Question

commission paid in advance will be treated as
(1) a loss
(2) an income
(3) an asset
(4) a liability

Answer 1

be treated as
4. a liability

Revenues received in advance  are reported as a current LIABILITY if they will be earned within one year. The accounting entry is a debit to the asset Cash for the amount received and a credit to the liability account such as Customer Advances or Unearned Revenues.


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