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    Question

    Under accrual accounting, which of the following best

    describes the treatment of income received in advance?
    A Revenue for current period Correct Answer Incorrect Answer
    B Contingent liability Correct Answer Incorrect Answer
    C Deferred revenue shown as a current liability Correct Answer Incorrect Answer
    D Sundry receivable Correct Answer Incorrect Answer
    E Asset under construction Correct Answer Incorrect Answer

    Solution

    Income received before the actual service is rendered is not recognized as revenue. It is considered deferred revenue and shown as a current liability until earned.

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