If at the end of the financial reporting period, a company receives cash for books which are to be delivered in the following period, the most appropriate accounting entry would be to record the transaction as: A. accrued revenue. B. deferred revenue. C. prepaid expenses.

The correct answer is B.The company will record the cash received as unearned revenue. Unearned revenue or deferred revenue arises when a company receives cash prior to earning revenues. The company will earn revenues when the books are delivered in the following year.

OMG my brain - I read 'accrued revenue' as 'unaccrued revenue'.

CFA Level 1 Question Of The Week - Financial Reporting And Analysis (6) - CFA Level 1

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This topic has 2 replies, 2 voices, and was last updated Aug-193:56 am by CFA_anon.

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- Matt_AnalystPrep
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  - CFA Charterholder
  26 Aug 2019 at 7:51 pm
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  ::
  The correct answer is B.
  
  The company will
  record the cash received as unearned revenue. Unearned revenue or deferred
  revenue arises when a company receives cash prior to earning revenues. The
  company will earn revenues when the books are delivered in the following year.
- CFA_anon
  Participant
  27 Aug 2019 at 3:56 am
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  1
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  OMG my brain – I read ‘accrued revenue’ as ‘unaccrued revenue’.
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