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Why must amounts received in advance from customers be deferred? a. The customer may not pay the...

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Question

Finance

Why must amounts received in advance from customers bedeferred?

a. The customer may not pay the entire balance due

b. The company receiving payment has not earned the amount

c. The customer has a right of return

d. All of the above are reasons to defer

Answer & Explanation Solved by verified expert
3.6 Ratings (628 Votes)
Basically the way the question is worded is slightly confusing but what it means to ask is why should we defer recognizing the revenue on receipt of an advance payment from a customer Options given here also imply as follows a The customer may not pay the    See Answer
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Transcribed Image Text

Why must amounts received in advance from customers bedeferred?a. The customer may not pay the entire balance dueb. The company receiving payment has not earned the amountc. The customer has a right of returnd. All of the above are reasons to defer

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