assets and decreases stockholders' equity. c. increases assets and liabilities. d. none of these answer choices are correct.

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jepessoa

Answer:

C) increases assets and liabilities.

Explanation:

A typical journal entry needed to record a receipt of cash in advance would be:

Dr Cash XXX

    Cr Unearned revenue XXX

Cash is an asset account that has a debit balance, while unearned revenues is a liability account with a credit balance.

As the products are delivered are services are performed, the journal entry should be:

Dr Unearned revenue XXX

    Cr Sales revenue XXX