QUESTION 9
Explain the following:
Income received in advance
Is an expense which was paid during a certain reporting period, but which relates to a future period.
An expense which relates to a certain reporting period but which is still unpaid at the end of that reporting period.
An income prepaid is revenue received during a ceratin reporting period but which relates to a future period.
A revenue which relates to a fixed reporting period, but is still to be received at the end of the reporting period concerned.
1 answer
Income received in advance refers to when a company receives payment for goods or services before they are actually delivered. This results in the company having a liability to fulfill the goods or services in the future, even though they have already received the payment. This is often recorded as a liability on the company's balance sheet until the obligation is fulfilled and the income can be recognized as revenue.
1 answer