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Financial Accounting

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Adjusting Entries & Theory of Unearned Revenue: Why Record It?

FINACT-BY9BBX

Why is cash received in advance recorded as a current liability called "Unearned Revenue?"

A

To show that the firm owes services to customers.

B

To keep track of orders that have not been shipped yet.

C

To keep track of what customers owe for pending orders.

D

To track cash balances received from customers who prepay.